<PAGE>
As filed with the Securities and Exchange Commission on February 11, 2000
Registration No. 333-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
INTERWEST BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 6711 91-1691216
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER IDENTIFICATION NO.)
275 SE PIONEER WAY
OAK HARBOR, WASHINGTON 98277
(360) 679-4181
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------
Stephen M. Walden
President and Chief Executive Officer
275 SE Pioneer Way
Oak Harbor, Washington 98277
(360) 679-4181
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------
Copies of communications to:
Stephen M. Klein
Carmen L. Smith
Graham & Dunn PC
1420 Fifth Avenue, 33rd Floor
Seattle, Washington 98101
-----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. / /
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 number of the earlier
effective Registration Statement for the same offering. / /___________
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /___________
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================== ======================= ========================== ====================== ====================
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount Being Offering Price Aggregate Registration
Being Registered Registered Per Note(1) Offering Price(1) Fee(1)
=============================== ======================= ========================== ====================== ====================
<S> <C> <C> <C> <C>
9.875% Capital Securities
Series B of InterWest Capital
Trust I $40,000,000 100% $40,000,000 $10,560.00
- ------------------------------- ----------------------- -------------------------- ---------------------- --------------------
InterWest Bancorp, Inc.
Guarantee with respect to
9.875% Capital Securities,
Series B N/A N/A N/A N/A
- ------------------------------- ----------------------- -------------------------- ---------------------- --------------------
9.875% Junior Subordinated
Deferrable Interest
Debentures due November 15,
2029, Series B of InterWest
Bancorp, Inc. $41,238,000 100% $41,238,000 $10,886.83
=============================== ======================= ========================== ====================== ====================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
---------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
FILES A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE 1933 ACT, OR UNTIL THIS REGISTRATION STATEMENT BECOMES EFFECTIVE ON SUCH
DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
<PAGE>
[RED HERRING LEGEND]
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED FEBRUARY 11, 2000
PROSPECTUS
INTERWEST CAPITAL TRUST I
OFFER TO EXCHANGE
9.875% CAPITAL SECURITIES, SERIES B
FOR ANY AND ALL OUTSTANDING
9.875% CAPITAL SECURITIES, SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT DESCRIBED IN THIS
PROSPECTUS, BY
INTERWEST BANCORP, INC.
------------------------------------
InterWest Capital Trust I, a Delaware statutory business
trust, is offering to exchange up to $40,000,000 aggregate liquidation amount
of its 9.875% Capital Securities, Series B for a similar amount of its
outstanding 9.875% Capital Securities, Series A. The Series B capital
securities are registered under the Securities Act of 1933. There is
currently $40,000,000 aggregate liquidation amount of the Series A capital
securities outstanding.
As part of this exchange offer, InterWest Bancorp, Inc. is also
offering to exchange its guarantee of InterWest Capital Trust I's obligations
under the Series A capital securities for a similar guarantee of InterWest
Capital Trust I's obligations under the Series B capital securities, as
described in this Prospectus as the Series B guarantee. Also as part of this
exchange offer, InterWest Bancorp, Inc. is offering to exchange up to
$41,238,000 of its 9.875% Junior Subordinated Deferrable Interest Debentures,
Series B for a similar amount of its 9.875% Junior Subordinated Deferrable
Interest Debentures, Series A. The Series B guarantee and the Series B
debentures are also registered under the Securities Act.
The terms of the Series B capital securities, the Series B
debentures and the Series B guarantee are the same as the terms of the Series
A capital securities, the Series A debentures and the Series A guarantee
except that:
- each of the Series B securities are registered under the
Securities Act and do not have the same restrictions on
transfer as the Series A capital securities;
- the distribution rate on the Series B capital securities will
not have the potential to increase; and
- the Series B debentures will not be entitled to any liquidated
damages.
This Prospectus and a transmittal letter describing the procedures
for exchanging Series A securities for the Series B securities are first
being mailed to all of the holders of the Series A securities on _________
___, 2000.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE
9 BEFORE DECIDING WHETHER TO EXCHANGE YOUR ORIGINAL CAPITAL SECURITIES FOR
NEW CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR
ANYONE TO TELL YOU OTHERWISE.
----------------------------------
THE DATE OF THIS PROSPECTUS IS ________ ___, 2000.
<PAGE>
SUMMARY
THIS SUMMARY PROVIDES AN OVERVIEW OF SELECTED INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS AND DOES NOT CONTAIN ALL THE INFORMATION YOU
SHOULD CONSIDER. THEREFORE, YOU SHOULD ALSO READ THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
INTERWEST BANCORP, INC.
InterWest Bancorp is a bank holding company incorporated in the
State of Washington and regulated by the Federal Reserve Board. We are
headquartered in Oak Harbor, Washington. As of December 31, 1999, we
conducted our business through four wholly-owned bank subsidiaries:
- InterWest Bank, a Washington State-chartered savings bank with
assets of $2.2 billion as of December 31, 1999;
- Pacific Northwest Bank, a Washington State-chartered bank with
assets of $426.7 million as of December 31, 1999;
- Kittitas Valley Bank, N.A., a national banking association
with assets of $48.2 million as of December 31, 1999; and
- National Bank of Tukwila, a national banking association, with
assets of $48.2 million as of December 31, 1999.
We merged Kittitas Valley Bank, N.A. into Pacific Northwest Bank on
January 3, 2000.
We conduct our business through the 55 branch offices of our banking
subsidiaries, located in communities throughout western and central
Washington. At December 31, 1999, together with our subsidiaries, we had
consolidated assets of $2.8 billion, total loans of $1.7 billion, total
deposits of $1.6 billion and shareholders' equity of approximately $171.7
million. Our principal executive offices are located at 275 S.E. Pioneer Way,
Oak Harbor, Washington 98277 and our telephone number is (360) 679-4181.
For more information, see "- Summary Selected Consolidated Financial
Data," "- Recent Developments" and "InterWest Bancorp, Inc." Additional
information concerning InterWest Bancorp is included in the documents
incorporated by reference in this Prospectus. See "Incorporation of Certain
Documents by Reference."
INTERWEST CAPITAL TRUST I
InterWest Capital Trust I is a statutory business trust created
under Delaware law upon the filing of a certificate of trust with the
Delaware Secretary of State. The Trust's business and affairs are conducted
by the property trustee, the Delaware trustee and the three individual
administrative trustees, who are officers of InterWest Bancorp. The Trust
exists for the exclusive purposes of:
- issuing and selling the capital securities;
- using the proceeds from the sale of the capital securities and
the common securities to acquire the junior subordinated
debentures issued by InterWest Bancorp; and
- engaging in only those other activities necessary, advisable
or incidental to the above.
Accordingly, the junior subordinated debentures are the sole assets
of the Trust, and payments under the junior subordinated debentures are the
sole revenues of the Trust.
InterWest Bancorp owns all of the common securities of the Trust.
2
<PAGE>
THE EXCHANGE OFFER
WE ARE OFFERING TO EXCHANGE SERIES B CAPITAL SECURITIES FOR AN EQUAL AMOUNT
OF YOUR SERIES A CAPITAL SECURITIES.
We are offering to exchange up to $40,000,000 aggregate liquidation
amount of Series B capital securities for an equal aggregate liquidation
amount of Series A capital securities. You may exchange all of your Series A
capital securities, or less than all of them provided that they have a
liquidation amount of at least $100,000 (100 capital securities), or any
integral multiple of $1,000 (one capital security) in excess of $100,000. We
are making this exchange offer in order to satisfy our obligations under a
Registration Rights Agreement relating to your Series A capital securities.
See "The Exchange Offer" for a description of the procedures for tendering
your Series A capital securities.
THE EXCHANGE OFFER EXPIRES ON ________ ___, 2000.
The exchange offer will expire at 5:00 p.m., New York City time, on
________ ___, 2000, unless we extend it. See "The Exchange Offer - Expiration
Date; Extension; Amendments."
THERE ARE CONDITIONS TO THE EXCHANGE OFFER.
The exchange offer is subject to certain conditions, which we have the
discretion to waive. The exchange offer is not conditioned upon the tender of
any minimum liquidation amount of Series A capital securities. See "Exchange
Offer - Conditions to the Exchange Offer."
WE MAY MAKE CHANGES IN, OR IMPOSE REQUIREMENTS ON, THE EXCHANGE OFFER.
We reserve the right at any time and from time to time:
- to delay accepting the Series A capital securities for
exchange;
- to end the exchange offer if specified conditions are not
satisfied;
- to extend the exchange offer and keep the Series A capital
securities tendered pursuant to the exchange offer, subject to
your right to withdraw your tendered Series A capital
securities; or
- to waive any condition or otherwise change the terms of the
exchange offer in any way.
See "The Exchange Offer - Terms of the Exchange Offer."
If you wish to exchange your Series A capital securities for Series
B capital securities, you will be required to represent that:
- you are not an Affiliate of either InterWest Bancorp or
InterWest Capital Trust I;
- you are acquiring Series B capital securities in the
ordinary course of your business;
- you have no arrangement or understanding with any person to
participate in a "distribution" within the meaning of the
Securities Act of such Series B capital securities; and
- you are not engaged in, and do not intend to engage in, a
"distribution" within the meaning of the Securities Act of
such Series B capital securities.
See "The Exchange Offer - Resale of Series B capital securities."
3
<PAGE>
THE TERMS OF THE SERIES B CAPITAL SECURITIES ARE NEARLY IDENTICAL TO THE
SERIES A CAPITAL SECURITIES.
We have registered up to $40,000,000 aggregate liquidation amount of
Series B capital securities under the Securities Act. The terms of the Series
B capital securities are the same as the terms of the Series A capital
securities, except that the Series B capital securities:
- have been registered under the Securities Act;
- will not be subject to certain transfer restrictions
applicable to the Series A capital securities; and
- will not provide for any increase in the distribution rate.
See "Description of Series B capital securities."
YOU MAY WITHDRAW YOUR TENDER OF SERIES A CAPITAL SECURITIES AT ANY TIME
BEFORE THE EXPIRATION DATE.
You may withdraw your tender of Series A capital securities at any
time before the expiration date by delivering written notice of such
withdrawal to the exchange agent as described below under the caption "The
Exchange Offer - Withdrawal Rights."
YOU MUST FOLLOW SPECIFIED PROCEDURES FOR TENDERING SERIES A CAPITAL
SECURITIES.
You must complete and sign a letter of transmittal and mail, fax or
hand deliver it, together with any other documents required by the letter of
transmittal, to the exchange agent, either with your Series A capital
securities or in compliance with the specified procedures for guaranteed
delivery of Series A capital securities. Certain brokers, dealers, commercial
banks, trust companies and other nominees may also effect tenders by
book-entry transfer. If your Series A capital securities are registered in
the name of a broker, dealer, commercial bank, trust company or other
nominee, you should contact such person promptly if you wish to tender your
Series A capital securities pursuant to the exchange offer. See "The Exchange
Offer - Procedures for Tendering Series A Capital Securities."
YOU MAY SELL YOUR SERIES B CAPITAL SECURITIES WITHOUT RESTRICTION EXCEPT IN
CERTAIN CASES.
In making the exchange offer, we are relying on the position of the
staff of the Securities and Exchange Commission's Division of Corporation
Finance contained in certain interpretive letters addressed to third parties
in other transactions. However, we have not sought our own interpretive
letter. Therefore, there is no guarantee that the staff of the Securities and
Exchange Commission's Division of Corporation Finance would make a similar
determination regarding the exchange offer as it has in the interpretive
letters to third parties.
Unless you are a broker-dealer or an affiliate of either InterWest
Bancorp or InterWest Capital Trust I, we believe that you may sell or
otherwise transfer Series B capital securities issued to you pursuant to this
exchange offer in exchange for your Series A capital securities without
further compliance with the registration and Prospectus delivery requirements
of the Securities Act.
Note, however, that the Series B capital securities will be issued,
and may be transferred, only in blocks having a liquidation amount of not
less than $100,000 and multiples of $1,000 in excess of $100,000.
If you are a broker-dealer or an affiliate of either InterWest
Bancorp or InterWest Capital Trust I, then you shall be subject to further
restrictions described in "The Exchange Offer - Resale of Series B Capital
Securities."
4
<PAGE>
Subject to limitations described in "The Exchange Offer - Resale of
Series B Capital Securities," we have agreed that this Prospectus, as it may
be changed or supplemented from time to time, may be used by you if you are a
participating broker-dealer in connection with resales of such Series B
capital securities. See "Plan of Distribution."
WILMINGTON TRUST COMPANY WILL ACT AS EXCHANGE AGENT.
The exchange agent with respect to the exchange offer is Wilmington
Trust Company. The address, telephone and facsimile numbers of the exchange
agent are listed in "The Exchange Offer - Exchange Agent" and in the letter
of transmittal.
WE WILL NOT RECEIVE ANY PROCEEDS FROM THE EXCHANGE OFFER.
Neither InterWest Bancorp nor InterWest Capital Trust I will receive
any cash proceeds from the issuance of the Series B capital securities.
YOU SHOULD REVIEW THE INFORMATION ON FEDERAL INCOME TAX CONSEQUENCES AND
ERISA CONSIDERATIONS.
You should review carefully the information contained under the
caption "Certain Federal Income Tax Considerations" and "ERISA
Considerations" before tendering your Series A capital securities in the
exchange offer.
INTERWEST BANCORP WILL GUARANTEE PAYMENTS ON THE SERIES B CAPITAL SECURITIES.
We will, on a subordinated basis, fully, irrevocably and
unconditionally guarantee:
- payment of distributions on the capital securities;
- payments on liquidation of the Trust; and
- payments on maturity or earlier redemption of the capital
securities.
If we do not make a payment on the junior subordinated debentures,
the Trust will not have sufficient funds to make payments on the capital
securities. Our guarantee does not assure the payment of distributions when
the Trust does not have sufficient funds to pay the distributions. Our
obligations under the guarantee are unsecured and are subordinated and junior
to the payment of our senior and subordinated debt and will be effectively
subordinated to all of the existing and future liabilities and obligations of
our subsidiaries.
THERE IS NO MARKET FOR THE SERIES B CAPITAL SECURITIES.
The Series B capital securities will be a new issue of securities
for which there currently is no market. Accordingly, we cannot assure you
that any market will develop for the Series B capital securities. We do not
intend to seek a listing of the capital securities or, if issued, the
exchange capital securities, on any national securities exchange or on the
Nasdaq Stock Market. For more information, you should read "Plan of
Distribution."
THE SERIES B CAPITAL SECURITIES HAVE BEEN RATED "BBB-".
The Series B capital securities have been rated "BBB-" by Thomson
Financial Bank Watch. If another rating agency were to rate the capital
securities, such rating agency may assign a rating different from the rating
described above. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at any time by
the assigning rating organization.
5
<PAGE>
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
THE FOLLOWING SUMMARY INFORMATION PRESENTS SELECTED CONSOLIDATED
FINANCIAL DATA OF INTERWEST BANCORP AND OUR SUBSIDIARIES. CERTAIN FINANCIAL
DATA HAS BEEN DERIVED FROM OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS. THE
FOLLOWING INFORMATION IS ONLY A SUMMARY AND YOU SHOULD READ IT IN CONJUNCTION
WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED IN OUR
FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1999, WHICH ARE INCORPORATED IN
THIS PROSPECTUS BY REFERENCE.
<TABLE>
<CAPTION>
AS OF OR FOR THE AS OF OR FOR THE
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- ------------------------------------------------------------------
1999 1998 1999 1998(1) 1997 1996(2) 1995
----------- ----------- ----------- ------------ ----------- ------------ --------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income $50,381 $45,076 $179,659 $180,279 $165,206 $143,827 $119,731
Interest expense 27,283 24,484 95,480 101,483 91,081 77,127 65,119
-------- -------- -- ------ --------- ---------- ---------- ----------
Net interest income before
provision for losses on loans 23,098 20,592 84,179 78,796 74,125 66,700 54,612
Provision for losses on loans 550 498 2,000 2,807 1,508 2,452 929
------ ------ ---------- ----------- ----------- ----------- ------------
Net interest income after provision
for losses on loans 22,548 20,094 82,179 75,989 72,617 64,248 53,683
Non-interest income 4,290 7,841 28,408 26,473 18,645 15,744 13,030
Non-interest expense 18,443 16,773 68,147 66,972 54,032 55,716 40,718
Income tax expense 2,933 3,794 14,585 12,848 12,681 7,785 8,721
----------- ----------- ------------ ----------- ---------- ------------ ------------
Net income $5,462 $7,368 $27,855 $22,642 $24,549 $16,491 $17,274
====== ====== ======= ======= ======= ======= =======
Basic net income per share $0.34 $0.47 $1.78 $1.45 $1.58 $1.08 $1.13
Diluted net income per share 0.34 0.46 1.74 1.40 1.54 1.05 1.11
Cash dividends declared per share 0.14 0.14 0.56 0.50 0.33 0.29 0.19
STATEMENT OF FINANCIAL CONDITION
Total assets $2,782,568 $2,601,561 $2,579,539 $2,447,848 $2,402,928 $2,016,085 $1,723,780
Total loans 1,694,712 1,454,394 1,584,722 1,452,175 1,348,681 1,170,271 1,035,099
Deposits 1,598,190 1,540,090 1,578,949 1,564,825 1,468,460 1,389,402 1,260,946
Borrowings 997,259 856,735 817,910 682,390 755,968 466,693 321,932
Shareholders' equity 171,720 175,283 165,306 171,652 160,770 137,647 128,882
Book value per share 10.87 11.18 10.71 10.97 10.26 8.93 8.45
KEY OPERATING RATIOS
Return on average assets 0.81% 1.20% 1.12% 0.95% 1.15% 0.90% 1.10%
Return on average shareholders' equity 12.25% 16.89% 16.00% 13.58% 16.64% 12.13% 14.25%
Net interest margin 3.67% 3.58% 3.64% 3.52% 3.70% 3.85% 3.70%
Efficiency ratio 67.34% 58.99% 60.53% 63.62% 58.24% 67.58% 60.20%
ASSET QUALITY RATIOS
Non-performing assets to total assets (3) 0.55% 0.76% 0.56% 0.64% 0.52% 0.49% 0.41%
Non-performing loans to loans
receivable, net 0.65% 0.92% 0.70% 0.60% 0.41% 0.33% 0.28%
Allowance for losses on loans to
total loans receivable at the end of
the period 0.90% 0.99% 0.90% 0.96% 0.82% 0.88% 0.76%
Net charge-offs to average loans
outstanding during the period 0.07% 0.05% 0.08% 0.06% 0.05% 0.01% 0.03%
CAPITAL RATIOS
Average shareholders' equity to
average assets 6.61% 7.08% 7.02% 6.99% 6.89% 7.38% 7.73%
Total capital to risk weighted
assets (4) 12.39% 10.77% 10.90% 11.96% 13.64% 13.04% 13.54%
Tier 1 capital to total average
assets (4) 7.93% 6.79% 6.83% 6.61% 6.97% 6.51% 7.19%
Tier 1 capital to risk-weighted
assets (4) 11.56% 9.96% 10.07% 11.06% 12.75% 12.40% 12.88%
Dividend pay-out ratio 41.14% 30.06% 31.62% 33.98% 21.35% 26.97% 17.04%
</TABLE>
- --------------------
6
<PAGE>
(1) 1998 results include nonrecurring merger-related charges of $4.4 million
(net of tax) and a merger-related provision for losses on loans of $0.7
million (net of tax).
(2) 1996 results include nonrecurring Savings Association Insurance Fund
assessment of $3.6 million (net of tax), merger-related charges of $2.0
million (net of tax) and a merger-related provision for losses on loans
of $0.6 million (net of tax).
(3) Non-performing assets consist of non-performing loans (including
non-accrual loans and certain other delinquent loans) and real estate
held for sale, but do not include a $3.9 million land development
project.
(4) The capital ratios indicated as of September 30, 1996 and 1995 are as
previously reported for InterWest Bank and have not been restated to
reflect pooling-of-interest acquisitions completed in 1998 and 1996.
This significantly impacts the comparability of regulatory capital
ratios in fiscal years prior to 1997.
7
<PAGE>
FORWARD LOOKING STATEMENTS
Some of the information presented or incorporated by reference into
this Prospectus contains "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Sentences containing
words such as "may," "will," "expect," "anticipate," "believe," "estimate,"
"should," "projected" or "contemplates" or similar words may constitute
forward-looking statements. Although we believe that the expectations
expressed in these forward-looking statements are based on reasonable
assumptions within the bounds of our knowledge of our business and
operations, it is possible that actual results may differ materially from
these expectations. We have used these statements to describe our
expectations and estimates in various areas, including:
- changes in the economy of the markets in which we operate;
- interest-rate movements;
- timely development of technology enhancements for our products
and Year 2000 operating systems;
- the impact of competitive products, services and pricing; and
- legislative, regulatory and accounting changes affecting the
banking and financial services industry.
Our actual results could vary materially from the future results
covered in our forward-looking statements. The statements in the "Risk
Factors" section of this Prospectus are cautionary statements identifying
important factors, including certain risks and uncertainties, which could
cause our results to vary materially from the future results covered in such
forward-looking statements. Other factors, such as Year 2000 issues, interest
rate trends and loan delinquency rates, which are addressed in the documents
incorporated by reference, as well as the general state of the economy in
Washington State and the United States as a whole, could also cause actual
results to vary materially from the future results covered in such
forward-looking statements:
We disclaim any obligation to announce publicly future events or
developments that affect the forward-looking statements in this Prospectus.
8
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE CAPITAL SECURITIES SHOULD CAREFULLY
REVIEW THE INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND SHOULD PARTICULARLY CONSIDER THE FOLLOWING FACTORS, WHICH
DO NOT NECESSARILY APPEAR IN THE ORDER OF IMPORTANCE. INVESTORS SHOULD
CONSIDER ALL OF THESE FACTORS TO BE IMPORTANT. BECAUSE HOLDERS OF THE CAPITAL
SECURITIES MAY RECEIVE JUNIOR SUBORDINATED DEBENTURES IN EXCHANGE THEREFOR
UPON LIQUIDATION OF THE TRUST, PROSPECTIVE PURCHASERS OF THE CAPITAL
SECURITIES ARE ALSO MAKING AN INVESTMENT DECISION WITH REGARD TO THE JUNIOR
SUBORDINATED DEBENTURES AND SHOULD CAREFULLY REVIEW ALL OF THE INFORMATION
REGARDING THE JUNIOR SUBORDINATED DEBENTURES CONTAINED IN THIS PROSPECTUS.
RISKS RELATED TO YOUR INVESTMENT IN THE CAPITAL SECURITIES
INTERWEST BANCORP CANNOT MAKE PAYMENTS UNDER THE GUARANTEE OR THE JUNIOR
SUBORDINATED DEBENTURES IF INTERWEST BANCORP WOULD DEFAULT ON ITS OTHER
OBLIGATIONS THAT ARE MORE SENIOR.
Our obligations under the guarantee and the junior subordinated
debentures are unsecured and rank
- junior to all of our other borrowings, except those borrowings
that by their terms are equal or junior;
- junior to all of our subsidiaries' liabilities, including
deposit accounts; and
- senior to our common stock.
This means that we cannot pay under the guarantee or the junior
subordinated debentures if we default on payments of any of our other
borrowings, unless, by their terms, those borrowings are equal or junior to
the guarantee or the junior subordinated debentures. In addition, if the
maturity of the junior subordinated debentures is accelerated, we cannot pay
under the guarantee or the junior subordinated debentures until all of our
more senior borrowings are paid in full. Finally, if we liquidate, go
bankrupt or dissolve, we would be able to pay under the guarantee and the
junior subordinated debentures only after we have paid all of our liabilities
that are senior to the guarantee. As of September 30, 1999, we had senior
indebtedness outstanding totaling $7.7 million.
If we default on our obligations to pay principal, premium or
interest on the junior subordinated debentures, the Trust will not have
sufficient funds to make distribution, redemption or liquidation payments on
the capital securities. As a result, you will not be able to rely upon our
guarantee for payment of these amounts. Instead, you or the property trustee
may enforce the rights of the Trust under the junior subordinated debentures
against us. For more information, please refer to "Description of Junior
Subordinated Debentures - Enforcement of Certain Rights by Holders."
The capital securities, the guarantee, the junior subordinated
debentures and the Indenture do not limit our ability to incur additional
debt, including debt that is senior to the junior subordinated debentures in
priority of payment.
The ability of the Trust to make payments due on the capital
securities is solely dependent on us making payments on the junior
subordinated debentures as and when required.
For more information on payments under the guarantee and the junior
subordinated debentures, you should refer to "Description of Guarantee -
Status of the Guarantee" and "Description of Junior Subordinated Debentures -
Subordination."
9
<PAGE>
BANKING LAWS AND REGULATIONS LIMIT INTERWEST BANCORP'S ACCESS TO FUNDS, WHICH
MAY PREVENT INTERWEST BANCORP FROM MAKING PAYMENTS UNDER THE SUBORDINATED
DEBENTURES.
We are a bank holding company regulated by the Federal Reserve
Board, or FRB, and almost all of our operating assets are owned by our bank
subsidiaries, InterWest Bank, Pacific Northwest Bank and National Bank of
Tukwila. We rely primarily on dividends from our bank subsidiaries to meet
our obligations for payment of principal and interest on our outstanding debt
obligations and corporate expenses. Dividend payments from our bank
subsidiaries are subject to regulatory limitations, generally based on
current and retained earnings, imposed by the various regulatory agencies
with authority over our bank subsidiaries. Payment of dividends is also
subject to regulatory restrictions if such dividends would impair the capital
of our bank subsidiaries. Payment of dividends by our bank subsidiaries is
also subject to their profitability, financial condition and capital
expenditures and other cash flow requirements. Bank regulatory agencies have
authority to prohibit us or any of our bank subsidiaries from engaging in an
unsafe or unsound practice in conducting our business. The payment of
dividends, depending upon our financial condition or the financial condition
of our bank subsidiaries, could be deemed to constitute such an unsafe or
unsound practice. The FRB has stated that, as a matter of prudent banking, a
bank or bank holding company should not maintain its existing rate of cash
dividends on common stock unless:
- the organization's net income available to common shareholders
over the past year has been sufficient to fund fully the
dividends; and
- the prospective rate of earnings retention appears consistent
with the organization's capital needs, asset quality, and
overall financial condition.
Federal law and regulations limit the amount of dividends that
national banks may distribute. National Bank of Tukwila, a national banking
association, is limited to paying dividends equal to the bank's total net
income for the year combined with the bank's retained net income for the
preceding two years, less any required transfers to surplus or a fund for the
retirement of any preferred stock. Any greater dividend must be approved by
the Office of the Comptroller of the Currency.
InterWest Bank and Pacific Northwest Bank, as Washington
State-chartered banks, are subject to state limitations on dividends.
Washington State law and regulations provide that state-chartered banks and
savings banks may, without the prior approval of the Washington Department of
Financial Institutions, pay dividends equal to the amount of their retained
earnings.
We cannot assure you that InterWest Bank, Pacific Northwest Bank or
National Bank of Tukwila will be able to pay dividends at past levels, or at
all, in the future. See the section entitled "Regulation and Supervision" in
our Annual Report on Form 10-K for the year ended September 30, 1999, which
is incorporated in this Prospectus by reference.
In addition to regulatory restrictions on the payment of dividends,
our bank subsidiaries are subject to certain restrictions imposed by federal
law on any extensions of credit they make to their affiliates and on
investments in stock or other securities of its affiliates. We are considered
an affiliate of our bank subsidiaries. These restrictions prevent affiliates
of our bank subsidiaries, including us, from borrowing from our bank
subsidiaries, unless the terms of the loans are not better than those offered
to other customers, and, in certain circumstances, unless various types of
collateral secure the loans. Federal law limits the aggregate amount of loans
to and investments in any single affiliate to 10% of the bank's capital and
surplus and also limits the aggregate amount of loans to and investments in
all affiliates to 20% of the bank's capital and surplus. As of September 30,
1999, approximately $16.0 million of credit was available to us under this
limitation.
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Under the prompt corrective action provisions of the Federal Deposit
Insurance Act, each of our bank subsidiaries is prohibited from making
capital distributions, including the payment of dividends, if, after making
any capital distribution, the bank subsidiary would become undercapitalized
as defined under the Federal Deposit Insurance Act. Based on the current
financial condition of our bank subsidiaries, we do not expect that this
provision will have any impact on our ability to obtain dividends from our
bank subsidiaries; however, we cannot be sure that our bank subsidiaries will
be able to pay dividends in the future. At September 30, 1999, InterWest
Bank, Pacific Northwest Bank, and Kittitas Valley Bank N.A. had the capital
to pay us $38.2 million, $10.3 million and $0.8 million, respectively, in
dividends without prior regulatory approval. At September 30, 1999, National
Bank of Tukwila had capital to pay dividends to its holding company in the
amount of $1.1 million. Subsequent to September 30, 1999, InterWest Bank
declared dividends payable to us totaling $6.0 million.
If we do not receive sufficient cash dividends from our bank
subsidiaries, then it is unlikely that we will have sufficient funds to make
payments on the junior subordinated debentures, thereby leaving insufficient
funds for the Trust to make payments to you on the capital securities.
INTERWEST BANCORP CAN DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED
DEBENTURES, CAUSING YOUR PAYMENTS UNDER THE CAPITAL SECURITIES TO STOP, WHICH
WILL HAVE TAX CONSEQUENCES TO YOU AND MAY AFFECT THE MARKET PRICE OF THE
CAPITAL SECURITIES.
We have the right, at one or more times, unless an event of default
exists under the junior subordinated debentures, to defer interest payments
on the junior subordinated debentures for up to 10 consecutive semi-annual
periods, but not beyond November 15, 2029. If we defer interest payments, the
Trust will defer paying distributions to you on your capital securities
during the deferral period. Additionally, during this period, any unpaid
distributions on the capital securities will accumulate additional
distributions at the rate of 9.875% per year, compounded semi-annually, to
the extent permitted by law. We also will be prohibited from declaring or
paying cash dividends on our common stock. For more information, please refer
to "Description of Capital Securities - Distributions."
When any deferral period ends and we pay all interest then accrued
and unpaid on the junior subordinated debentures, we may elect to begin a new
deferral period. There is no limitation on the number of times that we may
elect to begin a deferral period. See "Description of Capital Securities
- - Distributions" and "Description of Junior Subordinated Debentures - Options
to Extend Interest Payment Date."
If we exercise our right to defer payments of interest on the junior
subordinated debentures, you will be required to accrue income (as original
issue discount) in respect of the deferred stated interest allocable to your
capital securities for federal income tax purposes, which will be allocated
but not distributed to you. As a result, you will be required to recognize
income for federal income tax purposes before you receive any cash.
Furthermore, if you dispose of your capital securities prior to the record
date for the distribution payment, you will not receive, from the Trust, the
cash related to this interest income.
We do not currently intend to exercise our right to defer interest
payments on the junior subordinated debentures. However, if we exercise this
right in the future, the market price of the capital securities will probably
be affected. The capital securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest on the junior subordinated
debentures. If you sell your capital securities during a deferral period, you
may not receive the same return on your investment as someone else who
continues to hold the capital securities. As a result of our right to defer
interest payments, the market price of the capital securities, which
represent preferred beneficial interests in the Trust, may be more volatile
than the market prices of other securities that are not subject to such
deferral options.
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DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES MAY HAVE AN ADVERSE EFFECT
ON THE TRADING MARKET AND TRADING PRICE OF YOUR INVESTMENT, AND THERE MAY BE
ADVERSE TAX EFFECTS.
We have the right to dissolve the Trust at any time if such
dissolution and any distribution of the junior subordinated debentures would
not result in a taxable event to the holders of the capital securities. If we
dissolve the Trust, the Trust will be liquidated by distribution to the
holders and the common securities.
Under current federal income tax laws, a distribution of junior
subordinated debentures to you on the dissolution of the Trust would not be a
taxable event to you. Nevertheless, if the Trust is classified for federal
income tax purposes as an association taxable as a corporation at the time it
is dissolved, the distribution of junior subordinated debentures to you would
be a taxable event. In addition, if there is a change in law, a distribution
of junior subordinated debentures to you on the dissolution of the Trust
could also be a taxable event.
Your investment in the capital securities may decrease in value if
the junior subordinated debentures are distributed to you in liquidation of
the Trust. We cannot predict the liquidity of the market price or market
prices for the junior subordinated debentures that may be distributed.
Accordingly, the junior subordinated debentures that you receive upon a
distribution, or the capital securities you hold pending such distribution,
may trade at a discount to the price that you paid to purchase the capital
securities.
Because you may receive the junior subordinated debentures, you must
also make an investment decision with regard to the junior subordinated
debentures. You should carefully review all of the information regarding the
junior subordinated debentures contained in this Prospectus. Under "Certain
Federal Income Tax Consequences - Receipt of Junior Subordinated Debentures
or Cash Upon Liquidation of the Trust," we discuss applicable federal income
tax consequences of a distribution of the junior subordinated debentures.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of capital securities, you will have limited voting
rights. You can vote only in the event certain terms of the capital
securities are modified or on the removal of the property and Delaware
trustees of the Trust upon a limited number of events. We, along with the
property trustee and the administrative trustees, may amend the trust
agreement without your consent, even if these actions adversely affect your
interests, to ensure that the Trust:
- will continue to be classified as a grantor trust for federal
income tax purposes; and
- will not be required to register as an "investment company"
under the Investment Company Act of 1940.
You will not have any voting rights regarding InterWest Bancorp or
the administrative trustees or any matters submitted to a vote of our
stockholders. See "Description of Capital Securities - Voting Rights;
Amendment of the Trust Agreement" and "Removal of Issuer Trustees" for more
information on your limited voting rights.
THE LIMITED COVENANTS RELATING TO THE CAPITAL SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES DO NOT PROTECT YOU.
The covenants in the governing documents relating to the capital
securities and the junior subordinated debentures are limited. As a result,
the governing documents do not protect you in the event of an adverse change
in our financial condition or results of operations. In addition, the
governing
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documents do not limit our ability, or the ability of our subsidiaries, to
incur additional debt. You should not consider the terms of the governing
documents to be a significant factor in evaluating whether we will be able to
comply with our obligations under the junior subordinated debentures or the
guarantee.
TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The capital securities may trade at a price that does not reflect
the value of the accrued but unpaid interest on the underlying junior
subordinated debentures. If you dispose of your capital securities between
the record dates for payments on the capital securities, you may have adverse
tax consequences. Under these circumstances, you will be required to include
accrued but unpaid interest on the junior subordinated debentures allocable
to the capital securities through the date of disposition in your income. If
interest on the junior subordinated debentures is included in income under
the original issue discount provisions, you would add this amount to your
adjusted tax basis in your share of the underlying junior subordinated
debentures deemed disposed. If your selling price is less than your adjusted
tax basis, which will include all accrued but unpaid original issue discount
interest included in your income, you could recognize a capital loss which
cannot be applied to offset ordinary income for federal income tax purposes,
subject to exceptions. See "Certain Federal Income Tax Consequences - Interest
Income and Original Issue Discount" and "Sales or Redemptions of Capital
Securities" for more information on possible adverse tax consequences to you.
THERE IS NO ESTABLISHED PUBLIC MARKET FOR THE CAPITAL SECURITIES AND THEY
WILL BE SUBJECT TO RESTRICTIONS ON RESALE.
The capital securities will be subject to a limitation on transfer to
only amounts having a liquidation amount of not less that $100,000 (100
capital securities). There is no existing market for the capital securities
and there can be no assurance as to:
- the liquidity of any markets that may develop for the capital
securities or, if issued, the exchange capital securities;
- the ability of the holders to sell the capital securities or,
if issued, the exchange capital securities; or
- at what price holders of the capital securities, or, if
issued, the exchange capital securities, will be able to sell
their capital securities or the exchange capital securities,
as the case may be.
Future trading prices of the capital securities will depend on many
factors including, among others, prevailing interest rates, our operating
results and the market for similar securities. The initial purchasers of the
Series A capital securities have informed the Trust and us that they are
making a market in the Series A capital securities and intend to make a market
in the Series B capital securities. However, the initial purchasers are not
obligated to do so and any such activity may be terminated at any time without
notice to the holders of capital securities. In addition, such market making
activity will be subject to the limits of the Securities Act and may be
limited during the pendency of the exchange offer. See "The Exchange Offer -
Resale of Series B Capital Securities."
RISKS RELATING TO INTERWEST BANCORP
DIFFICULTY IN INTEGRATING ACQUIRED BUSINESSES MAY ADVERSELY AFFECT OUR FUTURE
FINANCIAL RESULTS.
Managing growth through acquisitions is a difficult process that
includes integration and training of personnel, developing common products
and pricing, combining office and operations policies and
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procedures, data processing conversions and various other matters. While we
have completed five acquisitions since January 1, 1998, we have not yet
converted to a common data processing system nor have we yet to fully
integrate various operating policies and procedures. Additionally, we
currently conduct business using multiple names and charters. As such, we
have not yet realized operating efficiencies available from eliminating these
redundancies and, as a result, our marketing and business development
activities have been slowed. Our operating efficiency ratio was 65.5 percent
for the quarter ended September 30, 1999, compared to 59.1 percent for the
quarter ended June 30, 1999 and 57.5 percent for the quarter ended September
30, 1998.
We have selected one data processing system and are planning for a
complete integration of various policies and procedures into a common
operating platform. This is part of our plan to merge multiple charters that
we operate under today and to be recognized and identified as one brand
within our markets. We have intentionally delayed the integration until work
associated with Year 2000 activities has been completed, as our management
and support personnel will have to allocate increased time to the integration
process. We currently anticipate that our banking subsidiaries will be
consolidated under one charter by early 2001. However, failure to convert all
of our bank subsidiaries to a common data processing system would delay the
consolidation of our banking subsidiaries.
Any future acquisitions or mergers by InterWest or its banking
subsidiaries are subject to approval by the appropriate federal and state
banking regulators. The banking regulators evaluate a number of criteria in
making their approval decisions, such as (1) safety and soundness guidelines;
(2) compliance with the Community Reinvestment Act; (3) compliance with
consumer affairs and reporting standards; and (4) anti-competitive issues
with the proposed transaction. If the banking regulators raise concerns about
any of these criteria at the time a regulatory application is filed, the
banking regulators may deny, delay or condition their approval of a proposed
transaction.
We have grown, and intend to continue to grow, through acquisitions
of banks and other financial institutions. After these acquisitions, we may
experience adverse changes in results of operations of acquired entities,
unforeseen liabilities, asset quality problems of acquired entities, loss of
key personnel, loss of customers because of change of identity, difficulties
in integrating data processing and operational procedures and deterioration
in local economic conditions. These various acquisition risks can be
heightened in larger transactions.
We have taken steps to address the issues resulting from recent
acquisitions and have developed a plan to integrate acquired businesses.
However, we cannot assure you that we will be successful in implementing the
plan or in obtaining regulatory approvals necessary as part of our plan.
Additionally, we may experience these issues in connection with future
acquisitions. These integration issues may result in disruption of service
and/or additional expense.
WE MAY NOT BE ABLE TO FINANCE FUTURE ACQUISITIONS ON FAVORABLE TERMS OR FIND
SUITABLE ACQUISITION CANDIDATES.
Our ability to make future acquisitions depends in part on our
capital position and, in the case of cash acquisitions, on our cash assets or
ability to acquire cash. We may need to obtain additional debt and equity
capital in pursuing our business strategy. We cannot assure you that we will
be successful in obtaining future financing on satisfactory terms. Our access
to the capital markets or the costs of this capital could be affected by
various factors including:
- changes in interest rates;
- general economic conditions; and
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- the perception in the capital markets of our business, results
of operations, leverage, financial condition and business
prospects.
Each of these factors depends on economic, financial, competitive and other
conditions beyond our control. In addition, covenants under our future debt
securities and credit facilities may significantly restrict our ability to
incur additional indebtedness and to issue preferred stock.
Further, acquisition candidates may not be available in the future
on favorable terms. There are only a limited number of suitable acquisition
candidates within our existing or potential market areas, and many of these
candidates would also be attractive acquisition candidates for other
financial institutions. Our ability to grow through acquisition could
therefore be significantly constrained. This competition is likely to affect
our ability to make acquisitions, increase the price that we pay for certain
acquisitions and increase our costs in analyzing possible acquisitions.
Our future acquisitions will also be subject to regulatory approval.
We cannot assure you that we will succeed in obtaining the required
regulatory approvals or will have the necessary regulatory capital to acquire
financial institutions or branches.
OUR FOCUS ON COMMERCIAL BANKING MAY HAVE AN ADVERSE IMPACT ON OUR RESULTS OF
OPERATIONS.
We began to implement a strategy in 1995 to increase our
commercial banking activities. This resulted because of market conditions
associated with compressed margins in residential lending and opportunities
created by acquisition of other financial institutions that were once
headquartered in the Pacific Northwest. Our strategy includes emphasis on
commercial real estate mortgages, construction lending and commercial
lending, and less emphasis on originating and selling single family mortgage
loans. We have added management personnel experienced in commercial banking
and hired several experienced commercial loan officers. Also, in 1998 we
acquired Pacific Northwest Bank which specializes in commercial banking and
has several executives with significant experience and relationships in
commercial banking. Commercial real estate mortgages, construction loans and
commercial loans outstanding represented 58.3 percent of the loan portfolio
as of September 30, 1999 compared to 44.6 percent as of September 30, 1998.
Our intention is to increase non-interest income (for example
investment product fees and insurance commissions) as part of this strategy.
However, recently non-interest income has decreased due to increases in
interest rates, which has reduced our opportunities to originate and sell
single family mortgage loans. Originating and selling single family mortgages
has been a significant source of revenue in the past. Developing new sources
of non-interest income will take time. Accordingly, we cannot guarantee that
we will be able to replace revenues we have experienced previously from
originating and selling single family mortgages.
While we have made much progress in implementing our strategy, it
is not yet complete and accordingly, we cannot assure you that our emphasis
on commercial banking activities will be successful or that we will achieve
the increase in revenues anticipated by our strategy.
As we implement our strategy, we will have different credit risks
associated with our increased emphasis on commercial real estate and
commercial lending. As a result, repayment on these loans may be subject to
conditions in the real estate market or economy to a greater extent than
single family residential real estate loans. Commercial real estate mortgage
loans are generally larger and involve greater risks than residential
mortgage loans because payments on loans are secured by income properties
which are dependent upon the successful operation or management of the
property. Real estate construction loans may involve additional risks because
loan funds are collateralized by the project under construction which is of
uncertain value prior to completion, delays may arise from labor problems,
material shortages may be experienced and other unpredictable contingencies
may occur.
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Commercial lending has increased risks as a result of dependence on income
production for future repayment, and in certain circumstances the lack of
tangible collateral.
While recently we have experienced increased net interest margin
primarily as a result of changing the composition of the loan portfolio, we
face the risk of diminishing net interest margins for commercial lending due
to competition in the markets we serve.
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE FAIL TO EFFECTIVELY MANAGE OUR
CREDIT RISK.
Originating and underwriting loans is integral to the success of our
business. This business requires us to take "credit risk," which is the risk
of losing principal and interest income because borrowers fail to repay loans.
Collateral values and the ability of borrowers to repay their loans
may be affected at any time by factors such as:
- a downturn in the local economies in which we operate or
the national economy;
- a downturn in one or more of the business sectors in which our
customers operate; or
- a rapid increase in interest rates.
We have adopted underwriting and credit monitoring procedures and
credit policies, including the establishment and review of the allowance for
credit losses, that we believe are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying our credit portfolio. Such policies and procedures, however, may
not prevent unexpected losses that could materially adversely affect our
business.
Our levels of past due and non-performing loans have increased since
1994. Non accrual loan balances were $10.9 million as of September 30, 1999,
compared to $8.2 million as of September 30, 1998, $5.1 million as of
September 30, 1997 and $3.8 million as of September 30, 1996. We expect this
trend to continue as we further expand our commercial banking activities and
expand into new geographic and product markets.
LOSS OF KEY MANAGEMENT PERSONNEL MIGHT REDUCE OUR GROWTH OR PROFITABILITY.
We will depend on our management team to continue to implement our
strategy of focusing on commercial banking while maintaining asset quality
and operational standards, as well as integrating acquired businesses. We are
especially dependent on a limited number of key management personnel,
including Barney R. Beeksma, Chairman of the Board; Stephen M. Walden, Chief
Executive Officer, President and Vice Chairman; Patrick M. Fahey, Vice
Chairman/Commercial Banking; H. Glenn Mouw, Executive Vice President and
Treasurer; Clark W. Donnell, Executive Vice President; and Kenneth G. Hulett,
Executive Vice President. The loss of key management personnel, because of
death or other reasons, might slow our growth or reduce our profitability. In
this respect, Mr. Fahey, our Vice Chairman/Commercial Banking, recently
announced his decision to retire from his position as President and Chief
Executive Officer of Pacific Northwest Bank effective July 1, 2000. Mr. Fahey
will, however, continue as Chairman of Pacific Northwest Bank's Board of
Directors and will remain a member of our Board of Directors and of our
Executive Committee. Since we currently anticipate that our banking
subsidiaries will be consolidated under one charter by early 2001, we do not
anticipate filling Mr. Fahey's position as President and Chief Executive
Officer of Pacific Northwest Bank.
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OUR BUSINESS MAY BE ADVERSELY AFFECTED BY DOWNTURNS IN THE LOCAL ECONOMIES ON
WHICH WE DEPEND.
We do business in several different non-metropolitan communities,
some of which are economically linked because of geographic proximity or
significantly impacted by a small number of significant employers, while
other areas may be influenced by different economic variables. For example,
our markets in Wenatchee and Ellensburg, and to some extent Yakima, are part
of the central Washington economy. Economic activity in central Washington is
not closely linked to our western Washington branches. The different areas we
serve have diverse, and to some extent independent, economic characteristics,
strengths and weaknesses, although all of these depend to various degrees on
agriculture, small business, and construction and, in some cases, a small
number of significant employers.
The areas we serve include:
- the western Washington market, including the Interstate 5
corridor from the Canadian border south to Olympia and the
Olympic Peninsula. This market has recently benefited from
home construction and a growing high-technology and service
economy, resulting from rapid population increases; and
- the central Washington market, including Wenatchee, Ellensburg
and Yakima, which is characterized by an agricultural base and
less rapid population growth.
Given the varied economies of the market areas we serve, our management faces
a challenge in effectively managing our diverse loan portfolio.
Our profits depend on providing products and services to customers
in this local region. An increase in unemployment, a decrease in real estate
values or an increase in interest rates could weaken the local economy. With
a weaker local economy,
- customers may not want or need our products and services;
- borrowers may be unable to repay their loans;
- the value of the collateral securing our loans to borrowers
may decline; and
- the overall quality of our loan portfolio may decline.
Historically, originating residential mortgage loans has been a
significant source of our revenues. If customers in the local area do not
want residential mortgage loans, our revenues may decrease. Also, our losses
on loans may increase if borrowers are unable to make payments on their
loans. In addition, weakness in one of our market areas, or in one economic
sector, could depress our overall earnings and financial condition.
WE FACE COMPETITION FROM OTHER BANKS THAT MAY BE MORE TECHNOLOGICALLY
ADVANCED THAN WE ARE.
Changes in technology, mostly from the growing use of computers and
computer-based technology, pose competitive challenges to community banks
such as ours. Large banking institutions typically offer on-line banking and
other banking products and services over the Internet, including deposit
services and mortgage loans, and have the ability to devote significant
resources to developing and maintaining such technology-based services. Other
bank competitors, such as brokerage houses, also offer competitive services
on-line. Some new banking competitors offer all of their services on-line.
Customers who bank by computer or by telephone need never set foot in a bank
branch. Our high service philosophy emphasizes face-to-face contact with
tellers, loan officers, and other bank employees. We believe our personal
approach to banking is a source of strength, one that will remain popular in
the non-metropolitan communities that are its natural marketplace. However,
customer preferences may change, and the rapid growth of on-line banking
could, at some point, render our personal, branch-based approach obsolete. We
have partially addressed this risk by offering limited on-line banking
services to our
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customers, and by continuing to provide 24-hour telephone banking services.
We cannot assure you, however, that these efforts will be successful in
preventing the loss of customers to competitors.
OUR OPERATIONS AND PROFITABILITY MAY BE ADVERSELY AFFECTED IF WE, OR CERTAIN
PERSONS WITH WHOM WE DO BUSINESS, FAIL TO ADEQUATELY ADDRESS THE YEAR 2000
ISSUE.
Problems associated with software and computer systems' use of two
digits to define the year, referred to as "Year 2000" issues, could harm our
business. Although to date we are not aware of any significant Year 2000
issues relating to our principal internally developed programs and systems,
or systems provided to us by others, and although January 1, 2000 is past, it
is possible that problems have gone undetected, or that other dates in the
Year 2000, such as February 29, 2000, may further affect computer software
and systems. We are currently unable to assess completely whether our
internal systems or the internal systems of vendors of critical software and
systems, third-party service providers, and customers have been affected by
the Year 2000 date change or whether such systems will be affected by other
dates occurring after January 1, 2000.
These problems could disrupt our business and require us to incur
significant, unanticipated expenses to remedy them. They could also result in
claims and litigation against us, which could subject us to significant costs
and could require substantial attention from our management. Similarly, our
business could be severely harmed if vendors of critical software and
systems, third-party service providers, and customers encounter Year 2000
issues.
USE OF PROCEEDS
Neither InterWest Bancorp nor InterWest Capital Trust I will receive
any cash proceeds from the issuance of the Series B capital securities. The
Series A capital securities surrendered in exchange for the Series B capital
securities will be retired and canceled. The Trust invested all of the
proceeds from the sale of its Series A capital securities and common
securities in the debentures. We currently are using, or intend to use, the
net proceeds from the sale of the debentures for general corporate purposes,
such as the repurchase of our common stock and capital contributions to our
banking subsidiaries.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as our
subsidiary, and, accordingly, the accounts of the Trust are included in our
consolidated financial statements. The capital securities are included with
borrowings and presented as a separate line item in our consolidated balance
sheet under the caption "Guaranteed Preferred Beneficial Interests in
Subordinated Debt," and appropriate disclosures about the capital securities,
the guarantee and the junior subordinated debentures will be included in the
notes to consolidated financial statements. For financial reporting purposes,
we will record distributions payable on the capital securities as an interest
expense in the consolidated statements of operations.
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CAPITALIZATION
The following table sets forth our consolidated capitalization at
December 31, 1999. You should read this table in conjunction with our
consolidated financial statements and notes, which are incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
(IN THOUSANDS)
<S> <C>
Long-term borrowings
FHLB advances due beyond one year (1) $561,200
Term reverse repurchase agreements due beyond one year 73,000
Guaranteed preferred beneficial interests in
subordinated debt (2) 40,000
------
Total long-term borrowings $674,200
========
Common stock, no par or stated value; 30,000,000 shares
authorized, 15,800,377 outstanding (3) $ 33,297
Accumulated other comprehensive loss (4) (20,640)
Debt related to employee stock ownership plan (2,980)
Retained earnings 162,043
Total shareholders' equity $171,720
========
Total capitalization $845,920
========
</TABLE>
(1) Certain FHLB advances and term repurchase agreements contractually due
beyond one year have an option whereby the issuer can call the long
term borrowing due at anytime prior to the expiration of the option
date. The amounts of such advances and term repurchase agreements with
option dates that expire within one year are $435 million and $73
million, respectively.
(2) As described herein, the sole asset of the Trust, which is our
subsidiary, is the aggregate principal amount of the fixed rate junior
subordinated debentures, which will mature on November 15, 2029. We
will own all of the common securities issued by the Trust. See
"Description of Series B Securities - Description of Debentures."
(3) This amount includes shares reserved for issuance in connection with
completed acquisitions, but does not include shares held by our
Employee Stock Ownership Plan that have been pledged as security for
our guarantee of Employee Stock Ownership Plan debt.
(4) Includes only net unrealized loss on securities available for sale, net
of tax.
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<PAGE>
REGULATORY CAPITAL
Under regulations adopted by the Federal Reserve Board, InterWest
Bancorp is required to maintain Tier 1 capital and total capital (Tier 1 plus
Tier 2 capital) of 4.0% and 8.0%, respectively, of our risk weighted assets,
and Tier 1 capital of 4.0% of our average total assets (calculated quarterly).
At December 31, 1999, our Tier 1 leverage capital, Tier 1 risk-based
capital and total capital amounted to $212.6 million (7.93% of average
adjusted total assets), $212.6 million (11.56% of risk weighted assets) and
$227.8 million (12.39% of risk weighted assets), respectively, exceeding all
our minimum regulatory requirements. For additional information of the
regulatory capital requirements applicable to us, see "Regulation and
Supervision."
The following tables set forth our regulatory capital and regulatory
capital ratios. See "Regulation and Supervision."
<TABLE>
<CAPTION>
RISK BASED
-------------------------------------------
TIER 1
LEVERAGE TIER 1 TOTAL
CAPITAL CAPITAL CAPITAL
-------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Shareholders' equity $171,720 $171,720 $171,720
Guaranteed preferred beneficial interests in subordinated debt (1) 40,000 40,000 40,000
Unrealized losses on securities available for sale 20,640 20,640 20,640
Non-allowable capital:
Intangible assets (19,756) (19,756) (19,756)
Supplemental capital:
Allowance for loan losses --- --- 15,183
Regulatory capital $212,604 $212,604 $227,787
======== ======== ========
</TABLE>
- -----------------------
(1) Under Federal Reserve Board regulations, the guaranteed preferred
beneficial interests in subordinated debt cannot represent more than
25% of Tier 1 capital.
<TABLE>
<CAPTION>
RISK BASED
-------------------------------------------
TIER 1
LEVERAGE TIER 1 TOTAL
CAPITAL CAPITAL CAPITAL
-------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Regulatory capital $212,604 $212,604 $227,787
7.93% 11.56% 12.39%
Regulatory requirement $107,212 $73,553 $147,106
4.00% 4.00% 8.00%
Excess above required ratio $105,392 $139,051 $80,681
3.93% 7.56% 4.39%
</TABLE>
The amount of average adjusted total assets for the Tier 1 leverage
ratio was approximately $2.7 billion. Risk-weighted assets used for the
risk-based capital ratios amounted to approximately $1.8 billion, assuming
the proceeds from the sale of the junior subordinated debentures are invested
in assets having a risk weighting of 100%.
20
<PAGE>
INTERWEST BANCORP, INC.
GENERAL
InterWest Bancorp is a bank holding company incorporated in the
state of Washington in 1994 and regulated by the Federal Reserve Board. Our
business consists primarily of holding 100% of the capital stock of InterWest
Bank, Pacific Northwest Bank and National Bank of Tukwila. As of September
30, 1999, InterWest Bancorp and its subsidiaries had consolidated total
assets of $2.6 billion, total loans of $1.6 billion, total deposits of $1.6
billion and shareholders' equity of $165.3 million.
Presently, we conduct our business through our subsidiaries' 55
full-service branch offices in western and central Washington State. These
offices are located in towns, small cities, suburbs and metropolitan markets.
Through our banking subsidiaries, we offer a wide range of financial services
to individuals and businesses. Our financial services include the banking
activities of accepting deposits from individuals and businesses and
originating residential loans, consumer loans and certain types of commercial
real estate loans, and commercial loans. We are committed to growth in
commercial banking and expansion in Washington State.
INTERWEST BANK. InterWest Bank is a Washington State-chartered
savings bank. InterWest Bank was organized in 1956 in the community of Oak
Harbor on Whidbey Island. On July 28, 1995, InterWest Bank completed a
reorganization, in which InterWest Bank became a wholly-owned subsidiary of
InterWest Bancorp, Inc., and the shareholders of InterWest Bank became
shareholders of InterWest Bancorp, Inc. InterWest Bank is a
community-oriented bank that provides a wide range of financial services for
individual and business customers. InterWest Bank is currently in the process
of transforming from a traditional thrift to a financial institution focused
on promoting commercial banking products and services while continuing to
serve its retail banking customers. InterWest Bank conducts its business
through 40 full-service branch offices located in the northwestern and
north-central parts of the state of Washington and one lending office located
in Everett, Washington. As of September 30, 1999, InterWest Bank had total
assets of $2.1 billion and loans receivable of $1.2 billion.
PACIFIC NORTHWEST BANK. Pacific Northwest Bank is a state-chartered
bank that we acquired on June 15, 1998. Since its acquisition, three other
banks, First National Bank of Port Orchard, Pioneer National Bank and
Kittitas Valley Bank, N.A., have been merged into Pacific Northwest Bank.
Pacific Northwest Bank primarily engages in commercial banking activities,
serving individuals and small- to medium-sized businesses. Pacific Northwest
Bank conducts its business through 14 full-service branch offices located in
the metropolitan Seattle area, the Kitsap Peninsula and south-central parts
of Washington State. As of September 30, 1999, Pacific Northwest Bank had
total assets of $424.5 million and loans receivable of $341.6 million.
In keeping with our consolidation strategy, we merged Kittitas
Valley Bank, N.A. into Pacific Northwest Bank on January 3, 2000. As of
September 30, 1999, Kittitas Valley Bank had total assets of $47.0 million
and loans receivable of $30.1 million.
NATIONAL BANK OF TUKWILA. National Bank of Tukwila is a national
bank that we acquired on October 1, 1999. National Bank of Tukwila offers a
full line of commercial banking services to individuals and small- to
medium-sized businesses, with a strong emphasis on deposit services and
commercial lending. National Bank of Tukwila conducts its business through a
single full-service office in south King County, Washington.
Financial and other information relating to InterWest Bancorp is set
forth in our 1999 Annual Report on 10-K and Quarterly Reports on Form 10-Q,
which are incorporated in this Prospectus by
21
<PAGE>
reference. You may obtain copies of these documents as described under
"Incorporation of Certain Documents by Reference."
OUR GROWTH STRATEGY
At September 30, 1995, InterWest Bank had assets of $1.3 billion and
had net income of $11.8 million for the fiscal year then ended and did
business through 31 branch offices. In 1995 we began to implement our
strategy to increase our emphasis on commercial banking and to become a
statewide institution. We believe our growth in earnings in recent years is,
in part, attributable to our strategy of increasing our commercial banking
business and expanding operations throughout Washington State. The
acquisition of Central Bancorporation in August of 1996 was a significant
step in the implementation of this strategy. We have completed the
acquisition of seven commercial banks since 1996, which has added commercial
banking assets of approximately $668 million, measured as of each acquisition
date. Additionally, we have opened four de novo branches in western
Washington during that time period as part of increasing our presence along
the Interstate 5 corridor. We believe that our growth strategy will allow us
to:
- achieve greater diversification of our markets and products;
- enhance shareholder value by more effectively leveraging our
equity capital; and
- more effectively position ourselves to take advantage of
acquisition opportunities in the rapidly changing financial
services industry.
We recognize that our growth will have to come primarily from
expansion into new markets. In recognition of these factors, our growth
strategy emphasizes:
- increasing commercial real estate and commercial lending ;
- acquiring commercial banks;
- de novo branching;
- providing non-deposit investment products; and
- improving technology to enhance services and realizing
operational efficiencies.
We intend to seek continued controlled growth of the organization
through selective acquisitions of banks. The objectives of such acquisitions
will be to:
- increase the opportunity for quality earning asset growth,
deposit generation and fee-based income opportunities;
- diversify the earning assets portfolio and core deposit base
through expansion into new geographic markets within
Washington State;
- have an adequate capital position after the acquisition;
- improve the potential profits from our combined operations
through economies of scale; and
- enhance shareholder value measured through increasing the
return on equity and/or increasing earnings per share.
REGULATION AND SUPERVISION
Almost all of our assets consist of our investment in InterWest
Bank, Pacific Northwest Bank and National Bank of Tukwila, our principal bank
subsidiaries. Thus, our ability to pay principal of, and interest on, the
junior subordinated debentures depends almost entirely on cash dividends we
receive from our bank subsidiaries.
Our bank subsidiaries may not pay dividends to us if, after paying
those dividends, they would fail to meet the required minimum levels under
risk-based capital guidelines and the minimum leverage
22
<PAGE>
ratio requirements. The subsidiaries must have the approval of federal bank
regulators if a dividend in any year would cause the total dividends for that
year to exceed certain regulatory minimums. At September 30, 1999,
approximately $49.3 million was available for the payment of dividends to us
by subsidiaries we owned at that date without regulatory approval. Payment of
dividends by a banking subsidiary may be restricted at any time at the
discretion of the appropriate regulator if it deems the payment to constitute
an unsafe and/or unsound banking practice or necessary to maintain adequate
capital.
Federal law and regulations limit the amount of dividends that
national banks may distribute. National Bank of Tukwila, a national banking
association, is limited to paying dividends equal to the bank's total net
income for the current year combined with the bank's retained net income for
the preceding two years, less any required transfers to surplus or a fund for
the retirement of any preferred stock. Any greater dividend must be approved
by the Office of the Comptroller of the Currency.
InterWest Bank and Pacific Northwest Bank, as Washington
State-chartered banks, are subject to state limitations on dividends.
Washington State law and regulations provide that state-chartered banks and
savings banks may, without the prior approval of the Washington Department of
Financial Institutions, pay dividends equal to the amount of their retained
earnings.
If we do not receive sufficient cash dividends from our bank
subsidiaries, it is unlikely that we will have sufficient funds to make
payments on the junior subordinated debentures. See "Description of Junior
Subordinated Debentures."
The U.S. Congress recently passed legislation intended to modernize
the financial services industry by establishing a comprehensive framework to
permit affiliations among commercial banks, insurance companies and other
financial service providers. The legislation is being forwarded to the
President for his approval. Generally, the legislation would:
- repeal the historical restrictions and eliminate many federal
and state barriers to affiliations among banks and securities
firms, insurance companies and other financial service
providers,
- provide a uniform framework for the activities of banks,
savings institutions and their holding companies,
- broaden the activities that may be conducted by national banks
and banking subsidiaries of bank holding companies,
- provide an enhanced framework for protecting the privacy of
consumers' information,
- adopt a number of provisions related to the capitalization,
membership, corporate governance and other measures designed
to modernize the Federal Home Loan Bank system,
- modify the laws governing the implementation of the Community
Reinvestment Act, and
- address a variety of other legal and regulatory issues
affecting both day-to-day operations and long-term activities
of financial institutions, including the functional regulation
of bank securities activities.
Bank holding companies would be permitted to engage in a wider
variety of financial activities than permitted under current law,
particularly with respect to insurance and securities activities. In
addition, in a change from current law, bank holding companies will be in a
position to be owned, controlled or acquired by any company engaged in
financially related activities.
23
<PAGE>
We do not believe that the proposed legislation, as publicly
reported, would have a material adverse effect on our operations in the near
term. However, to the extent the legislation permits banks, securities firms
and insurance companies to affiliate, the financial services industry may
experience further consolidation. This could result in a growing number of
larger financial institutions that offer a wider variety of financial
services that we currently offer and that can aggressively compete in the
markets we currently serve.
Other statutes and regulations that affect us and the subsidiaries
are summarized in "Item 1. Business - Supervision and Regulation" of our Annual
Report on Form 10-K for the fiscal year ended September 30, 1999, which is
incorporated into this Prospectus by reference.
INTERWEST CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
upon the filing of a certificate of trust with the Delaware Secretary of
State. The Trust exists for the exclusive purposes of:
- issuing and selling the capital securities and the common
securities;
- using the proceeds from the sale of the capital securities and
the common securities to acquire the junior subordinated
debentures issued by us; and
- engaging in only those other activities necessary, advisable
or incidental thereto, including the exchange offer.
The junior subordinated debentures are the sole assets of the Trust,
and, accordingly, payments under the junior subordinated debentures are the
sole revenues of the Trust. We own all of the common securities of the Trust.
The common securities rank PARI PASSU, and payments will be made thereon pro
rata, with the capital securities, except that upon the occurrence and
continuance of an event of default under the trust agreement resulting from a
debenture event of default, our rights as holder of the common securities to
payments in respect of distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of
the capital securities. See "Description of Capital Securities -
Subordination of Common Securities." We have acquired common securities in a
liquidation amount equal to at least 3% of the total capital of the Trust.
The Trust has a term of approximately 35 years, but may dissolve earlier as
provided in its Amended and Restated Declaration of Trust, referred to in
this Prospectus as the trust agreement. The Trust's business and affairs are
conducted by the issuer trustees, each of whom we appoint as holder of the
common securities. The issuer trustees for the Trust are Wilmington Trust
Company, as the property trustee and as the Delaware trustee, and three
administrative trustees who are our officers. Wilmington Trust Company, as
property trustee, acts as sole Indenture trustee under the Indenture.
Wilmington Trust Company also acts as guarantee trustee under the guarantee.
See "Description of Series B Securities - Description of Guarantee" and
"- Description of Debentures." The holder of the common securities of the Trust
or, if an event of default under the trust agreement has occurred and is
continuing, the holders of not less than a majority in liquidation amount of
the capital securities will be entitled to appoint, remove or replace the
property trustee and/or the Delaware trustee. In no event will the holders of
the capital securities have the right to vote to appoint, remove or replace
the administrative trustees; such voting rights will be vested exclusively in
the holder of the common securities. The duties and obligations of each
issuer trustee are governed by the trust agreement. As issuer of the junior
subordinated debentures, we will pay all fees, expenses, debts and
obligations (other than the payment of principal of, and premium and interest
on, the capital securities) related to the Trust and the exchange offer and
will pay, directly or indirectly, all ongoing costs, expenses and liabilities
of the Trust. The principal executive office of the Trust is c/o InterWest
Bancorp, Inc., 275 Southeast Pioneer Way, Oak Harbor, WA 98277 and its
telephone number is (360) 679-4181.
24
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Series A capital securities,
InterWest Bancorp and InterWest Capital Trust I entered into the Registration
Rights Agreement with the initial purchasers, pursuant to which InterWest
Bancorp and InterWest Capital Trust I agreed to file and to use their
reasonable best efforts to cause to be declared effective by the Securities
and Exchange Commission a registration statement with respect to the exchange
of the Series A capital securities for capital securities with terms
identical in all material respects to the terms of the Series A capital
securities. A copy of the Registration Rights Agreement has been filed as an
Exhibit to the Registration Statement of which this Prospectus is a part.
The exchange offer is being made to satisfy the contractual
obligations of InterWest Bancorp and InterWest Capital Trust I under the
Registration Rights Agreement. The form and terms of the Series B capital
securities are the same as the form and terms of the Series A capital
securities except that the Series B capital securities have been registered
under the Securities Act and therefore will not be subject to certain
restrictions on transfer under federal and state securities laws and will not
provide for any increase in the distribution rate thereon. In that regard,
the Series A capital securities provide, among other things, that, if a
registration statement relating to the exchange offer has not been filed by
April 9, 2000 and declared effective by May 9, 2000, the distribution rate
borne by the Series A capital securities will increase by 0.25% per annum
until the exchange offer is consummated. Upon consummation of the exchange
offer, holders of Series A capital securities will not be entitled to any
increase in the distribution rate thereon or any further registration rights
under the Registration Rights Agreement.
The exchange offer is not being made to, nor will InterWest Capital
Trust I accept tenders for exchange from, holders of Series A capital
securities in any jurisdiction in which the exchange offer or the acceptance
thereof would not be in compliance with the securities or blue sky laws of
such jurisdiction.
Unless the context requires otherwise, the term "holder" with
respect to the exchange offer means any person in whose name the Series A
capital securities are registered on the books of InterWest Capital Trust I
or any other person who has obtained a properly completed bond power from the
registered holder, or any participant in the DTC system whose name appears on
a security position listing as the holder of such Series A capital securities
and who desires to deliver such Series A capital securities by book-entry
transfer at DTC. In addition, the term "person" shall refer to a natural
person or any legally existing entity.
Pursuant to the exchange offer, InterWest Bancorp will exchange as
soon as practicable after the date hereof, the Series A guarantee for the
Series B guarantee and the Series A debentures, in an amount corresponding to
the Series A capital securities accepted for exchange, for a like aggregate
principal amount of the Series B debentures. The Series B guarantee and the
Series B debentures have been registered under the Securities Act.
25
<PAGE>
TERMS OF THE EXCHANGE OFFER
InterWest Capital Trust I hereby offers, upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying letter
of transmittal, to exchange up to $40,000,000 aggregate liquidation amount of
Series B capital securities for a like aggregate liquidation amount of Series
A capital securities properly tendered on or prior to the expiration date and
not properly withdrawn in accordance with the procedures described below.
InterWest Capital Trust I will issue, promptly after the expiration date, an
aggregate liquidation amount of up to $40,000,000 of Series B capital
securities in exchange for a like aggregate liquidation amount of outstanding
Series A capital securities tendered and accepted in connection with the
exchange offer. Holders may tender their Series A capital securities in whole
or in part in a liquidation amount of not less than $100,000 or any integral
multiple of $1,000 liquidation amount in excess thereof; provided, however,
that if any Series A capital securities are tendered in exchange for part,
the untendered liquidation amount must be $100,000 or any integral multiple
of $1,000 in excess thereof.
The exchange offer is not conditioned upon any minimum liquidation
amount of Series A capital securities being tendered. As of the date of this
Prospectus, $40,000,000 aggregate liquidation amount of the Series A capital
securities is outstanding.
Holders of Series A capital securities do not have any appraisal or
dissenters' rights in connection with the exchange offer. Series A capital
securities which are not tendered for or are tendered but not accepted in
connection with the exchange offer will remain outstanding and be entitled to
the benefits of the Declaration of Trust, but will not be entitled to any
further registration rights under the Registration Rights Agreement.
If any tendered Series A capital securities are not accepted for
exchange because of an invalid tender, the occurrence of certain other events
set forth herein or otherwise, certificates for any such unaccepted Series A
capital securities will be returned, without expense, to the tendering holder
thereof promptly after the expiration date.
Holders who tender Series A capital securities in connection with
the exchange offer will not be required to pay brokerage commissions or fees
or, subject to the instructions in the letter of transmittal, transfer taxes
with respect to the exchange of Series A capital securities in connection
with the exchange offer. InterWest Bancorp will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
exchange offer. See "- Fees and Expenses."
Neither the Board of Directors of InterWest Bancorp nor any Trustee
of InterWest Capital Trust I makes any recommendation to holders of Series A
capital securities as to whether to tender or refrain from tendering all or
any portion of their Series A capital securities pursuant to the exchange
offer. In addition, no one has been authorized to make any such
recommendation. Holders of Series A capital securities must make their own
decision whether to tender pursuant to the exchange offer and, if so, the
aggregate amount of Series A capital securities to tender based on such
holders own financial position and requirements.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date is 5:00 p.m., New York City time, on ________
___, 2000, unless the exchange offer is extended by InterWest Bancorp or
InterWest Capital Trust I, in which case the expiration date shall be the
latest date and time to which the exchange offer is extended.
InterWest Bancorp and InterWest Capital Trust I expressly reserve
the right in their sole and absolute discretion, subject to applicable law,
at any time and from time to time, to:
26
<PAGE>
- delay the acceptance of the Series A capital securities for
exchange;
- terminate the exchange offer, whether or not any Series A
capital securities have been accepted for exchange, if
InterWest Bancorp and InterWest Capital Trust I determine that
any of the events or conditions referred to under "-
Conditions to the Exchange Offer" have occurred or exist;
- extend the expiration date of the exchange offer and retain
all Series A capital securities tendered pursuant to the
exchange offer, subject, however, to the right of holders of
Series A capital securities to withdraw their tendered Series
A capital securities as described under "- Withdrawal
Rights;" and
- waive any condition or otherwise amend the terms of the
exchange offer in any respect.
If the exchange offer is amended in a manner determined by InterWest
Bancorp and InterWest Capital Trust I to constitute a material change, or if
InterWest Bancorp and InterWest Capital Trust I waive a material condition of
the exchange offer, InterWest Bancorp and InterWest Capital Trust I will
promptly disclose such amendment by means of a Prospectus supplement that
will be distributed to the registered holders of the Series A capital
securities, and InterWest Bancorp and InterWest Capital Trust I will extend
the exchange offer to the extent required by Rule 14e-1 under the Exchange
Act.
Any such delay in acceptance, extension, termination or amendment
will be followed promptly by oral or written notice thereof to the exchange
agent and by making a public announcement thereof, and such announcement in
the case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration
date. Without limiting the manner in which InterWest Bancorp and InterWest
Capital Trust I may choose to make any public announcement and subject to
applicable law, InterWest Bancorp and InterWest Capital Trust I shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF SERIES B CAPITAL SECURITIES
Upon the terms and subject to the conditions of the exchange offer,
InterWest Capital Trust I will exchange, and will issue to the exchange
agent, Series B capital securities for Series A capital securities validly
tendered and not withdrawn promptly after the expiration date.
In all cases, delivery of Series B capital securities in exchange
for Series A capital securities tendered and accepted for exchange pursuant
to the exchange offer will be made only after timely receipt by the exchange
agent of:
- Series A capital securities or a book-entry confirmation of a
book-entry transfer of Series A capital securities into the
exchange agent's account at DTC, including an Agent's Message
if the tendering holder has not delivered a letter of
transmittal;
- the letter of transmittal, or a facsimile, properly completed
and duly executed, with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message, and
- any other documents required by the letter of transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Series A capital securities into the exchange agent's
account at DTC. The term "Agent's Message" means a message, transmitted by
DTC to and received by the exchange agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the
27
<PAGE>
tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by the letter of transmittal and that
InterWest Capital Trust I and InterWest Bancorp may enforce such letter of
transmittal against such participant.
Subject to the terms and conditions of the exchange offer, InterWest
Bancorp and InterWest Capital Trust I will be deemed to have accepted for
exchange, and thereby exchanged, Series A capital securities validly tendered
and not withdrawn as, if and when InterWest Capital Trust I gives oral or
written notice to the exchange agent of InterWest Bancorp' and InterWest
Capital Trust I's acceptance of such Series A capital securities for exchange
pursuant to the exchange offer. The exchange agent will act as agent for
InterWest Capital Trust I for the purpose of receiving tenders of Series A
capital securities, letters of transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Series A capital
securities, letters of transmittal and related documents and transmitting
Series B capital securities to validly tendering holders. Such exchange will
be made promptly after the expiration date. If, for any reason whatsoever,
acceptance for exchange or the exchange of any Series A capital securities
tendered pursuant to the exchange offer is delayed, whether before or after
InterWest Capital Trust I's acceptance for exchange of Series A capital
securities, or InterWest Bancorp and InterWest Capital Trust I extend the
exchange offer or are unable to accept for exchange or exchange Series A
capital securities tendered pursuant to the exchange offer, then, without
prejudice to InterWest Bancorp' and InterWest Capital Trust I's rights set
forth herein, the exchange agent may, nevertheless, on behalf of InterWest
Bancorp and InterWest Capital Trust I and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Series A capital securities. Such Series A
capital securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "- Withdrawal
Rights."
Pursuant to the letter of transmittal or Agent's Message in lieu
thereof, a holder of Series A capital securities will warrant and agree in
the letter of transmittal that it has full power and authority to tender,
exchange, sell, assign and transfer Series A capital securities, that
InterWest Capital Trust I will acquire good, marketable and unencumbered
title to the tendered Series A capital securities, free and clear of all
liens, restrictions, charges and encumbrances, and the Series A capital
securities tendered for exchange are not subject to any adverse claims or
proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by InterWest Bancorp,
InterWest Capital Trust I or the exchange agent to be necessary or desirable
to complete the exchange, sale, assignment and transfer of the Series A
capital securities tendered pursuant to the exchange offer.
PROCEDURES FOR TENDERING SERIES A CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Series A
capital securities to be validly tendered pursuant to the exchange offer, a
properly completed and duly executed letter of transmittal, or facsimile of
such letter, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message and any other required documents,
must be received by the exchange agent at its address set forth under "-
Exchange Agent," and, in addition, one of the following:
- tendered Series A capital securities must be received by the
exchange agent;
- such Series A capital securities must be tendered pursuant to
the procedures for book-entry transfer set forth below and a
book-entry confirmation, including an Agent's Message if the
tendering holder has not delivered a letter of transmittal,
must be received by the exchange agent, in each case on or
prior to the expiration date; or
- the guaranteed delivery procedures set forth below must be
complied with.
If less than all of the Series A capital securities are tendered, a
tendering holder should fill in the amount of Series A capital securities
being tendered in the appropriate box on the letter of transmittal, or
28
<PAGE>
so indicate in an Agent's Message in lieu of the letter of transmittal. The
untendered liquidation amount must be $100,000 or any integral multiple of
$1,000 in excess thereof. The entire amount of Series A capital securities
delivered to the exchange agent will be deemed to have been tendered unless
otherwise indicated.
The method of delivery of certificates, the letter of transmittal
and all other required documents is at the option and sole risk of the
tendering holder, and delivery will be deemed made only when actually
received by the exchange agent. If delivery is by mail, registered mail,
return-receipt requested, properly insured, or an overnight delivery service
is recommended. In all cases, sufficient time should be allowed to ensure a
timely delivery.
BOOK-ENTRY TRANSFER. The exchange agent will establish an account
with respect to the Series A capital securities at DTC for purposes of the
exchange offer within two Business Days, a defined under "Description of
Series B Securities - Description of Capital Securities - Distributions,"
after the date of this Prospectus. Any financial institution that is a
participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Series A capital securities by causing DTC to
transfer such Series A capital securities into the exchange agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of Series A capital securities may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal,
or facsimile of such letter, properly completed and duly executed, with any
required signature guarantees, or an Agent's Message in lieu of the letter of
transmittal, and any other required documents, must in any case be delivered
to and received by the exchange agent at its address set forth under
"- Exchange Agent" on or prior to the expiration date, or the guaranteed
delivery procedure set forth below must be complied with.
Delivery of documents to DTC in accordance with DTC's procedures
does not constitute delivery to the Exchange Agent.
SIGNATURE GUARANTEES. If a certificate for the Series A capital
securities is registered in a name other than that of the person surrendering
the certificate or such holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the letter of
transmittal, such certificate must be endorsed or accompanied by a properly
executed bond power, with the respective endorsement or signature guaranteed
by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act
as an "eligible guarantor institution," including, as such terms are defined
therein:
- a bank;
- a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
- a credit union;
- a national securities exchange, registered securities
association or clearing agency; or
- an "Eligible Institution," which is a savings association that
is a participant in a Securities Transfer Association, unless
surrendered on behalf of such Eligible Institution. See
Instruction 1 to the letter of transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Series A capital
securities pursuant to the exchange offer and the certificates for such
Series A capital securities are not immediately available or time will not
permit all required documents to reach the exchange agent on or prior to the
expiration date, or the procedure for book-entry transfer cannot be completed
on a timely basis, such Series A capital
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securities may nevertheless be tendered; provided, however, that all of the
following guaranteed delivery procedures are complied with:
- such tenders are made by or through an Eligible Institution;
- a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the letter of
transmittal, is received by the exchange agent, as provided
below, on or prior to the expiration date; and
- the certificates, or a book-entry confirmation representing
all tendered Series A capital securities, in proper form for
transfer, together with a properly completed and duly executed
letter of transmittal, or a facsimile of such letter, or
Agent's Message with any required signature guarantees and any
other documents required by the letter of transmittal, are
received by the exchange agent within three New York Stock
Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Series B
capital securities in exchange for Series A capital securities tendered and
accepted for exchange pursuant to the exchange offer will in all cases be
made only after timely receipt by the exchange agent of Series A capital
securities, or of a book-entry confirmation with respect to such Series A
capital securities, and a properly completed and duly executed letter of
transmittal, or facsimile of such letter, or Agent's Message together with
any required signature guarantees and any other documents required by the
letter of transmittal. Accordingly, the delivery of Series B capital
securities might not be made to all tendering holders at the same time, and
will depend upon when Series A capital securities, book-entry confirmations
with respect to Series A capital securities and other required documents are
received by the exchange agent.
InterWest Bancorp' and InterWest Capital Trust I's acceptance for
exchange of Series A capital securities tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering holder, InterWest Bancorp and InterWest Capital Trust I upon the
terms and subject to the conditions of the exchange offer.
DETERMINATION OF VALIDITY. All questions as to the form of
documents, validity, eligibility, including time of receipt, and acceptance
for exchange of any tendered Series A capital securities will be determined
by InterWest Bancorp and InterWest Capital Trust I, in their sole discretion,
whose determination shall be final and binding on all parties. InterWest
Bancorp and InterWest Capital Trust I reserve the absolute right, in their
sole and absolute discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for,
may, in the opinion of counsel to InterWest Bancorp and InterWest Capital
Trust I, be unlawful. InterWest Bancorp and InterWest Capital Trust I also
reserve the absolute right, subject to applicable law, to waive any of the
conditions of the exchange offer as set forth under "- Conditions to the
Exchange Offer" or any condition or irregularity in any tender of Series A
capital securities of any particular holder whether or not similar conditions
or irregularities are waived in the case of other holders.
The interpretation by InterWest Bancorp and InterWest Capital Trust
I of the terms and conditions of the exchange offer, including the letter of
transmittal and the instructions thereto, will be final and binding. No
tender of Series A capital securities will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. None of InterWest Bancorp, InterWest Capital Trust I, any affiliates
or assigns of InterWest Bancorp or InterWest Capital
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Trust I, the exchange agent or any other person shall be under any duty to
give any notification of any irregularities in tenders or incur any liability
for failure to give any such notification.
If any letter of transmittal, endorsement, bond power, power of
attorney or any other document required by the letter of transmittal is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
unless waived by InterWest Bancorp and InterWest Capital Trust I, proper
evidence satisfactory to InterWest Bancorp and InterWest Capital Trust I, in
their sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Series A capital securities that are held by
or registered in the name of a broker, dealer, commercial bank, trust company
or other nominee or custodian is urged to contact such entity promptly if
such beneficial holder wishes to participate in the exchange offer.
RESALE OF SERIES B CAPITAL SECURITIES
InterWest Capital Trust I is making the exchange offer for the
Series B capital securities in reliance on the position of the staff of the
Division of Corporation Finance of the Securities and Exchange Commission as
set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither InterWest Bancorp nor InterWest Capital Trust
I sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Securities and Exchange
Commission would make a similar determination with respect to the exchange
offer as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, InterWest Bancorp and
InterWest Capital Trust I believe that Series B capital securities issued
pursuant to this exchange offer in exchange for Series A capital securities
may be offered for resale, resold and otherwise transferred by a holder
thereof without further compliance with the registration and Prospectus
delivery requirements of the Securities Act; provided, however, that such
Series B capital securities are acquired in the ordinary course of such
holder's business, that such holder is not participating, and has no
arrangement or understanding with any person to participate in, a
distribution as defined in the Securities Act of such Series B capital
securities and that such holder is not a broker-dealer. However, any holder
of Series A capital securities who is an affiliate of InterWest Bancorp or
InterWest Capital Trust I or who intends to participate in the exchange offer
for the purpose of distributing Series B capital securities, or any
broker-dealer who purchased Series A capital securities from InterWest
Capital Trust I to resell pursuant to Rule 144A or any other available
exemption under the Securities Act:
- will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Securities and
Exchange Commission set forth in the above-mentioned
interpretive letters;
- will not be permitted or entitled to tender such Series A
capital securities in the exchange offer; and
- must comply with the registration and Prospectus delivery
requirements of the Securities Act in connection with any sale
or other transfer of such Series A capital securities, unless
such sale is made pursuant to an exemption from such
requirements.
In addition, as described below, participating broker-dealers must
deliver a Prospectus meeting the requirements of the Securities Act in
connection with any resales of Series B capital securities.
Each holder of Series A capital securities who wishes to exchange
Series A capital securities for Series B capital securities in the exchange
offer will be required to represent that:
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- it is not an affiliate of InterWest Bancorp or InterWest
Capital Trust I;
- any Series B capital securities to be received by it are being
acquired in the ordinary course of its business;
- it has no arrangement or understanding with any person to
participate in a distribution, as defined in the Securities
Act, of such Series B capital securities; and
- if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution
of such Series B capital securities.
The letter of transmittal contains the foregoing representations. In
addition, InterWest Bancorp and InterWest Capital Trust I may require such
holder, as a condition to such holder's eligibility to participate in the
exchange offer, to furnish to InterWest Bancorp and InterWest Capital Trust I
in writing information as to the number of "beneficial owners," as defined in
Rule 13d-3 under the Exchange Act, on behalf of whom such holder holds the
Capital Securities to be exchanged in the exchange offer. Each participating
broker-dealer will be deemed to have acknowledged by execution of the letter
of transmittal or delivery of an Agent's Message that it acquired the Series
A capital securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
Prospectus meeting the requirements of the Securities Act in connection with
any resale of such Series B capital securities. The letter of transmittal
states that by so acknowledging and by delivering a Prospectus, a
participating broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance in the interpretive
letters referred to above, InterWest Bancorp and InterWest Capital Trust I
believe that participating broker-dealers who acquired Series A capital
securities for their own accounts as a result of market-making activities or
other trading activities, may fulfill their Prospectus delivery requirements
with respect to the Series B capital securities received upon exchange of
such Series A capital securities, other than Series A capital securities
which represent an unsold allotment from the original sale of the Series A
capital securities, with a Prospectus meeting the requirements of the
Securities Act, which may be the Prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Series B capital securities. Accordingly, this Prospectus,
as it may be amended or supplemented from time to time, may be used by a
participating broker-dealer during the period referred to below in connection
with resales of Series B capital securities received in exchange for Series A
capital securities where such Series A capital securities were acquired by
such participating broker-dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, InterWest Bancorp and InterWest
Capital Trust I have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a participating broker-dealer
in connection with resales of such Series B capital securities for a period
ending 90-days after the expiration date, subject to extension under certain
limited circumstances described below, or, if earlier, when all such Series B
capital securities have been disposed of by such participating broker-dealer.
See "Plan of Distribution." However, a participating broker-dealer who
intends to use this Prospectus in connection with the resale of Series B
capital securities received in exchange for Series A capital securities
pursuant to the exchange offer must notify InterWest Bancorp or InterWest
Capital Trust I, or cause InterWest Bancorp or InterWest Capital Trust I to
be notified, on or prior to the expiration date, that it is a participating
broker-dealer. Such notice may be given in the space provided for that
purpose in the letter of transmittal or may be delivered to the exchange
agent at the address set forth herein under "- Exchange Agent." Any person,
including any participating broker-dealer, who is an affiliate of InterWest
Bancorp or InterWest Capital Trust I may not rely on such interpretive letters
and must comply with the registration and Prospectus delivery requirements of
the Securities Act in connection with any resale transaction.
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In that regard, each participating broker-dealer who surrenders Series
A capital securities pursuant to the exchange offer will be deemed to have
agreed, by execution of the letter of transmittal or delivery of an Agent's
Message that, upon receipt of notice from InterWest Bancorp or InterWest Capital
Trust I of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such participating broker-dealer will suspend
the sale of Series B capital securities, or the Series B guarantee or the Series
B debentures, as applicable, pursuant to this Prospectus until InterWest Bancorp
or InterWest Capital Trust I has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such participating broker-dealer or InterWest Bancorp
or InterWest Capital Trust I has given notice that the sale of the Series B
capital securities, or the Series B guarantee or the Series B debentures, as
applicable, may be resumed, as the case may be. If InterWest Bancorp or
InterWest Capital Trust I gives such notice to suspend the sale of the Series B
capital securities, or the Series B guarantee or the Series B debentures, as
applicable, it shall extend the 90-day period referred to above during which
participating broker-dealers are entitled to use this Prospectus in connection
with the resale of Series B capital securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when participating broker-dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the Series B
capital securities or to and including the date on which InterWest Bancorp or
InterWest Capital Trust I has given notice that the sale of Series B capital
securities, or the Series B guarantee or the Series B debentures, as applicable,
may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Series A capital
securities may be withdrawn at any time on or prior to the expiration date. In
order for a withdrawal to be effective a written or facsimile transmission of
such notice of withdrawal must be timely received by the exchange agent at one
of its addresses set forth under "- Exchange Agent" on or prior to the
expiration date. Any such notice of withdrawal must specify the name of the
person who tendered the Series A capital securities to be withdrawn, the
aggregate principal amount of Series A capital securities to be withdrawn, and,
if certificates for such Series A capital securities have been tendered, the
name of the registered holder of the Series A capital securities as set forth on
the Series A capital securities, if different from that of the person who
tendered them. If Series A capital securities have been delivered or otherwise
identified to the exchange agent, then prior to their physical release, the
tendering holder must submit the certificate numbers shown on the particular
Series A capital securities to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Series A capital securities tendered for the account of an Eligible Institution.
If Series A capital securities have been tendered pursuant to the procedures for
book-entry transfer set forth in "- Procedures for Tendering Series A Capital
Securities," the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Series A capital
securities, in which case a notice of withdrawal will be effective if delivered
to the exchange agent by written or facsimile transmission. Withdrawals of
tenders of Series A capital securities may not be rescinded. Series A capital
securities properly withdrawn will not be deemed validly tendered for purposes
of the exchange offer, but may be retendered at any subsequent time on or prior
to the expiration date by following any of the procedures described above under
"- Procedures for Tendering Series A Capital Securities."
All questions as to the validity, form and eligibility, including time
of receipt, of such withdrawal notices will be determined by InterWest Bancorp
and InterWest Capital Trust I, in their sole discretion, whose determination
shall be final and binding on all parties. None of InterWest Bancorp, InterWest
Capital Trust I, any affiliates or assigns of InterWest Bancorp or InterWest
Capital Trust I, the exchange
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agent or any other person, shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Series A capital securities which
have been tendered but which are withdrawn will be returned to the holder
thereof promptly after withdrawal.
DISTRIBUTIONS ON SERIES B CAPITAL SECURITIES
Distributions on the Series B capital securities are payable
semi-annually in arrears on May 15 and November 15 of each year, commencing May
15, 2000, at the annual rate of 9.875% of the liquidation amount to the holders
of the Series B capital securities on the relevant record dates. Distributions
on the Series B capital securities will accumulate from May 15, 2000, the date
of the initial distribution on the capital securities.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, or any
extension of the exchange offer, InterWest Bancorp and InterWest Capital Trust I
will not be required to accept for exchange, or to exchange, any Series A
capital securities for any Series B capital securities, and, as described below,
may terminate the exchange offer, whether or not any Series A capital securities
have theretofore been accepted for exchange, or may waive any conditions to or
amend the exchange offer, if any of the following conditions have occurred or
exist:
- there shall occur a change in the current interpretation by
the staff of the Securities and Exchange Commission which
permits the Series B capital securities issued pursuant to the
exchange offer to be offered for resale, resold and otherwise
transferred by their holders, other than broker-dealers and
any such holder which is an affiliate of InterWest Bancorp or
InterWest Capital Trust I, without compliance with the
registration and Prospectus delivery provisions of the
Securities Act; provided, however, that such Series B capital
securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement or
understanding with any person to participate in the
distribution of such Series B capital securities;
- any law, statute, rule or regulation shall have been adopted
or enacted which, in the judgment of InterWest Bancorp or
InterWest Capital Trust I, would reasonably be expected to
impair its ability to proceed with the exchange offer;
- any action or proceeding shall have been instituted or
threatened in any court or by or before any governmental
agency or body with respect to the exchange offer which, in
InterWest Bancorp' and InterWest Capital Trust I's judgment,
would reasonably be expected to impair the ability of
InterWest Capital Trust I or InterWest Bancorp to proceed
with the exchange offer;
- a banking moratorium shall have been declared by United States
federal or Washington or New York state authorities which,
in InterWest Bancorp' and InterWest Capital Trust I's
judgment, would reasonably be expected to impair the ability
of InterWest Capital Trust I or InterWest Bancorp to proceed
with the exchange offer;
- trading on the New York Stock Exchange or generally in the
United States over-the-counter market shall have been
suspended by order of the Securities and Exchange Commission
or any other governmental authority which, in InterWest
Bancorp' and InterWest Capital Trust I's judgment, would
reasonably be expected to impair the ability of the issuer or
InterWest Bancorp to proceed with the exchange offer; or
- a stop order shall have been issued by the Securities and
Exchange Commission or any state securities authority
suspending the effectiveness of the Registration Statement or
proceedings shall have been initiated or, to the knowledge of
InterWest Bancorp or InterWest Capital Trust I,
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threatened for that purpose, or any governmental approval
which either InterWest Bancorp or InterWest Capital Trust I
shall, in its sole discretion, deem necessary for the
consummation of the exchange offer as contemplated hereby has
not been obtained.
If InterWest Bancorp and InterWest Capital Trust I determine in their
sole and absolute discretion that any of the foregoing events or conditions has
occurred or exists, they may, subject to applicable law, terminate the exchange
offer or waive any such condition or otherwise amend the terms of the exchange
offer in any respect. If such waiver or amendment constitutes a material change
to the exchange offer, InterWest Bancorp and InterWest Capital Trust I will
promptly disclose such waiver or amendment by means of a Prospectus supplement
that will be distributed to the registered holders of the Series A capital
securities and will extend the exchange offer to the extent required by Rule
14e-1 under the Exchange Act.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as exchange agent for the
exchange offer. Delivery of the letters of transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the letter of transmittal should be directed to
the exchange agent as follows:
Wilmington Trust Company, as Exchange Agent
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations - InterWest Capital Trust I
Exchange Offer
Facsimile Transmission (Eligible Institutions only): (302) 651-8882
Confirm by telephone or for information call: (302) 651-1000
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
InterWest Bancorp has agreed to pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. InterWest Bancorp will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Series A capital securities,
and in handling or tendering for their customers.
Holders who tender their Series A capital securities for exchange will
not be obligated to pay any transfer taxes in connection therewith. If, however,
Series B capital securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Series A capital
securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Series A capital securities in connection with the exchange
offer, then the amount of any such transfer taxes, whether imposed on the
registered holder or any other persons, will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither InterWest Bancorp nor InterWest Capital Trust I will make any
payment to brokers, dealers or other nominees soliciting acceptances of the
exchange offer.
DESCRIPTION OF SERIES B SECURITIES
The terms of the Series B securities are identical in all material
respects to the terms of the Series A securities, except that
- the Series A capital securities have not been registered under
the Securities Act, are subject to restrictions on transfer
under federal and state securities laws and are entitled
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to certain rights under the Registration Rights Agreement
which will terminate upon consummation of the exchange offer;
- the Series B capital securities will not provide for any
increase in the distribution rate; and
- the Series B debentures will not provide for any increase in
the interest rate.
Except where otherwise indicated, the following description applies to
both the Series B capital securities and the Series A capital securities.
THIS SUMMARY DESCRIBES THE MATERIAL PROVISIONS OF THE CAPITAL
SECURITIES. IT IS NOT COMPLETE AND IS SUBJECT TO, AND QUALIFIED BY, THE TRUST
AGREEMENT, INCLUDING THE DEFINITIONS USED IN THE TRUST AGREEMENT, AND THE TRUST
INDENTURE ACT OF 1939, AS AMENDED. WE HAVE INCORPORATED THE DEFINITIONS USED IN
THE TRUST AGREEMENT IN THIS PROSPECTUS. YOU CAN RECEIVE A COMPLETE COPY OF THE
FORM OF TRUST AGREEMENT BY REQUESTING A COPY FROM INTERWEST BANCORP.
DESCRIPTION OF CAPITAL SECURITIES
The capital securities represent beneficial interests in the Trust. As
a holder of capital securities, you are entitled to a preference over the common
securities in certain circumstances with respect to distributions and amounts
payable on redemption of the capital securities or liquidation of the Trust, as
described under "- Subordination of Common Securities." The trust agreement will
not be qualified under the Trust Indenture Act of 1939, except upon
effectiveness of the exchange offer registration statement or the shelf
registration statement. By its terms, however, the trust agreement will
incorporate certain provisions of the Trust Indenture Act, and, upon
consummation of the exchange offer or effectiveness of the shelf registration
statement, the trust agreement will be subject to and governed by the Trust
Indenture Act.
The capital securities are limited to $40.0 million aggregate
liquidation amount at any one time outstanding, including any exchange capital
securities that may be issued from time to time in exchange for the capital
securities, as described under "Exchange Offer; Registration Rights." The
capital securities rank equal to, and payments will be made on a pro rata basis
with, the common securities, except as described under "- Subordination of
Common Securities." The property trustee has legal title to the junior
subordinated debentures and holds them in trust for the benefit of you and the
other holders of the capital securities. Our guarantee for the benefit of the
holders of the capital securities will be a guarantee on a subordinated basis
with respect to the capital securities, but will not guarantee payment of
distributions or amounts payable on redemption of the capital securities or
liquidation of the Trust when the Trust does not have funds legally available
for such payments. You should read "Description of Guarantee" for more
information about our guarantee.
The capital securities have been rated "BBB-" by Thomson Financial Bank
Watch. See "Ratings."
DISTRIBUTIONS
Distributions on the capital securities will be cumulative, and will
accumulate from the date that the capital securities are first issued.
Distributions will be made at the annual rate of 9.875% of the stated
liquidation amount, payable semi-annually in arrears on the distribution dates,
which are May 15 and November 15 of each year, commencing May 15, 2000, to the
holders of the capital securities on the relevant record dates. The record dates
will be the 1st day of the month in which the relevant payment
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occurs. The amount of distributions payable for any distribution period will
be based on a 360-day year of twelve 30-day months.
If any distribution date would otherwise fall on a day that is not a
business day, the distribution date will be postponed to the next day that is a
business day without any additional payments for the delay, unless the
distribution would fall in the next calendar year, in which case the
distribution date will be the last business day of the calendar year. A business
day means any day other than a Saturday, a Sunday, or a day on which banking
institutions in Wilmington, Delaware, New York, New York are authorized or
required by law or executive order to remain closed.
The Trust's revenue available for distribution to holders of the
capital securities will be limited to our payments to the Trust under our junior
subordinated debentures. For more information, please refer to "Description of
Junior Subordinated Debentures - General." If we do not make interest payments
on the junior subordinated debentures, the property trustee will not have funds
available to pay distributions on the capital securities. Our guarantee only
covers the payment of distributions if and to the extent that the Trust has
funds legally available to pay the distributions. You should read "Description
of Guarantee" for more information about the extent of our guarantee.
OPTION TO DEFER INTEREST PAYMENTS
As long as no debenture event of default exists, we have the right
under the Indenture to elect to defer the payment of interest on the junior
subordinated debentures, at any time or from time to time, for no more that 10
consecutive semi-annual periods, provided that no deferral period will end on a
date other than an interest payment date, or extend beyond November 15, 2029,
the stated maturity date of the junior subordinated debentures. If we defer
payments, the Trust will defer semi-annual distributions on the capital
securities during the deferral period. During any deferral period, distributions
will continue to accumulate on the capital securities and on any accumulated and
unpaid distributions, compounded semi-annually from the relevant distribution
date at the applicable distribution rate, which will be equal to the applicable
interest rate on the junior subordinated debentures. The term distributions
includes any accumulated additional distributions.
Before the end of any deferral period, we may extend the deferral
period, as long as the extension does not cause the deferral period to exceed 10
consecutive semi-annual periods, or, to end on a date other than an interest
payment date or extend beyond November 15, 2029. At the end of any deferral
period and upon the payment of all amounts then due on any interest payment
date, we may elect to begin a new deferral period, subject to the above
requirements. No interest shall be due and payable during a deferral period
until the deferral period ends. We must give the property trustee, the
administrative trustees and the debenture trustee notice of our election to
defer interest payments, or to extend a deferral period at least five business
days before the earlier of:
- the date the distributions on the capital securities would
have been payable, except for the election to begin a deferral
period; and
- the date the administrative trustees are required to give
notice to any securities exchange or automated quotation
system or to holders of the capital securities of the record
date or the date such distributions are payable, but in any
event not less than five business days prior to such record
date.
There is no limitation on the number of times that we may elect to
begin a deferral period. Please refer to "Description of Junior Subordinated
Debentures - Option to Extend Interest Payment Date" and "Certain Federal Income
Tax Consequences - Interest Income and Original Issue Discount."
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During any deferral period, we may not:
- declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect
to, any of our common stock;
- make any payment of principal of, or interest or premium, if
any, on or repay, repurchase or redeem any debt securities
that rank equal or junior to the junior subordinated
debentures; or
- make any guarantee payments with respect to any guarantee of
the debt securities of any of our subsidiaries if such
guarantee ranks equal or junior to the junior subordinated
debentures.
Notwithstanding the foregoing, during a deferral period the following
is permitted:
- a payment of dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase
shares of, our common stock;
- a 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;
- a payment under the guarantee;
- a reclassification of our common stock or the exchange or
conversion of one class or series of our capital stock for
another class or series of our capital stock;
- the purchase of fractional interests in shares of our common
stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or
exchanged; and
- the purchase of common stock related to the issuance of common
stock or rights under any of our benefit plans for our
directors, officers or employees or any of our dividend
reinvestment plans.
We do not currently intend to exercise our right to defer payments of
interest on the junior subordinated debentures. Our obligations under the
guarantee to make payments of distributions is limited to the extent that the
Trust has funds legally available to pay distributions. You should read
"Description of Guarantee" for more information about the extent of our
guarantee.
REDEMPTION
Upon repayment at maturity on November 15, 2029 or prepayment, in whole
or in part prior to November 15, 2029, of the junior subordinated debentures
(other than following the distribution of the junior subordinated debentures to
you as a holder of the Trust's capital securities and us, as the holder of the
Trust's common securities), the property trustee will apply the proceeds from
the repayment or prepayment of the junior subordinated debentures (as long as
the property trustee has received written notice no later than 45 days before
the repayment) to redeem, at the applicable redemption price, capital and common
securities having an aggregate liquidation amount equal to the principal amount
of the junior subordinated debentures paid to the Trust. The Trust will give
notice of any redemption of capital securities between 30 to 60 days prior to
the redemption date.
If we prepay less than all of the junior subordinated debentures on a
redemption date, then the property trustee will allocate the proceeds of the
prepayment on a PRO RATA basis among the capital securities and the common
securities. If a court of competent jurisdiction enters an order to dissolve the
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Trust, the junior subordinated debentures will be subject to optional prepayment
in whole, but not in part, on or after November 15, 2009.
We will have the right to prepay the junior subordinated debentures:
- in whole or in part, on or after November 15, 2009; and
- in whole but not in part, at any time prior to November 15,
2009, if there are changes in the bank regulatory, investment
company or tax laws that would adversely affect the status of
the Trust, the capital securities or the junior subordinated
debentures.
We may have to obtain regulatory approval, including the approval of
the Federal Reserve Board before we redeem any junior subordinated debentures.
Please refer to "Description of Debentures - Optional Prepayment" and "Special
Event Prepayment" for information on prepayment of the junior subordinated
debentures.
The redemption prices applicable to the capital securities
correspond to the maturity and prepayment prices applicable to the junior
subordinated debentures.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We have the right at any time to dissolve the Trust and, after
satisfying the liabilities owed to the Trust's creditors, as required by
applicable law, we have the right to distribute the junior subordinated
debentures to the holders of the capital securities and to us as holder of the
common securities. Our right to dissolve the Trust is subject to our receiving:
- an opinion of counsel to the effect that if we distribute the
junior subordinated debentures, the holders of the capital
securities will not experience a taxable event; and
- all required regulatory approvals.
The Trust will automatically dissolve if:
- certain bankruptcy events occur, or we dissolve or liquidate;
- we distribute junior subordinated debentures having a
principal amount equal to the liquidation amount of the
capital securities and the common securities to holders of
such securities and we, as sponsor, have given written
directions to the property trustee to dissolve the Trust
(which direction is at our option and, except as described
above, wholly within our discretion, as sponsor);
- the Trust redeems all of the capital securities and common
securities in accordance with their terms;
- the Trust's term expires; or
- a court of competent jurisdiction enters an order for the
dissolution of the Trust.
If the Trust is dissolved for any of the above reasons, except for a
redemption of all capital securities and the common securities, it will be
liquidated by the administrative trustees as quickly as they determine to be
possible by distributing to holders of the capital securities and the common
securities, after satisfying the liabilities owed to the Trust's creditors, as
provided by applicable law, junior subordinated debentures having a principal
amount equal to the liquidation amount of the capital
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securities and the common securities, unless the property trustee determines
that this distribution is not practicable. If the property trustee determines
that this distribution is not practicable, the holders of the capital
securities will be entitled to receive an amount equal to the aggregate of the
liquidation amount plus accumulated and unpaid distributions on the capital
securities to the date of payment (such amount being the "liquidation
distribution") out of the assets of the Trust legally available for
distribution to holders, after satisfying the liabilities owed to the Trust's
creditors as provided by applicable law. If the liquidation distribution can
be paid only in part because the Trust has insufficient assets legally
available to pay the full amount of the liquidation distribution, or if a
debenture event of default exists, the capital securities will have a priority
over the common securities. For more information, please refer to
"- Subordination of Common Securities."
After the liquidation date is fixed for any distribution of junior
subordinated debentures to holders of the capital securities:
- the capital securities will no longer be deemed to be
outstanding;
- DTC or its nominee will receive in respect of each registered
global certificate representing capital securities a
registered global certificate representing the junior
subordinated debentures to be delivered upon this
distribution; and
- any certificates representing capital securities not held by
DTC or its nominee will be deemed to represent junior
subordinated debentures having a principal amount equal to the
liquidation amount of those capital securities, and bearing
accrued and unpaid interest in an amount equal to the
accumulated and unpaid distributions on those capital
securities until such certificates are presented to the
administrative trustees or their agent for cancellation, in
which case we will issue to those holders, and the debenture
trustee will authenticate, a certificate representing the
junior subordinated debentures.
We cannot assure you of the market prices for the capital securities,
or the junior subordinated debentures that may be distributed to you in exchange
for the capital securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the capital securities that you purchase, or the junior
subordinated debentures that you may receive upon a dissolution and liquidation
of the Trust, may trade at a discount to the price that you paid to purchase the
capital securities.
If we elect not to prepay the junior subordinated debentures prior to
maturity and either elect not to or we are unable to liquidate the Trust and
distribute the junior subordinated debentures to holders of the capital
securities, the capital securities will remain outstanding until the repayment
of the junior subordinated debentures on November 15, 2029.
REDEMPTION PROCEDURES
If we pay the junior subordinated debentures at maturity or earlier
prepayment, the Trust will redeem capital securities at the applicable
redemption price with the proceeds that it receives from our payment or
repayment of the junior subordinated debentures. Any redemption of capital
securities will be made and the applicable redemption price will be payable on
the redemption date only to the extent that the Trust has funds legally
available to pay the applicable redemption price. For more information, you
should refer to "Subordination of Common Securities."
If the Trust gives a notice of redemption for the capital securities,
then, by 12:00 noon, New York City time, on the redemption date, to the extent
funds legally are available, with respect to:
- the capital securities held by DTC or its nominees, the
property trustee will deposit, or cause the paying agent to
deposit, irrevocably with DTC funds sufficient to pay the
applicable
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redemption price. For more information, you should refer to
"- Form, Denomination, Book-Entry Procedures and Transfers."
- the capital securities held in certificated form, the property
trustee will irrevocably deposit with the paying agent funds
sufficient to pay the applicable redemption price and will
give the paying agent irrevocable instructions and authority
to pay the applicable redemption price to the holders upon
surrender of their certificates evidencing the capital
securities. For more information, you should refer to "-
Payment and Paying Agency."
The paying agent will initially be the property trustee and any
co-paying agent chosen by the property trustee and acceptable to the
administrative trustees and us.
Notwithstanding the foregoing, distributions payable on or before the
redemption date will be payable to the holders of the capital securities on the
relevant record dates for the related distribution dates. If the Trust gives a
notice of redemption and funds are deposited as required, then upon the date of
the deposit, all rights of the holders of the capital securities called for
redemption will cease, except the right of the holders of the capital securities
to receive the applicable redemption price, without interest, and the capital
securities called to be redeemed will cease to be outstanding.
If any redemption date for the capital securities is not a business
day, then the applicable redemption price, without interest or any other payment
in respect of the delay, will be paid on the next business day, except that, if
the next business day falls in the next calendar year, the payment shall be made
on the last business day of the calendar year. If payment of the applicable
redemption price is improperly withheld or refused and not paid either by the
Trust or by us pursuant to the guarantee:
- distributions on the capital securities will continue to
accumulate from the redemption date originally established by
the Trust to the date such applicable redemption price is
actually paid; and
- the actual payment date will be the redemption date for
purposes of calculating the applicable redemption price.
Notice of any redemption will be mailed between 30 and 60 days before
the redemption date to each holder of capital securities at its registered
address. Unless we default in payment of the applicable redemption price on, or
in the repayment of, the junior subordinated debentures, on and after the
redemption date, distributions will cease to accrue on the capital securities
called for redemption.
Subject to applicable law, including, without limitation, federal
securities laws, we or our subsidiaries may at any time, and from time to time,
purchase outstanding capital securities in the open market or by private
agreement.
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SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, the redemption price of, and the
liquidation distribution for, the capital securities and the common securities,
as applicable, will generally be made on a PRO RATA basis. However, if an event
of default under the junior subordinated debentures exists on any distribution,
redemption or liquidation date, no payment of any distribution on, or applicable
redemption price of, or liquidation distribution for, any of the common
securities, and no other payment on account of the redemption, liquidation or
other acquisition of the common securities, will be made unless payment in full
in cash of all accumulated and unpaid distributions on all of the outstanding
capital securities for all distribution periods terminating on or before the
distribution, redemption or liquidation date, or payment of the applicable
redemption price or liquidation distribution is made in full. All funds
available to the property trustee will first be applied to the payment in full
in cash of all distributions on, or redemption price of, or liquidation
distribution for, the capital securities then due and payable.
In the case of any event of default under the trust agreement, we, as
holder of all of the common securities, will be deemed to have waived any right
to act with respect to the event of default until the effect of the event of
default has been cured or waived. Until any event of default has been cured,
waived or otherwise eliminated, the property trustee will act solely on behalf
of the holders of the capital securities and not on our behalf, and only the
holders of the capital securities will have the right to direct the property
trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
An event of default under the Indenture constitutes an event of default
under the trust agreement. See "Description of Debentures - Debenture Events of
Default."
The trust agreement provides that within ten (10) business days after
any event of default actually known to the property trustee occurs, the property
trustee will give notice of the event of default to the holders of the capital
securities, the administrative trustees and to us, as sponsor, unless the event
of default has been cured or waived. We, as sponsor, and the administrative
trustees are required to file annually with the property trustee a certificate
as to whether we and the administrative trustees have complied with the
applicable conditions and covenants of the trust agreement.
If a debenture event of default exists, the capital securities will
have a preference over the common securities as described under "- Liquidation
of the Trust and Distribution of Junior Subordinated Debentures" and "-
Subordination of Common Securities." An event of default does not entitle the
holders of capital securities to require the redemption of the capital
securities.
REMOVAL OF ISSUER TRUSTEES
Unless a debenture event of default exists, we may remove the property
trustee and the Delaware trustee at any time. If a debenture event of default
exists, the property trustee and the Delaware trustee may be removed only by the
holders of a majority in liquidation amount of the outstanding capital
securities. In no event will the holders of the capital securities have the
right to vote to appoint, remove or replace the administrative trustees, because
these voting rights are vested exclusively in us as the holder of all of the
common securities. No resignation or removal of the property trustee or the
Delaware trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the trust agreement.
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MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
If the property trustee, the Delaware trustee or any administrative
trustee that is not a natural person is merged, converted or consolidated into
another entity, or the property trustee or the Delaware trustee is a party to a
merger, conversion or consolidation which results in a new entity, or an entity
succeeds to all or substantially all of the corporate trust business of the
property trustee or the Delaware trustee, the new entity shall be the successor
of the respective trustee under the trust agreement, provided that the entity is
otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease all or substantially all of its
properties and assets to any corporation or other entity, except as described
below or as otherwise described under "- Liquidation of the Trust and
Distribution of Junior Subordinated Debentures." The Trust may, at our request,
as sponsor, and with the consent of the administrative trustees but without the
consent of the holders of the capital securities, merge with or into,
consolidate, amalgamate or be replaced by or convey, transfer or lease all or
substantially all of its properties and assets to a trust organized as such
under the laws of any state; provided, that:
- the successor either:
- expressly assumes all of the obligations of the Trust
with respect to the capital securities; or
- substitutes securities for the capital securities
that have substantially the same terms as the capital
securities so long as the substitute securities rank
equal to or the same as the capital securities in
priority with respect to distributions and payments
upon liquidation, redemption and otherwise;
- we appoint a trustee of the successor possessing the same
powers and duties as the property trustee with respect to the
junior subordinated debentures;
- the substitute securities are listed, or any substitute
securities will be listed upon notification of issuance, on
any national securities exchange or other organization on
which the capital securities are then listed or quoted, if
any;
- if the capital securities, substitute securities or junior
subordinated debentures are rated by any nationally recognized
statistical rating organization prior to such transaction, the
transaction does not cause any of those securities to be
downgraded by any such rating organization;
- the transaction does not adversely affect the rights,
preferences and privileges of the holders of the capital
securities (including any successor securities) in any
material respect;
- the successor has a purpose substantially identical to that of
the Trust;
- prior to the transaction, we received an opinion from
independent counsel to the Trust experienced in such matters
to the effect that:
- the transaction does not adversely affect the
rights, preferences and privileges of the holders
of the capital securities (including any successor
securities) in any material respect (other than any
dilution of such holders' interests in the new
entity);
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- following the transaction, neither the Trust nor
the successor will be required to register as an
investment company under the Investment Company
Act; and
- the Trust continues to be, and any successor will
be, classified as a grantor trust for federal
income tax purposes; and
- we, or any permitted successor or assignee, own all of the
common securities of the successor and guarantee the
obligations of the successor under the substitute securities
at least to the extent provided by our guarantee and the
common securities guarantee.
Notwithstanding the foregoing, the Trust may not, except with the
consent of holders of 100% in liquidation amount of the capital securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease all or substantially all its properties and assets to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if the transaction would cause the Trust or the successor
not to be classified as a grantor trust for federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "- Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of Guarantee -
Amendments and Assignment" and as otherwise required by law and the trust
agreement, the holders of the capital securities have no voting rights.
We, together with the property trustee and the administrative trustees,
may amend the trust agreement from time to time, without the consent of the
holders of the capital securities:
(1) to cure any ambiguity, correct or supplement any provisions in the
trust agreement that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under the
trust agreement, which are not inconsistent with the other provisions of the
trust agreement; or
(2) to modify, eliminate or add to any provisions of the trust
agreement as is necessary to ensure that at all times that any capital
securities are outstanding, the Trust will not be classified as an association
taxable as a corporation or to enable the Trust to qualify as a grantor trust,
in each case for U.S. federal income tax purposes, or to ensure that the Trust
will not be required to register as an investment company under the Investment
Company Act; or
(3) to modify, eliminate or add any provisions of the trust agreement
as is necessary to enable us or the Trust to conduct an exchange offer in the
manner contemplated by the registration rights agreement;
PROVIDED, HOWEVER, that the amendment would not adversely affect in any material
respect the interests of the holders of the capital securities. Any amendments
of the trust agreement pursuant to the foregoing shall become effective when
notice of the amendment is given to the holders of the capital securities.
We, together with the property trustee and the administrative trustees,
may amend the trust agreement:
- with the consent of holders of a majority (in liquidation
amount) of the outstanding capital securities; and
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- upon receipt by the property trustee and the administrative
trustees of an opinion of counsel experienced in such matters
to the effect that the amendment or the exercise of any power
granted to the property trustee and the administrative
trustees in accordance with the amendment will not affect the
Trust's classification as an entity that is not taxable as a
corporation or as being a grantor trust for U.S. federal
income tax purposes or the Trust's exemption from status as an
investment company under the Investment Company Act;
PROVIDED that, without the consent of each holder of capital securities, no
amendment may change the amount or timing of any distribution on the capital
securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the capital securities as of a specified date, change
any of the prepayment provisions, or restrict the right of a holder of capital
securities to sue for the enforcement of any payment on or after the specified
date.
So long as the property trustee holds any junior subordinated
debentures, the trustees may not:
- direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or execute
any trust or power conferred on the debenture trustee with
respect to the junior subordinated debentures;
- waive certain past defaults under the Indenture;
- exercise any right to rescind or annul a declaration
accelerating the maturity of the principal of the junior
subordinated debentures; or
- consent to any amendment, modification or termination of the
Indenture or the junior subordinated debentures, where such
consent shall be required,
without, in each case, obtaining the prior consent of the holders of a majority
in liquidation amount of all outstanding capital securities; PROVIDED, HOWEVER,
that where a consent under the Indenture would require the consent of each
holder of junior subordinated debentures affected by the amendment, modification
or termination, the property trustee will not give consent without the prior
approval of each holder of the capital securities.
The trustees will not revoke any action previously authorized or
approved by a vote of the holders of the capital securities, except by
subsequent vote of such holders. The property trustee shall notify each holder
of capital securities of any notice of default with respect to the junior
subordinated debentures. In addition to obtaining the approvals of the holders
of the capital securities, prior to taking any of the foregoing actions, the
trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will continue to be classified as a grantor trust for
federal income tax purposes on account of such action.
Any required approval of holders of capital securities may be given at
a meeting of the holders convened for the purpose of approving the matter or
pursuant to written consent. The property trustee will cause a notice of any
meeting at which holders of capital securities are entitled to vote, or of any
matter upon which action by written consent of such holders has been taken, to
be given to each holder of record of capital securities in accordance with the
trust agreement.
No vote or consent of the holders of capital securities will be
required for the Trust to redeem and cancel the capital securities in accordance
with the trust agreement.
Notwithstanding that holders of the capital securities are entitled to
vote or consent under any of the circumstances described above, any of the
capital securities that are owned by us, the Trust, the
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trustees or any affiliates thereof shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The Series B capital securities may be issued in certificated form or
as "global capital securities," which shall consist of one or more capital
securities in registered, global form.
In the event that capital securities are issued in certificated form,
the capital securities will be issued in blocks having a liquidation amount of
not less than $100,000 and may be transferred or exchanged only in such blocks
in the manner and at the offices described below.
The global capital securities will be deposited upon issuance with the
property trustee as custodian for DTC, in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the global capital securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 capital securities. Beneficial interests in the
global capital securities may not be exchanged for capital securities in
certificated form, except in the limited circumstances described below. See "-
Exchange of Book-Entry Capital Securities for Certificated Capital Securities."
Other capital securities may be issued in registered, certificated,
i.e., non-global form. Other capital securities may not be exchanged for
beneficial interests in any global capital securities, except in the limited
circumstances described below. See "- Exchange of Certificated Capital
Securities for Book-Entry 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 us that it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, "participants")
and to facilitate the clearance and settlement of transactions in those
securities between participants through electronic book-entry changes in
accounts of its participants, to eliminate the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly (collectively, "indirect
participants"). Persons who are not participants may beneficially own
securities held by or on behalf of DTC only through participants or indirect
participants. The ownership interest and transfer of ownership interest of
each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of participants and indirect participants.
DTC also has advised the Trust and us that, pursuant to procedures
established by it, (1) upon deposit of the global capital securities, DTC will
credit the accounts of participants designated by the initial purchasers with
the designated liquidation amount of the global capital securities and (2)
ownership of beneficial interests in the global capital securities will be shown
on, and the transfer of ownership of the global capital securities will be
effected only through, records maintained by DTC (with
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respect to participants) or by participants and indirect participants (with
respect to other owners of beneficial interests in the global capital
securities).
You may hold your interests in the global capital security directly
through DTC if you are a participant, or indirectly through organizations that
are participants. All interests in a global capital security will be subject to
the procedures and requirements of DTC. The laws of some states require that
certain persons take physical delivery in certificated form of securities that
they own. Consequently, the ability to transfer beneficial interests in a global
capital security to those persons will be limited to that extent. Because DTC
can act only on behalf of participants, which in turn act on behalf of indirect
participants and certain banks, the ability of a person having beneficial
interests in a global capital security to pledge its interests to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of its interests, may be affected by the lack of a physical certificate
evidencing its interests. For certain other restrictions on the transferability
of the capital securities, see "- Exchange of Book-Entry Capital Securities for
Certificated Capital Securities" and "- Exchange of Certificated Capital
Securities for Book-Entry Capital Securities."
Except as described below, owners of beneficial interest in the global
capital securities will not have capital securities registered in their name,
will not receive physical delivery of capital securities in certificated form
and will not be considered the registered owners or holders thereof under the
trust agreement for any purpose.
Payments on the global capital security registered in the name of DTC,
or its nominee, will be payable by the property trustee to DTC in its capacity
as the registered holder under the trust agreement. Under the terms of the trust
agreement, the property trustee will treat the persons in whose names the
capital securities, including the global capital securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Neither the property trustee nor any agent
thereof has or will have any responsibility or liability for:
- any aspect of DTC's records or any participant's or indirect
participant's records relating to, or payments made on account
of, beneficial ownership interests in the global capital
securities, or for maintaining, supervising or reviewing any
of DTC's records or any participant's or indirect
participant's records relating to the beneficial ownership
interests in the global capital securities; or
- any other matter relating to the actions and practices of DTC
or any of its participants or indirect participants.
DTC has advised the Trust and us that its current practice, upon
receipt of any payment on the capital securities, is to credit the accounts of
the relevant participants with the payment on the payment date, in amounts
proportionate to their respective holdings in liquidation amount of the capital
securities as shown on the records of DTC unless DTC has reason to believe it
will not receive payment on the payment date. Payments by participants and
indirect participants to the beneficial owners of capital securities will be
governed by standing instructions and customary practices and will be the
responsibility of participants or indirect participants and will not be the
responsibility of DTC, the property trustee, the Trust or us. None of the Trust,
InterWest Bancorp, Inc. nor the property trustee will be liable for any delay by
DTC or any of its participants or indirect participants in identifying the
beneficial owners of the capital securities, and the Trust, InterWest Bancorp,
Inc. and the property trustee may conclusively rely on, and will be protected in
relying on, instructions from DTC or its nominee for all purposes.
Any secondary market trading activity in interests in the global
capital securities will settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
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Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will settle in same-day funds.
DTC has advised the Trust and us that it will take any action
permitted to be taken by a holder of capital securities (including, without
limitation, presenting the capital securities for exchange as described
below) only at the direction of one or more participants who have an interest
in DTC's global capital securities in respect of the portion of the
liquidation amount of the capital securities as to which the participant or
participants has or have given direction. However, if an event of default
exists under the trust agreement, DTC reserves the right to exchange the
global capital securities for legended capital securities in certificated
form and to distribute the certificated capital securities to its
participants.
We believe that the information in this section concerning DTC and
its book-entry system has been obtained from reliable sources, but we do not
take responsibility for the accuracy of this information.
Although DTC has agreed to the procedures described in this section
to facilitate transfers of interests in the global capital securities among
participants in DTC, DTC is not obligated to perform or to continue to
perform these procedures, and these procedures may be discontinued at any
time. None of the Trust, InterWest Bancorp nor the property trustee will have
any responsibility or liability for any aspect of the performance by DTC or
its participants or indirect participants of any of their respective
obligations under the rules and procedures governing their operations or for
maintaining, supervising or reviewing any records relating to the global
capital securities that are maintained by DTC or any of its participants or
indirect participants.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A global capital security will be exchanged for capital securities
in registered certificated form if:
- DTC notifies the Trust that it is unwilling or unable to
continue as depositary for the global capital security and the
Trust fails to appoint a successor depositary within 90 days
of receipt of DTC's notice, or has ceased to be a clearing
agency registered under the Exchange Act and the Trust fails
to appoint a successor depositary within 90 days of becoming
aware of this condition;
- we, in our sole discretion, elect to cause the capital
securities to be issued in certificated form; or
- an event of default, or any event which after notice or lapse
of time or both would be an event of default, exists under the
trust agreement.
In addition, beneficial interests in a global capital security will
be exchanged by or on behalf of DTC for certificated capital securities upon
request by DTC, but only upon at least 20 days' prior written notice given to
the property trustee in accordance with DTC's customary procedures. In all
cases, certificated capital securities delivered in exchange for any global
capital security will be registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance with its
customary procedures) and will bear the restrictive legend referred to in
"Notice to Investors," unless the property trustee determines otherwise in
compliance with applicable law.
EXCHANGE OF CERTIFICATED CAPITAL SECURITIES FOR BOOK-ENTRY CAPITAL SECURITIES
Capital securities which are issued in certificated form may not be
exchanged for beneficial interests in any global capital security unless such
exchange occurs in connection with a transfer of such other capital
securities and the transferor first delivers to the property trustee a
written certificate, in the
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form provided in the Declaration of Trust, to the effect that such transfer
will comply with the appropriate transfer restrictions applicable to such
capital securities.
PAYMENT AND PAYING AGENCY
The Trust will make payments on any global capital security to DTC,
which will credit the relevant accounts at DTC on the applicable distribution
dates. The Trust will make payments on the capital securities that are not
held by DTC by mailing a check to the address of the holder entitled to the
payment as the holder's address appears on the register. The paying agent
will initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to the administrative trustees and us. The
paying agent will be permitted to resign as paying agent upon 30 days' notice
to the property trustee, the administrative trustees and us. In the event
that the property trustee is no longer the paying agent, the administrative
trustees will appoint a successor (which must be a bank or trust company
acceptable to the administrative trustees and us) to act as paying agent.
RESTRICTIONS ON TRANSFER
The capital securities may be transferred only in blocks having a
liquidation amount of not less than $100,000 (100 capital securities) and
multiples of $1,000 in excess thereof. Any attempted sale, transfer or other
disposition of capital securities in a block having a liquidation amount of
less than $100,000 will be deemed to be void and of no legal effect
whatsoever. Any such purported transferee will be deemed not to be the holder
of such capital securities for any purpose, including but not limited to the
receipt of distributions on such capital securities, and such purported
transferee will be deemed to have no interest whatsoever in such capital
securities. You should refer to "Notice to Investors" for a detailed
description of the restrictions on transfer.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for
the capital securities.
The Trust will register transfers of the capital securities without
charge, except for any tax or other governmental charges that may be imposed
in connection with any transfer or exchange. The Trust will not be required
to have the transfer of the capital securities registered after they have
been called for redemption.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct
the affairs of and to operate the Trust so that:
- the Trust will not be deemed to be an investment company
required to be registered under the Investment Company Act;
- the Trust will be classified as a grantor trust for U.S.
federal income tax purposes; and
- the junior subordinated debentures will be treated as our
indebtedness for U.S. federal income tax purposes.
We, together with the administrative trustees, are authorized to
take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the trust agreement, that we and the administrative
trustees determine in our discretion is necessary or desirable, as long as it
does not materially adversely affect the interests of the holders of the
capital securities.
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The trust agreement provides that holders of the capital securities
have no preemptive or similar rights to subscribe for any additional capital
securities and the issuance of capital securities is not subject to
preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or
pledge any of its assets.
GOVERNING LAW
The trust agreement and capital securities will be governed by and
construed in accordance with the laws of the State of Delaware, without
regard to conflict of law principles.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
Except if an event of default exists under the trust agreement, the
property trustee will undertake to perform only the duties specifically set
forth in the trust agreement. While such an event of default exists, the
property trustee must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the property trustee is not obligated to exercise
any of the powers vested in it by the trust agreement at the request of any
holder of capital securities, unless it is offered reasonable indemnity
against the costs, expenses and liabilities that it might incur. If no event
of default exists and the property trustee is required to decide between
alternative causes of action or to construe ambiguous provisions in the trust
agreement or is unsure of the application of any provision of the trust
agreement, and the matter is not one on which holders of the capital
securities or the common securities are entitled under the trust agreement to
vote, then the property trustee shall take such action as directed by us and,
if not directed, shall take such action as it deems advisable and in the best
interests of the holders of the capital securities and will have no
liability, except for its own bad faith, negligence or willful misconduct.
DESCRIPTION OF DEBENTURES
THE SERIES A DEBENTURES WERE, AND THE SERIES B DEBENTURES WILL BE,
ISSUED UNDER AN INDENTURE, AS SUPPLEMENTED FROM TIME TO TIME, BETWEEN
INTERWEST BANCORP AND THE DEBENTURE TRUSTEE. UPON EFFECTIVENESS WITH THE
SECURITIES AND EXCHANGE COMMISSION OF THE REGISTRATION STATEMENT RELATING TO
THIS EXCHANGE OFFER, THE INDENTURE WILL BE QUALIFIED UNDER THE TRUST
INDENTURE ACT. BY ITS TERMS, THE INDENTURE WILL INCORPORATE BY REFERENCE
CERTAIN PROVISIONS OF THE TRUST INDENTURE ACT AND UPON CONSUMMATION OF THE
EXCHANGE OFFER OR EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT, THE
INDENTURE WILL BE GOVERNED BY AND SUBJECT TO THE TRUST INDENTURE ACT.
THIS SUMMARY DESCRIBES THE MATERIAL PROVISIONS OF THE JUNIOR
SUBORDINATED DEBENTURES. IT IS NOT COMPLETE AND IS SUBJECT TO, AND QUALIFIED
IN ITS ENTIRETY BY, THE INDENTURE. WE HAVE INCORPORATED THE DEFINITIONS USED
IN THE INDENTURE IN THIS PROSPECTUS. YOU CAN OBTAIN A COPY OF THE INDENTURE
BY REQUESTING IT FROM INTERWEST BANCORP. WILMINGTON TRUST COMPANY WILL ACT AS
DEBENTURE TRUSTEE UNDER THE INDENTURE.
GENERAL
Concurrently with the issuance of the Series A capital securities,
the Trust invested the proceeds from the sale of the Series A capital
securities and its common securities in junior subordinated debentures issued
by InterWest Bancorp. The junior subordinated debentures bear interest at the
annual rate of 9.875% of the principal amount of the junior subordinated
debentures, payable semi-annually in arrears on interest payment dates of May
15 and November 15 of each year and at maturity to the person in whose name
each junior subordinated debenture is registered at the close of business on
the relevant record date. The first interest payment date for the junior
subordinated debentures will be May 15, 2000. The period beginning on and
including the date the junior subordinated debentures are first issued and
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ending on but excluding May 15, 2000 and each period beginning on and
including an interest payment date and ending on but excluding the next
interest payment date is an interest period.
We anticipate that, until the liquidation, if any, of the Trust,
each junior subordinated debenture will be held by the property trustee in
trust for the benefit of the holders of the capital securities. The amount of
interest payable for any interest period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any interest payment
date would otherwise fall on a day that is not a business day, the required
payment will be made on the next business day (without any interest or other
payment due to the delay), unless it would fall in the next calendar year, in
which case the interest payment date shall be the last business day of the
calendar year.
Accrued interest that is not paid on the applicable interest payment
date will bear additional interest (to the extent permitted by law) at the
rate of 9.875% per year, compounded semi-annually from the last interest
payment date for which interest was paid. The term "interest" as used in this
Prospectus includes semi-annual interest payments and interest on semi-annual
interest payments not paid on the applicable interest payment date.
Notwithstanding anything to the contrary above, if the maturity date
falls on a day that is not a business day, the payment of principal, premium,
if any, and interest will be paid on the next business day, with the same
force and effect as if made on such date, and no interest on such payments
will accrue from and after such date.
The junior subordinated debentures will be issued as a series of
junior subordinated deferrable interest debentures under the Indenture.
The junior subordinated debentures will mature on November 15, 2029,
unless redeemed prior thereto in accordance with the terms discussed below.
The junior subordinated debentures will rank equal to all of our
other subordinated debentures which have been or may be issued to other
trusts established by us, in each case similar to the Trust, and will be
unsecured and rank subordinate and junior to all of our senior indebtedness
to the extent and in the manner set forth in the Indenture. See
"Subordination."
We are a bank holding company regulated by the Federal Reserve
Board, and substantially all of our operating assets are owned by InterWest
Bank, Pacific Northwest Bank and National Bank of Tukwila. We are a legal
entity separate and distinct from our subsidiaries. Holders of junior
subordinated debentures should look only to us for payments on the junior
subordinated debentures. The principal sources of our income are dividends,
interest and fees from our bank subsidiaries. We rely primarily on dividends
from our bank subsidiaries to meet our obligations for payment of principal
and interest on our outstanding debt obligations and corporate expenses.
Dividend payments from our bank subsidiaries are subject to regulatory
limitations, generally based on current and retained earnings, imposed by the
various regulatory agencies with authority over our bank subsidiaries. See
"Regulation and Supervision." Under the Federal Deposit Insurance Act, an
insured depositary institution such as InterWest Bank, Pacific Northwest Bank
and National Bank of Tukwila is prohibited from making capital distributions,
including the payment of dividends, if, after making such distribution, the
institution would become "undercapitalized" (as such term is used in the
statute). Based on their current financial condition, we do not expect that
this provision will have any impact on our ability to obtain dividends from
InterWest Bank, Pacific Northwest Bank and National Bank of Tukwila. During
the year ended September 30, 1999, InterWest Bank declared dividends of $21.0
million payable to us. At September 30, 1999, approximately $49.3 million was
available for payment of dividends to us without prior regulatory approval by
bank subsidiaries we owned at that date. Subsequent to September 30, 1999,
InterWest Bank declared dividends of $6.0 million payable to us.
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Payment of dividends by our bank subsidiaries is also subject to
their profitability, financial condition and capital expenditures and other
cash flow requirements. The Federal Reserve Board has stated that, as a
matter of prudent banking, a bank or bank holding company should not maintain
its existing rate of cash dividends on common stock unless:
- the organization's net income available to common shareholders
over the past year has been sufficient to fund fully the
dividends, and
- the prospective rate of earnings retention appears consistent
with the organization's capital needs, asset quality, and
overall financial condition.
We cannot assure you that InterWest Bank, Pacific Northwest Bank and National
Bank of Tukwila will be able to pay dividends at past levels, or at all, in
the future.
In addition to restrictions on the payment of dividends, our bank
subsidiaries are subject to certain restrictions imposed by federal law on
any extensions of credit to, and certain other transactions with, us and
certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent us and such other affiliates from
borrowing from our bank subsidiaries unless the loans are secured by various
types of collateral. Furthermore, such secured loans, other transactions and
investments by our bank subsidiaries are generally limited in amount as to us
and as to each of such other affiliates to 10% of their capital and surplus
and as to us and all of such other affiliates to an aggregate of 20% of their
capital and surplus. As of September 30, 1999, approximately $16.0 million of
credit was available to us under this limitation, if adequate collateral
would have been available to secure such borrowings.
Also, as a holding company, our right to receive any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization
or otherwise (and thus your right to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of InterWest Bank, Pacific Northwest Bank
and National Bank of Tukwila), except to the extent that we may be recognized
as a creditor of that subsidiary. At September 30, 1999, our subsidiaries had
total liabilities, including deposits, of $2.4 billion. Accordingly, the
junior subordinated debentures will be effectively subordinated to all
existing and future liabilities of our subsidiaries (including InterWest
Bank, Pacific Northwest Bank, and National Bank of Tukwila's deposit
liabilities) and all liabilities of any of our future subsidiaries. The
Indenture does not limit the incurrence or issuance of other secured or
unsecured debt by us or any subsidiary, including senior indebtedness. See "-
Subordination."
FORM, REGISTRATION AND TRANSFER
If the junior subordinated debentures are distributed to the holders
of the capital securities, the junior subordinated debentures may be
represented by one or more global certificates registered in the name of Cede
& Co., as the nominee of DTC. The depositary arrangements for such junior
subordinated debentures are expected to be substantially similar to those in
effect for the capital securities. For a description of DTC and the terms of
the depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, you should read "Description
of Capital Securities - Form, Denomination, Book-Entry Procedures and
Transfer."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest on the
junior subordinated debentures will be made at the office of the debenture
trustee in Wilmington, Delaware or at the office of such
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paying agent or paying agents as we may designate from time to time, except
that, at our option, payment of any interest may be made, except in the case
of junior subordinated debentures in global form:
- by check mailed to the address of the person or entity
entitled to the interest payment as such address shall appear
in the register for the junior subordinated debentures; or
- by transfer to an account maintained by the person or entity
entitled to the interest payment as specified in the register,
provided that proper transfer instructions have been received
by the relevant record date.
Payment of any interest on any junior subordinated debenture will be
made to the person or entity in whose name the junior subordinated debenture
is registered at the close of business on the record date for the interest
payment date, except in the case of defaulted interest. We may at any time
designate additional paying agents or rescind the designation of any paying
agent; however we will always be required to maintain a paying agent in each
place of payment for the junior subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent,
or then held by us, in trust for the payment of the principal of (or premium,
if any) or interest on any junior subordinated debenture and remaining
unclaimed for two years after such principal (or premium, if any) or interest
has become due and payable shall, at our request, be repaid to us and the
holder of the junior subordinated debenture shall thereafter look, as a
general unsecured creditor, only to us for payment.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no debenture event of default exists, we will have the
right under the Indenture to defer the payment of interest on the junior
subordinated debentures, at any time and from time to time, for no more than
10 consecutive semi-annual periods for each deferral period, provided that no
deferral period shall end on a date other than an interest payment date or
extend beyond November 15, 2029. At the end of a deferral period, we must pay
all interest then accrued and unpaid (together with interest thereon at the
rate of 9.875% per year, compounded semi-annually from the last interest
payment date to which interest was paid, to the extent permitted by
applicable law). During a deferral period, interest will continue to accrue,
and holders of the capital securities or, if the junior subordinated
debentures have been distributed to holders of the capital securities,
holders of junior subordinated debentures, will be required to include that
deferred interest in gross income for federal income tax purposes on an
accrual method of accounting prescribed by the Code and Treasury regulation
provisions on original issue discount prior to the receipt of cash
attributable to that income. See "Certain Federal Income Tax Consequences -
Interest Income and Original Issue Discount."
During any such deferral period, we may not:
- declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect
to, any of our capital stock;
- make any payment of principal of, or interest or premium, if
any, on or repay, repurchase or redeem any of our debt
securities that rank equal to or junior to the junior
subordinated debentures; or
- make any guarantee payments with respect to any guarantee by
us of the debt securities of any of our subsidiaries
(including our guarantee of the capital securities of the
Trust and any other guarantees) if such guarantee ranks equal
or junior to the junior subordinated debentures other than:
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(a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, our common
stock;
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or
repurchase of any rights pursuant thereto;
(c) payments under the guarantee;
(d) as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock
for another class or series of our capital stock;
(e) the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged; and
(f) purchases of our common stock related to the issuance of
common stock or rights under any of our benefit plans for our
directors, officers or employees or any of our dividend
reinvestment plans.
Before the end of any deferral period, we may extend the deferral
period, as long as no event of default exists and the extension does not
cause the deferral period to exceed 10 consecutive semi-annual periods, to
end on a date other than an interest payment date or to extend beyond
November 15, 2029. At the end of any deferral period and upon the payment of
all then accrued and unpaid interest (together with interest thereon at the
rate of 9.875% per year, compounded semi-annually, to the extent permitted by
applicable law), we may elect to begin a new deferral period, subject to the
requirements set forth in this Prospectus. No interest will be due and
payable during a deferral period until the deferral period ends. We must give
the property trustee, the administrative trustees and the debenture trustee
notice of our election at least five business days before the earlier of:
- the date the distributions on the capital securities would
have been payable, except for the election to begin or extend
such deferral period;
- the date the administrative trustees are required to give
notice to any securities exchange or automated quotation
system on which the capital securities are listed or quoted or
to holders of capital securities of the record date for such
distributions; or
- the date such distributions are payable, but at least five
business days prior to the record date.
The debenture trustee will notify holders of the capital securities
of our election to begin or extend a new deferral period.
There is no limit on the number of times that we may elect to begin
a deferral period.
We do not currently intend to exercise our right to defer payments
of interest on the junior subordinated debentures.
OPTIONAL PREPAYMENT
The junior subordinated debentures will be prepayable, in whole or
in part, at our option on or after November 15, 2009, subject to our receipt
of any required regulatory approval, at an optional prepayment price equal to
the percentage of the outstanding principal amount of the junior subordinated
debentures specified below, plus, in each case, accrued and unpaid interest
on the junior subordinated
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debentures, if any, to the date of prepayment if redeemed during the 12-month
period beginning November 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2009..................................................................104.938%
2010..................................................................104.444%
2011..................................................................103.950%
2012..................................................................103.457%
2013..................................................................102.963%
2014..................................................................102.469%
2015..................................................................101.975%
2016..................................................................101.481%
2017..................................................................100.988%
2018..................................................................100.494%
2019 and thereafter...................................................100.000%
</TABLE>
SPECIAL EVENT PREPAYMENT
If there are changes in the bank regulatory, investment company or tax laws
that adversely affect the status of the Trust, the capital securities or the
junior subordinated debentures, we may, at our option and at any time,
subject to our receipt of any required regulatory approval, prepay the junior
subordinated debentures, in whole but not in part, at any time within 90 days
of the change in the law, at the special event prepayment price. The special
event prepayment price will be an amount equal to the greater of:
- 100% of the principal amount of the junior subordinated
debentures, or
- the sum, as determined by a quotation agent referred to below,
of the present values of the remaining scheduled payments of
principal and interest on the junior subordinated debentures
from the prepayment date to the maturity date, discounted to
the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the adjusted
treasury rate,
plus, in the case of each of the above scenarios, accrued and unpaid interest
and liquidated damages, if any, to the date of prepayment.
A change in the bank regulatory law means our receipt of an opinion
of independent bank regulatory counsel experienced in such matters to the
effect that, as a result of:
- any amendment to, or change (including any announced
prospective change) in, any laws or regulations of the United
States or any rules, guidelines or policies of an applicable
regulatory agency or authority; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, the
capital securities do not constitute, or within 90 days of the opinion will
not constitute, Tier 1 Capital (or its then equivalent if we were subject to
such capital requirement).
A change in the investment company law means the receipt by us and
the Trust of an opinion of independent securities counsel experienced in such
matters to the effect that, as a result of:
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- any amendment to, or change (including any announced
prospective change) in, any laws or regulations of the United
States or any rules, guidelines or policies of any applicable
regulatory agency or authority; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, the
Trust is, or within 90 days of the date of the opinion will be, considered an
investment company that is required to be registered under the Investment
Company Act.
A change in tax law means the receipt by us and the Trust of an
opinion of independent tax counsel experienced in such matters to the effect
that, as a result of:
- any amendment to, or change (including any announced
prospective change) in, any laws or regulations of the United
States or any political subdivision or taxing authority
thereof or therein; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, there
is more than an insubstantial risk that:
- the Trust is, or will be within 90-days of the date of such
opinion, subject to U.S. federal income tax with respect to
any income received or accrued on the junior subordinated
debentures;
- interest payable by us on the junior subordinated debentures
is not, or within 90-days of the date of such opinion will not
be, deductible by us, in whole or in part, for U.S. federal
income tax purposes; or
- the Trust is, or will be within 90-days of the date of such
opinion, subject to more than a DE MINIMIS amount of other
taxes, duties or other governmental charges.
Adjusted treasury rate means, with respect to a prepayment date, the
rate per annum equal to:
- 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 Board 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, as defined
below (if no maturity is within three months before or three
months after the maturity corresponding to the remaining life,
yields for the two published maturities most closely
corresponding to the remaining life shall be determined, and
the adjusted treasury rate shall be interpolated or
extrapolated from such yields on a straight-line basis,
rounding to the nearest month), or
- 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 to the comparable
treasury issue, calculated using a price for the
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comparable treasury issue (expressed as a percentage of
its principal amount) equal to the comparable treasury
price for such prepayment date,
plus: 320 basis points.
Comparable treasury issue means the United States Treasury security
selected by the quotation agent (defined below) having a maturity comparable
to the remaining life of the junior subordinated debentures 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 the remaining life, the two most closely corresponding United States
Treasury securities, as selected by the quotation agent, shall be used as the
comparable treasury issue, and the adjusted treasury rate shall be
interpolated or extrapolated on a straight-line basis, rounding to the
nearest month, using such securities.
Comparable treasury price means, with respect to a prepayment date:
- the average of three reference treasury dealer quotations for
such prepayment date, after excluding the highest and lowest
such reference treasury dealer quotations, or
- if the quotation agent obtains fewer than five such reference
treasury dealer quotations, the average of all such reference
treasury dealer quotations.
Quotation agent means the reference treasury dealer appointed by us.
Reference treasury dealer means a nationally recognized U.S. Government
securities dealer in New York, New York selected by us.
Reference treasury dealer quotations means, with respect to each
reference treasury dealer and the prepayment date, the average, as determined
by the debenture trustee, of the bid and asked prices for the comparable
treasury issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the debenture trustee by such reference treasury
dealer at 5:00 p.m., New York time, on the third business day preceding such
prepayment date.
Remaining life means the term of the junior subordinated debentures
from the prepayment date to the maturity date.
We will mail any notice of prepayment between 30 and 60 days before
the prepayment date to each holder of junior subordinated debentures to be
prepaid at its registered address. Unless we default in payment of the
prepayment price, on the prepayment date interest shall cease to accrue on
the junior subordinated debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or
other governmental charges as a result of a change in the tax law, we will
pay as additional amounts on the junior subordinated debentures any amounts
as may be necessary in order that the amount of distributions then due and
payable by the Trust on the outstanding capital securities shall not be
reduced as a result of any additional sums, including taxes, duties or other
governmental charges to which the Trust has become subject as a result of a
change in the tax law.
CERTAIN COVENANTS OF INTERWEST BANCORP, INC.
We have agreed that we will not:
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- declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock;
- make any payment of principal of, or interest or premium, if
any, on or repay, repurchase or redeem any of our debt
securities that rank equal or junior to the junior
subordinated debentures; or
- make any guarantee payments with respect to any of our
guarantees of the debt securities of any of our subsidiaries
if such guarantee ranks equal or junior to the junior
subordinated debentures, other than:
- dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase
shares of, our common stock;
- any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or
the issuance of common stock under any such plan in
the future, or the redemption or repurchase of any
such rights pursuant thereto;
- payments under the guarantee;
- as a result of a reclassification of our common
stock or the exchange or conversion of one class or
series of our common stock for another class or
series of our common stock;
- the purchase of fractional interests in shares of
our common stock pursuant to the conversion or
exchange provisions of such common stock or the
security being converted or exchanged; and
- purchases of our common stock related to the
issuance of common stock or rights under any of our
benefit plans for its directors, officers or
employees or any of our dividend reinvestment plans,
if at such time:
- we have actual knowledge that there is any event that is, or
with the giving of notice or the lapse of time, or both, would
be, a debenture event of default and that we have not taken
reasonable steps to cure;
- we are in default with respect to our payment of any
obligations under the guarantee; or
- we have given notice of our election to exercise our right to
defer interest payments on the junior subordinated debentures
as provided in the Indenture and the deferral period, or any
extension of the deferral period, is continuing.
So long as the capital securities remain outstanding, we also have
agreed:
- to directly or indirectly maintain 100% direct or indirect
ownership of the common securities; PROVIDED, HOWEVER, that
any of our permitted successors under the Indenture may
succeed to our ownership of the common securities;
- to use commercially reasonable efforts to cause the Trust to
remain a business trust, except in connection with the
distribution of junior subordinated debentures to the holders
of capital
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securities in liquidation of the Trust, the redemption of all
of the capital securities, or certain mergers, consolidations
or amalgamations, each as permitted by the trust agreement;
- to use commercially reasonable efforts to cause the Trust to
otherwise continue not to be classified as an association
taxable as a corporation and to be classified as a grantor
trust for U.S. federal income tax purposes;
- to use commercially reasonable efforts to cause each holder of
capital securities to be treated as owning an undivided
beneficial interest in the junior subordinated debentures; and
- to not cause, as sponsor of the Trust, or permit, as holder of
the common securities, the dissolution, winding-up or
liquidation of the Trust, except as provided in the trust
agreement.
MODIFICATION OF INDENTURE
From time to time, we, together with the debenture trustee, may,
without the consent of the holders of junior subordinated debentures, amend
the Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies or enabling us and the Trust to
conduct an exchange offer as contemplated by the registration rights
agreement, provided that such amendments do not materially adversely affect
the interest of the holders of junior subordinated debentures. We, together
with the debenture trustee, may amend the Indenture, regardless of the effect
on the interests of the holders of the junior subordinated debentures, for
specific purposes including, among other things, to qualify, or to maintain
the qualification of, the Indenture under the Trust Indenture Act.
The Indenture permits us and the debenture trustee, with the consent
of the holders of a majority in aggregate principal amount of junior
subordinated debentures, to modify the Indenture in a manner affecting the
rights of the holders of the junior subordinated debentures; provided that no
modification may, without the consent of the holders of each outstanding
subordinated debenture affected:
- change the stated maturity date, or reduce the principal
amount, of the junior subordinated debentures;
- reduce the amount payable on prepayment or reduce the rate or
extend the time of payment of interest, except pursuant to our
right under the Indenture to defer the payment of interest.
Please refer to "Option to Extend Interest Payment Date";
- change any of the prepayment provisions;
- make the principal of, (or premium, if any) or interest on,
the junior subordinated debentures payable in any coin or
currency other than that provided in the junior subordinated
debentures;
- impair or affect the right of any holder of junior
subordinated debentures to institute suit for the payment
thereof; or
- reduce the percentage of the principal amount of the junior
subordinated debentures, the holders of which are required to
consent to any such modification.
DEBENTURE EVENTS OF DEFAULT
A "debenture event of default" is:
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- our failure for 30 days to pay any interest (including
compounded interest and additional sums, if any), or
liquidated damages, if any, on the junior subordinated
debentures or any other similar debentures when due (subject
to the deferral of any interest due date in the case of a
deferral period with respect to the junior subordinated
debentures or other similar debentures as the case may be);
- our failure to pay any principal or premium, if any, on the
junior subordinated debentures or any other similar debentures
when due whether at maturity, upon prepayment, by accelerating
the maturity or otherwise;
- our failure to observe or perform any other covenant contained
in the Indenture for 90 days after written notice to us from
the debenture trustee or to us and the debenture trustee from
the holders of at least 25% in aggregate outstanding principal
amount of junior subordinated debentures; or
- certain events related to our bankruptcy, insolvency or
reorganization.
The holders of a majority in aggregate outstanding principal amount
of the junior subordinated debentures have, subject to certain exceptions,
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee. The debenture trustee or
the holders of not less than 25% in aggregate outstanding principal amount of
the junior subordinated debentures may declare the principal due and payable
immediately upon a debenture event of default. The holders of a majority in
aggregate outstanding principal amount of the junior subordinated debentures
may annul this declaration and waive the default if the default (other than
the non-payment of the principal of the junior subordinated debentures which
has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the debenture trustee.
Prior to any declaration accelerating the maturity of the junior
subordinated debentures the holders of a majority in aggregate outstanding
principal amount of the junior subordinated debentures affected 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 premium, if
any) or interest (including compounded interest and additional sums, if any),
or liquidated damages, if any, (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal (and
premium, if any) due otherwise than by acceleration has been deposited with
the debenture trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent
of the holder of each outstanding junior subordinated debenture.
The Indenture requires that we file with the debenture trustee a
certificate annually as to the absence of defaults specified under the
Indenture.
The Indenture provides that the debenture trustee may, in certain
circumstances, withhold notice of a debenture event of default from the
holders of the junior subordinated debentures, including if the debenture
trustee considers it in the interest of the holders to do so.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a debenture event of default exists that is attributable to our
failure to pay the principal of (or premium, if any) or interest (including
compounded interest and additional sums, if any), or liquidated damages, if
any, on the junior subordinated debentures on the due date, a holder of
capital securities may institute a direct action against us. We may not amend
the Indenture to remove this right to bring a direct action without the prior
written consent of the holders of all of the capital securities.
Notwithstanding any payments that we make to a holder of capital securities
in connection with a direct action, we shall remain obligated to pay the
principal of (and premium, if any) and interest on the junior subordinated
debentures, and we shall be subrogated to the rights of the holder of the
capital securities with respect to payments on the capital securities to the
extent that we make any payments to a holder in any direct action.
The holders of the capital securities will not be able to exercise
directly any remedies, other than those described in the above paragraph,
available to the holders of the junior subordinated debentures, unless an
event of default exists under the trust agreement. See "Description of
Capital Securities - Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that we will not consolidate with or merge
into any other person or convey, transfer or lease all or substantially all
of our properties to any person, and no person shall consolidate with or
merge into us or convey, transfer or lease all or substantially all of its
properties to us, unless:
- in case we consolidate with or merge into another person or
convey or transfer all or substantially all of our properties
to any person, the successor is organized under the laws of
the United States or any state or the District of Columbia,
and the successor expressly assumes our obligations under the
Indenture with respect to the junior subordinated debentures;
- immediately after giving effect to the transaction, no
debenture event of default, and no event which, after notice
or lapse of time or both, would become a debenture event of
default, exists; and
- certain other conditions as prescribed in the Indenture are
met.
The general provisions of the Indenture do not afford holders of the
junior subordinated debentures protection in the event of a highly leveraged
or other transaction that we may become involved in that may adversely affect
holders of the junior subordinated debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things,
- all junior subordinated debentures not previously delivered to
the debenture trustee for cancellation have become due and
payable or will become due and payable at maturity or called
for prepayment within one year, and
- we deposit or cause to be deposited with the debenture trustee
funds, in trust, for the purpose and in an amount sufficient
to pay and discharge the entire indebtedness on the junior
subordinated debentures not previously delivered to the
debenture trustee for cancellation, for the principal (and
premium, if any) and interest (including compounded interest
and
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additional sums, if any) to the date of the deposit or to
November 15, 2029, as the case may be,
then the Indenture will cease to be of further effect (except as to our
obligations to pay all other sums due pursuant to the Indenture and to
provide the officers' certificates and opinions of counsel), and we will be
deemed to have satisfied and discharged the Indenture.
SUBORDINATION
We have promised that any of our junior subordinated debentures
issued under the Indenture will rank junior to all of our senior indebtedness
to the extent provided in the Indenture. Upon any payment or distribution of
our assets to creditors upon our liquidation, dissolution, winding up,
reorganization, assignment for the benefit of our creditors, marshaling of
our assets or any bankruptcy, insolvency, debt restructuring or similar
proceedings in connection with any insolvency or bankruptcy proceeding
involving us, the allocable amounts in respect of the senior indebtedness
must be paid in full all allocable amounts (as defined below) before the
holders of the junior subordinated debentures will be entitled to receive or
retain any payment in respect thereof.
If the maturity of junior subordinated debentures is accelerated,
the holders of all senior indebtedness outstanding at such time will first be
entitled to receive payment in full of the allocable amounts in respect of
such senior indebtedness 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.
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 is:
- a default in any payment with respect to senior indebtedness;
or
- an event of default exists with respect to any senior
indebtedness that accelerates the maturity of the senior
indebtedness
Allocable amounts, when used with respect to any senior
indebtedness, means all amounts due or to become due on such senior
indebtedness less, if applicable, any amount which would have been paid to,
and retained by, the holders of such senior indebtedness (whether as a result
of the receipt of payments by the holders of such senior indebtedness from us
or any other obligor thereon or from any holders of, or trustee in respect
of, other indebtedness that is subordinate and junior in right of payment to
such senior indebtedness pursuant to any provision of such indebtedness for
the payment over of amounts received on account of such indebtedness to the
holders of such senior indebtedness or otherwise) but for the fact that such
senior indebtedness is subordinate or junior in right of payment to (or
subject to a requirement that amounts received on such senior indebtedness be
paid over to obligees on) trade accounts payable or accrued liabilities
arising in the ordinary course of business or deferred compensation.
Indebtedness for money borrowed means any of our obligations or any
obligation guaranteed by us, to repay borrowed money, whether or not
evidenced by bonds, debentures, notes or other written instruments; except
that indebtedness for money borrowed does not include trade accounts payable
or accrued liabilities arising in the ordinary course of business.
Indebtedness ranking on a parity with the junior subordinated
debentures means:
- indebtedness for money borrowed, whether outstanding on the
date the Indenture is executed or created, assumed or incurred
after the date that the Indenture is executed, to the extent
the
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indebtedness for money borrowed by its terms ranks equal
to and not prior to the junior subordinated debentures in the
right of payment upon the happening of our dissolution,
winding-up, liquidation or reorganization; and
- all other debt securities, and guarantees in respect of those
debt securities, issued to any trust other than the Trust, or
a trustee of such trust, partnership or other entity
affiliated with us, that is our financing vehicle (a
"financing entity"), in connection with the issuance by the
financing entity of equity securities or other securities
guaranteed by us pursuant to an instrument that ranks equal
to, with or junior to the guarantee; and the securing of any
indebtedness otherwise constituting indebtedness ranking on a
parity with the junior subordinated debentures shall not be
deemed to prevent such indebtedness from constituting
indebtedness ranking on a parity with the junior subordinated
debentures.
Indebtedness ranking junior to the junior subordinated debentures
means any indebtedness for money borrowed, whether outstanding on the date
the Indenture is executed or created, assumed or incurred after the date the
Indenture is executed, to the extent the indebtedness for money borrowed by
its terms ranks junior to and not equal to or prior to the junior
subordinated debentures (and any other indebtedness ranking on a parity with
the junior subordinated debentures) in right of payment upon the happening of
our dissolution or winding-up or liquidation or reorganization. The securing
of any indebtedness for money borrowed otherwise constituting indebtedness
ranking junior to the junior subordinated debentures shall not be deemed to
prevent the indebtedness for money borrowed from constituting indebtedness
ranking junior to the junior subordinated debentures.
Senior indebtedness means all indebtedness for money borrowed,
whether outstanding on the date the Indenture is executed or created, assumed
or incurred after the date the Indenture is executed, except indebtedness
ranking on a parity with the junior subordinated debentures or indebtedness
ranking junior to the junior subordinated debentures, and any deferrals,
renewals or extensions of the senior indebtedness.
We are a bank holding company and almost all of our operating assets
are owned by InterWest Bank, Pacific Northwest Bank and National Bank of
Tukwila. We rely primarily on dividends from our bank subsidiaries to meet
our obligations for payment of principal and interest on our outstanding debt
obligations and corporate expenses. We are a legal entity separate and
distinct from our subsidiaries. Holders of junior subordinated debentures
should look only to us for payments on the junior subordinated debentures.
There are regulatory limitations on the payment of dividends directly or
indirectly to us from our bank subsidiaries. See "- General." In addition, our
bank subsidiaries are subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, us and
certain other affiliates, and on investments in stock or other securities
thereof. See "Regulation and Supervision" for a discussion of these dividend
and borrowing restrictions. Accordingly, the junior subordinated debentures
will be effectively subordinated to all existing and future liabilities of
our subsidiaries.
Also, as a bank holding company, our right to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the
capital securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary (including depositors, in
the case of our bank subsidiaries), except to the extent we may be recognized
as a creditor of that subsidiary. At September 30, 1999, our subsidiaries had
total liabilities, including deposits, of $2.4 billion. Accordingly, the
junior subordinated debentures will be effectively subordinated to all
existing and future liabilities of our subsidiaries (including deposit
liabilities of our bank subsidiaries) and all liabilities of any of our
future subsidiaries. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of us or any subsidiary, including senior
indebtedness.
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RESTRICTIONS ON TRANSFER
The junior subordinated debentures may be transferred only in blocks
having an aggregate principal amount of not less than $100,000 and multiples
of $1,000 in excess thereof. Any attempted transfer of junior subordinated
debentures in a block having an aggregate principal amount of less than
$100,000 will be deemed to be void and of no legal effect whatsoever. Any
such purported transferee shall be deemed not to be the holder of such junior
subordinated debentures for any purpose, including but not limited to the
receipt of payments on such junior subordinated debentures, and such
purported transferee shall be deemed to have no interest whatsoever in such
junior subordinated debentures.
GOVERNING LAW
The Indenture and the junior subordinated debentures will be
governed by and construed in accordance with the laws of the State of New
York, without regard to conflict of law principles.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Following the exchange offer and the qualification of the Indenture
under the Trust Indenture Act, the debenture trustee will have and be subject
to all the duties and responsibilities specified with respect to an Indenture
trustee under the Trust Indenture Act. Subject to such provisions, the
debenture trustee is not obligated to exercise any of the powers vested in it
by the Indenture at the request of any holder of junior subordinated
debentures, unless offered reasonable indemnity by the holder against the
costs, expenses and liabilities which might be incurred thereby. The
debenture trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
under the Indenture.
DESCRIPTION OF GUARANTEE
WE WILL EXECUTE AND DELIVER THE SERIES B GUARANTEE AT THE SAME TIME
THE SERIES B CAPITAL SECURITIES ARE ISSUED. THIS SUMMARY OF THE MATERIAL
PROVISIONS OF THE GUARANTEE IS NOT COMPLETE AND IS SUBJECT TO, AND QUALIFIED
IN ITS ENTIRETY BY, THE GUARANTEE AND THE TRUST INDENTURE ACT. THE GUARANTEE
TRUSTEE WILL HOLD THE SERIES B GUARANTEE FOR THE BENEFIT OF THE HOLDERS OF
THE CAPITAL SECURITIES. YOU CAN OBTAIN A COPY OF THE SERIES B GUARANTEE BY
REQUESTING IT FROM INTERWEST BANCORP. WILMINGTON TRUST COMPANY WILL ACT AS
GUARANTEE TRUSTEE UNDER THE SERIES B GUARANTEE.
GENERAL
We irrevocably agree to pay in full on a subordinated basis, to the
extent set forth in this Prospectus, the payments with respect to the capital
securities to the extent not paid by the Trust. The payments that will be
subject to the guarantee are:
- any accumulated and unpaid distributions required to be paid
on the capital securities, to the extent that the Trust has
funds legally available at that time;
- the applicable redemption price with respect to the capital
securities called for redemption, to the extent that the Trust
has funds legally available at that time; and
- upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Trust (other than in connection with the
distribution of the junior subordinated debentures to holders
of the capital securities or the redemption of all capital
securities), the lesser of (a) the liquidation distribution,
to the extent the Trust has funds legally available at that
time, and (b) the amount of assets of the Trust remaining
available for distribution to holders of capital
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securities after satisfying the liabilities owed to the
Trust's creditors as required by applicable law.
The guarantee will rank subordinate and junior to all senior
indebtedness to the extent provided in the guarantee. See "- Status of the
Guarantee." Our obligation to make a guarantee payment may be satisfied by
our direct payment of the required amounts to the holders of the capital
securities or by causing the Trust to pay these amounts to the holders of the
capital securities.
The guarantee will be an irrevocable guarantee on a subordinated
basis of the Trust's obligations under the capital securities, but will apply
only to the extent that the Trust has funds sufficient to make these
payments. If we do not make payments on the junior subordinated debentures
held by the Trust, then it will not be able to make the related payments to
you on the capital securities and will not have funds legally available.
Please refer to the "Relationship among the Capital Securities, the
Subordinated Debentures and the Guarantee" section of this Prospectus. The
guarantee does not limit us from incurring or issuing other secured or
unsecured debt, including senior indebtedness, whether under the Indenture,
any other Indenture that we may enter into in the future or otherwise.
The holders of at least a majority in aggregate liquidation amount
of the capital securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the guarantee
trustee in respect of our guarantee or to direct the exercise of any trust
power conferred upon the guarantee trustee under our guarantee. If the
guarantee trustee fails to enforce the guarantee, any holder of the capital
securities may institute a legal proceeding directly against us to enforce
their rights under the guarantee without first instituting a legal proceeding
against the Trust, the guarantee trustee or any other person or entity.
If we default on our obligation to pay amounts payable under the
junior subordinated debentures, the Trust will lack funds for the payment of
distributions or amounts payable on redemption of the capital securities or
otherwise, and the holders of the capital securities will not be able to rely
upon the guarantee for payment of such amounts. Instead, if a debenture event
of default exists that is attributable to our failure to pay principal of (or
premium, if any) or interest on the junior subordinated debentures on a
payment date, then any holder of capital securities may institute a direct
action against us pursuant to the terms of the Indenture for enforcement of
payment to that holder of the principal of (or premium, if any) or interest
on such junior subordinated debentures having a principal amount equal to the
aggregate liquidation amount of the capital securities of that holder. In
connection with a direct action, we will have a right of set-off under the
Indenture to the extent that we made any payment to the holder of capital
securities in the direct action. Except as described in this Prospectus,
holders of capital securities will not be able to exercise directly any other
remedy available to the holders of the junior subordinated debentures or
assert directly any other rights in respect of the junior subordinated
debentures. The trust agreement provides that each holder of capital
securities by accepting the capital securities agrees to the provisions of
the guarantee and the Indenture.
We will, through our guarantee, the trust agreement, the junior
subordinated debentures and the Indenture, taken together, fully, irrevocably
and unconditionally guarantee all of the Trust's obligations under the
capital securities. No single document standing alone, or operating in
conjunction with fewer than all of the other documents, constitutes that
guarantee. Only the combined operation of these documents provides a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
capital securities. You should refer to "Relationship among the Capital
Securities, the Junior Subordinated Debentures and the Guarantee" for more
information about our guarantee.
STATUS OF THE GUARANTEE
Our guarantee will constitute an unsecured obligation and will rank
subordinate and junior to all senior indebtedness in the same manner as the
junior subordinated debentures. See "Description of
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Junior Subordinated Debentures - Subordination." In addition, because we are a
holding company, our right to participate in any distribution of the assets
of our subsidiaries upon their liquidation or reorganization or otherwise is
subject to the prior claims of their creditors (including its depositors),
except to the extent we may be recognized as their creditor. Accordingly, our
obligations under the guarantee effectively will be subordinated to all
existing and future liabilities of our present and future subsidiaries
(including depositors of InterWest Bank, Pacific Northwest Bank, and National
Bank of Tukwila). As a result, claimants should look only to our assets for
payments under the guarantee. See "Description of Junior Subordinated
Debentures - General."
Our guarantee will rank equal to all of our other guarantees with
respect to preferred beneficial interests issued by other trusts. Our
guarantee of the Trust's capital securities does not limit the amount of
secured or unsecured debt, including senior indebtedness, which we or any of
our subsidiaries may incur. We expect from time to time that we will incur
additional indebtedness and that our subsidiaries will also incur additional
liabilities. Our guarantee will constitute a guarantee of payment and not of
collection, enabling the guaranteed party to institute a legal proceeding
directly against us to enforce their rights under the guarantee without first
instituting a legal proceeding against any other person or entity. Our
guarantee will be held for the benefit of the holders of the capital
securities. Our guarantee will not be discharged, except by payment of the
guarantee payments in full to the extent that the Trust has not paid, or upon
distribution of the junior subordinated debentures to, the holders of the
capital securities.
EVENTS OF DEFAULT
There will be an event of default under the guarantee if we fail to
perform any of our payment or other obligations under the guarantee; except
that with respect to a default in payment of any guarantee payment, we shall
have received notice of default and shall not have cured the default within
60 days after receipt of the notice.
We, as guarantor, will be required to file annually with the
guarantee trustee a certificate regarding our compliance with the applicable
conditions and covenants under our guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the capital securities (in which case no
approval will be required), the guarantee may not be amended without the
prior approval of the holders of a majority of the liquidation amount of such
outstanding capital securities. You should read "Description of Capital
Securities - Voting Rights; Amendment of the Trust Agreement" for more
information about the manner of obtaining the holders' approval. All
guarantees and agreements contained in the guarantee agreement shall bind our
successors, assigns, receivers, trustees and representatives and shall inure
to the benefit of the holders of the capital securities then outstanding.
TERMINATION OF THE GUARANTEE
Our guarantee will terminate and be of no further force and effect
upon:
- full payment of the applicable redemption price of all
outstanding capital securities;
- full payment of the liquidation amount payable upon
liquidation of the Trust; or
- distribution of junior subordinated debentures to the holders
of the capital securities.
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Our guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the capital securities must
restore payment of any sums paid under the capital securities or the
guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, except if we default under the guarantee,
will undertake to perform only such duties as are specifically set forth in
the guarantee and, in case a default with respect to the guarantee has
occurred, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the guarantee trustee will not be obligated to exercise any
of the powers vested in it by the guarantee at the request of any holder of
the capital securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that it might incur.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of law
principles.
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We irrevocably guarantee payments of distributions and other amounts
due on the capital securities to the extent the Trust has funds legally
available to pay such amounts as and to the extent set forth under
"Description of Guarantee." Taken together, our obligations under the junior
subordinated debentures, the Indenture, the trust agreement and the guarantee
will provide, a full, irrevocable and unconditional guarantee of the Trust's
payments of distributions and other amounts due on the capital securities. No
single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes this guarantee. Only the combined
operation of these documents effectively provides a full, irrevocable and
unconditional guarantee of the Trust's obligations under the capital
securities.
If and to the extent that we do not make the required payments on
the junior subordinated debentures, the Trust will not have sufficient funds
to make its related payments, including distributions on the capital
securities. Our guarantee will not cover any payments when the Trust does not
have sufficient funds legally available to make those payments. Your remedy,
as a holder of capital securities, is to institute a direct action against
us. Our obligations under the guarantee will be subordinate and junior to all
senior indebtedness.
SUFFICIENCY OF PAYMENTS
As long as we pay the interest and other payments when due on the
junior subordinated debentures, the Trust will have sufficient funds to cover
distributions and other payments due on the capital securities, primarily
because:
- the aggregate principal amount or prepayment price of the
junior subordinated debentures will equal the sum of the
liquidation amount or redemption price, as applicable, of the
capital securities;
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- the interest rate and interest payment dates and other payment
dates on the junior subordinated debentures will match the
distribution rate and distribution dates and other payment
dates for the capital securities;
- as sponsor, we will pay for all and any costs, expenses and
liabilities of the Trust, except for the Trust's obligations
to holders of capital securities; and
- the trust agreement also provides that the Trust is not
authorized to engage in any activity that is not consistent
with its limited purposes.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
You, as holder of capital securities, may institute a legal
proceeding directly against us to enforce your rights under our guarantee
without first instituting a legal proceeding against the guarantee trustee,
the Trust or any other person or entity.
A default or event of default under any senior indebtedness would
not constitute a default or event of default under the trust agreement.
However, if there are payment defaults under, or accelerations of, senior
indebtedness, the subordination provisions of the Indenture provide that we
cannot make payments in respect of the junior subordinated debentures until
we have paid the senior indebtedness in full or we have cured any payment
default or a payment default has been waived. Our failure to make required
payments on junior subordinated debentures would constitute an event of
default under the trust agreement.
LIMITED PURPOSE OF THE TRUST
The capital securities will represent beneficial interests in the
Trust, and the Trust exists for the sole purpose of issuing and selling the
capital securities and the common securities, using the proceeds from the
sale of the capital securities and the common securities to acquire our
junior subordinated debentures and engaging in only those other activities
necessary, advisable or incidental thereto. A principal difference between
the rights of a holder of a capital security and a holder of a junior
subordinated debenture is that a holder of a junior subordinated debenture
will be entitled to receive from us the principal of (and premium, if any)
and interest on junior subordinated debentures held, while a holder of
capital securities is entitled to receive distributions from the Trust (or,
in certain circumstances, from us under our guarantee) if and to the extent
the Trust has funds legally available to pay the distributions.
RIGHTS UPON DISSOLUTION
Unless the junior subordinated debentures are distributed to holders
of the capital securities, if the Trust is voluntarily or involuntarily
dissolved, wound-up or liquidated, after satisfying the liabilities owed to
the Trust's creditors as required by applicable law, the holders of the
capital securities will be entitled to receive, out of assets held by the
Trust, the liquidation distribution in cash. See "Description of Capital
Securities - Liquidation of the Trust and Distribution of Junior Subordinated
Debentures."
If we are voluntarily or involuntarily liquidated or bankrupted, the
property trustee, as holder of the junior subordinated debentures, would be
one of our subordinated creditors, subordinated in right of payment to all
senior indebtedness, but entitled to receive payment in full of principal
(and premium, if any) and interest, before any of our stockholders receive
payments or distributions. Since we will be the guarantor under the guarantee
and will agree to pay all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of its capital securities), the
positions of a holder of capital
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securities and a holder of junior subordinated debentures relative to other
creditors and to our stockholders in the event of our liquidation or
bankruptcy are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Graham & Dunn PC, special federal income tax counsel
to us and the Trust, the following describes the material U.S. federal income
tax consequences of the purchase, ownership and disposition of a capital
security.
This summary addresses only the tax consequences to a person that
acquires a capital security on its original issuance at its original price and
that holds the security as a capital asset. This summary does not address all
tax consequences that may be applicable to a beneficial owner of a capital
security and does not address the tax consequences to holders subject to special
tax regimes (like banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors or persons that will hold a capital security as a position
in a "straddle," as part of a "synthetic security" or "hedge" or as part of a
"conversion transaction" or other integrated investment). This summary does not
include any description of any alternative minimum tax consequences or the tax
laws of any state or local government or of any foreign government that may
apply to a capital security. This discussion is addressed to a U.S. Holder,
which is defined as a beneficial owner of a capital security that, for federal
income tax purposes, is (or is treated as):
- a citizen or individual resident of the United States;
- a corporation or partnership (or entity treated for federal
income tax purposes as a corporation or partnership) created
or organized in or under the laws of the United States or any
state (including the District of Columbia) or other political
subdivision thereof;
- an estate the income of which is includible in gross income
for federal income tax purposes without regard to its source;
or
- a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the ability to control
all substantial decisions of the trust.
This summary does not address the special consequences to a non-U.S.
Holder who acquires a capital security. For purposes of this discussion, a
"Non-U.S. Holder" generally in any corporation, individual, partnership, estate
or trust that is not a U.S. Holder for federal income tax purposes.
This summary does not address the tax consequences to any shareholder,
partner or beneficiary of a holder of a capital security. This summary is based
on the Code, Treasury regulations thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. An opinion of Graham & Dunn PC is not
binding on the IRS or the courts. No rulings have been or are expected to be
sought from the IRS with respect to any of the matters described in this
Prospectus. We can give no assurance that the opinions expressed herein will not
be challenged by the IRS or, if challenged, that the challenge will not be
successful.
Prospective investors are advised to consult with 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 possible effects of changes in
such tax laws.
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EXCHANGE OF CAPITAL SECURITIES
The exchange of Series A capital securities for Series B capital
securities should not be a taxable event to holders for United States federal
income tax purposes. The exchange of Series A capital securities for Series B
capital securities pursuant to the exchange offer should not be treated as an
"exchange" for United States federal income tax purposes because the Series B
capital securities should not be considered to differ materially in kind or
extent from the Series A capital securities and because the exchange will occur
by operation of the terms of the Series A capital securities. If, however, the
exchange of the Series A capital securities for the Series B capital securities
were treated as an exchange for U. S. federal income tax purposes, such exchange
should constitute a recapitalization for federal income tax purposes.
Accordingly, the Series B capital securities should have the same issue price as
the Series A capital securities, and a holder should have the same adjusted tax
basis and holding period in the Series B capital securities as the holder had in
the Series A capital securities immediately before the exchange.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
We take the position that the junior subordinated debentures will be
classified for U.S. federal income tax purposes as our indebtedness. We,
together with the Trust and the holders of the capital securities (by acceptance
of a beneficial interest in a capital security) will agree to treat the junior
subordinated debentures as our indebtedness for all U.S. federal income tax
purposes. We cannot be sure that this position will not be challenged by the IRS
or, if challenged, that the challenge will not be successful. The remainder of
this discussion assumes that the junior subordinated debentures will be
classified as our indebtedness for U.S. federal income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the capital securities, Graham &
Dunn PC will render its opinion that, under then current law and assuming full
compliance with the terms of the trust agreement and the Indenture (and certain
other documents), and based on certain facts and assumptions contained in that
opinion, the Trust will be classified for federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for federal income tax purposes, the Trust will not be subject to federal income
tax, and each holder of a capital security will be required to include in its
gross income any interest (or accrued original issue discount), with respect to
its allocable share of the junior subordinated debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the Indenture, we have the right to defer the payment of interest
on the junior subordinated debentures at any time or from time to time for one
or more deferral periods not exceeding 10 consecutive semi-annual periods each,
provided that no deferral period shall end on a date other than an interest
payment date or extend beyond November 15, 2029. By reason of that right, the
Treasury regulations will subject the junior subordinated debentures to the
rules in the Code and Treasury regulations on debt instruments issued with
original issue discount, unless the Indenture or junior subordinated debentures
contain terms or conditions that make the likelihood of exercise of the deferral
option remote. Under the Treasury regulations, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with original issue discount. Although the answer is
not clear, we believe that the likelihood that we would exercise our option to
defer payments of interest is "remote" since exercising that option would, among
other things, prevent us from declaring dividends on any class of our equity
securities. Accordingly, we intend to take the position that the junior
subordinated debentures will not be considered to be issued with original issue
discount and, accordingly, stated interest on the junior subordinated debentures
generally will be
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taxable to a holder as ordinary income at the time it is paid or accrued in
accordance with such holder's method of accounting.
Under the Treasury regulations, if we were to exercise our option to
defer payments of interest, the junior subordinated debentures would at that
time be treated as issued with original issue discount, and all stated interest
on the junior subordinated debentures would thereafter be treated as original
issue discount as long as the junior subordinated debentures remain outstanding.
If this occurred, all of a holder's interest income with respect to the junior
subordinated debentures would thereafter be accounted for on an economic accrual
basis regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
Consequently, a holder of a capital security would be required to include in
gross income original issue discount even though we would not make actual cash
payments during a deferral period. The amount of such includible original issue
discount could be significant. Also, under the Treasury regulations, if the
option to defer the payment of interest were determined not to be "remote," the
junior subordinated debentures would be treated as having been originally issued
with original issue discount. In such event, a holder would be required to
include in gross income an amount of original issue discount each taxable year
that approximates the amount of interest that accrues on the junior subordinated
debentures at the stated interest rate, regardless of such holder's method of
tax accounting, and actual cash payments of interest on the junior subordinated
debenture would not be separately includible in gross income. It is possible
that the IRS could take a position contrary to the interpretation described in
this Prospectus.
Because income on the capital securities will constitute interest or
original issue discount, corporate holders of the capital securities will not be
entitled to a dividends-received deduction with respect to any income recognized
with respect to the capital securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURE OR CASH UPON LIQUIDATION OF THE TRUST
We have the right at any time to liquidate the Trust and cause the
junior subordinated debentures to be distributed to the holders of the trust
securities. Under current law, the liquidation of the Trust and the distribution
of the junior subordinated debentures to trust security holders, for federal
income tax purposes, would be treated as a nontaxable event to each holder, and
the aggregate tax basis in the junior subordinated debentures received by such
holder would be equal to the holder's aggregate tax basis in its capital
securities surrendered. A holder's holding period in the junior subordinated
debentures received in liquidation of the Trust would be the same as the holding
period that the holder had in the capital securities surrendered.
The junior subordinated debentures may be prepaid in cash, and the
proceeds of that prepayment would be distributed to holders in redemption of
their capital securities. Under current law, that redemption would constitute,
for U.S. federal income tax purposes, a taxable disposition of the redeemed
capital securities, the tax consequences of which are described below under
"Sales or Redemptions of Capital Securities."
SALES OR REDEMPTIONS OF CAPITAL SECURITIES
On a sale or redemption of a capital security for cash, a holder will
recognize gain or loss equal to the difference between its adjusted tax basis in
the capital security and the amount realized on the sale or redemption of that
capital security. If the rules regarding original issue discount do not apply, a
holder's adjusted basis in a capital security generally will be its initial
purchase price, and if the holder uses an accrual method of accounting, the
holder's basis will be increased by any accrued but unpaid interest. If the
rules regarding original issue discount apply, a holder's adjusted basis in a
capital security generally will be its initial purchase price increased by any
original issue discount previously included in the holder's gross income to the
date of disposition and decreased by any payments received with respect to
original issued discount on the capital security. Gain or loss recognized on a
sale or redemption of a
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capital security will be capital gain or loss. Capital gain recognized by an
individual in respect of a capital security held for more than one year as of
the date of sale or redemption is subject to a maximum federal income tax rate
of 20 percent.
The capital securities may trade at a price that discounts any accrued
but unpaid interest on the junior subordinated debentures. Therefore, the amount
realized by a holder who disposes of a capital security between distribution
payment dates and whose adjusted basis in the capital security has been
increased by the amount of any accrued but unpaid original issue discount (or
interest) may be less than the holder's adjusted basis in the capital security.
In that case, the holder will recognize a capital loss. Subject to a limited
exception in the case of individual taxpayers, capital losses cannot be applied
to offset ordinary income for federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest, including original issue discount, accrued on
capital securities held of record by U.S. persons (other than corporations and
other exempt holders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt U.S. persons unless
the holder furnishes its taxpayer identification number in the manner prescribed
in applicable Treasury regulations, certifies that the number is correct,
certifies as to no loss of exemption from backup withholding and meets certain
other conditions.
Payment of the proceeds from the disposition of capital securities to
or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amount withheld from a holder under the backup withholding rules
will be allowed as a refund or credit against such holder's federal income tax
liability, provided the required information is furnished to the IRS.
It is anticipated that income on capital securities will be reported to
holders on Form 1099 (or any successor form) and mailed to holders of capital
securities by January 31 following each calendar year.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISER WITH RESPECT TO THE
TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF A CAPITAL
SECURITY, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
GENERAL
In evaluating the purchase of capital securities, a fiduciary of a
qualified profit-sharing, pension or stock bonus plan, including a plan for
self-employed individuals and their employees or any other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a collective investment fund or separate account in which such plans
invest and any other investor using assets that are treated as assets of an
employee benefit plan subject to ERISA (each, a "Plan" and collectively,
"Plans") should consider:
- whether the ownership of capital securities is in accordance
with the documents and instruments governing such Plan;
- whether the ownership of capital securities is solely in the
interest of Plan participants and beneficiaries and otherwise
consistent with the fiduciary's responsibilities and in
compliance with the requirements of Part 4 of Title I of
ERISA, including, in particular, the diversification, prudence
and liquidity requirements of Section 404 of ERISA and the
prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code;
- whether the assets of the Trust are treated as assets of the
Plan; and
- the need to value the assets of the Plan annually.
In addition, the fiduciary of an individual retirement arrangement under 408 of
the Code (an "IRA") considering the purchase of capital securities should
consider whether the ownership of the capital securities would result in a
non-exempt prohibited transaction under Section 4975 of the Code.
Governmental plans and certain church plans (each as defined under
ERISA) are not subject to the prohibited transaction rules. Such plans may,
however, be subject to federal, state or local laws or regulations which may
affect their investment in the capital securities. Any fiduciary of such a
governmental or church plan considering an investment in the capital securities
should determine the need for, and the availability, if necessary, of any
exemptive relief under such laws or regulations.
The fiduciary investment considerations summarized below provide a
general discussion that does not include all of the fiduciary investment
considerations relevant to Plans and, where indicated, IRAs. This summary is
based on the current provisions of ERISA and the Code and regulations and
rulings thereunder, and may be changed (perhaps adversely and with retroactive
effect) by future legislative, administrative or judicial action.
Plans and IRAs that are prospective purchasers of capital securities
should consult with and rely upon their own advisors in evaluating these matters
in light of their own particular circumstances.
PLAN ASSET REGULATION
Under Department of Labor regulations governing what constitutes the
assets of a Plan or IRA ("Plan Assets") for purposes of ERISA and the related
prohibited transaction provisions of the Code (the "Plan Asset Regulation," 29
C.F.R. Sec. 2510.3-101), when a Plan or IRA acquires an equity interest in
another entity, and such interest does not represent a "publicly offered
security" nor a security issued by an investment company registered under the
1940 Act, the Plan's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity, unless it is
established either that the entity is an operating company or that equity
participation in the entity by "benefit plan investors," as
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defined in the Plan Assets Regulation, is not "significant." For purposes of
the Plan Asset Regulation, the Trust will be neither an investment company nor
an operating company.
Under the Plan Asset Regulation, equity participation by benefit plan
investors will not be considered "significant" on any date only if immediately
after the most recent acquisition of the capital securities, the aggregate
interest in the capital securities held by benefit plan investors will be less
than 25% of the aggregate outstanding principal amount of the capital
securities. Although it is possible that the equity participation by benefit
plan investors on any date will not be "significant" for purposes of the Plan
Asset Regulation, such a result cannot be assured. Consequently, if Plans, IRAs
or investors using assets of Plans purchase the capital securities, the Trust's
assets could be deemed to be "plan assets" of such Plans and/or IRAs for
purposes of the fiduciary responsibility provisions of ERISA and the prohibited
transactions rules of ERISA and the Code. Under ERISA and the Code, any person
who exercises any authority or control respecting the management or disposition
of the assets of a Plan or IRA is considered to be a fiduciary of such Plan or
IRA. The property trustee of the Trust could therefore become a fiduciary of the
Plans and IRAs that invest in the capital securities and be subject to the
general fiduciary requirements of ERISA in exercising its authority with respect
to the management of the assets of the Trust. However, the property trustee will
have only limited discretionary authority with respect to the Trust assets and
the remaining functions and responsibilities performed by the property trustee
will be for the most part custodial and ministerial in nature.
PROHIBITED TRANSACTIONS
Each of the Trust, InterWest Bancorp (the obligor with respect to the
junior subordinated debentures held by the Trust) and their affiliates or the
property trustee may be a party in interest or a disqualified person with
respect to a Plan or IRA investing in the capital securities. Therefore, such
investment by a Plan or IRA may give rise to a prohibited transaction.
Consequently, before investing in the capital securities or acquiring junior
subordinated debentures, any person who is, or who is acquiring such securities
for, or on behalf of, a Plan or IRA should determine that either a statutory or
an administrative exemption from the prohibited transaction rules discussed
below or otherwise available is applicable to such investment in the capital
securities, or that such investment in, or acquisition of, such securities will
not result in a non-exempt prohibited transaction.
The statutory or administrative exemptions from the prohibited
transaction rules under ERISA and the Code which may be available to a Plan or
IRA, which is investing in the capital securities include the following
(collectively referred to as the "ERISA Investor Exemptions"):
- Prohibited Transaction Class Exemption ("PTCE") 90-1,
regarding investments by insurance company pooled separate
accounts;
- PTCE 91-38, regarding investments by bank collective
investment funds;
- PTCE 84-14, regarding transactions effected by qualified
professional asset managers;
- PTCE 96-23, regarding transactions effected by in-house asset
managers; and
- PTCE 95-60, regarding investments by insurance company general
accounts.
No person who is, or who in acquiring capital securities is using the
assets of, a Plan or IRA may acquire capital securities unless one of the ERISA
Investor Exemptions or another applicable exemption is available to the Plan or
IRA, or such acquisition or holding of the capital securities will not result in
a non-exempt Prohibited Transaction. The acquisition of the capital securities
by any person who is, or who in acquiring such capital securities is using the
assets of, a Plan or IRA shall be deemed to constitute
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a representation by such person to the trustee of the Trust, InterWest Bancorp
and the initial purchasers either that:
- it is not a Plan, IRA, trustee or other person acting on
behalf of a Plan or IRA or other person or entity using the
assets of any Plan or IRA to finance such purchase; or
- such acquisition will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code for
which there is no applicable statutory or administrative
exemption.
In the case of capital securities delivered in certificated form, the
purchaser will be required to make such representation, in writing, to the
trustee of the Trust, InterWest Bancorp and the initial purchasers.
The discussion of ERISA in this Prospectus is general in nature and is
not intended to be all inclusive. Any fiduciary of a plan, IRA, governmental
plan or church plan considering an investment in the capital securities should
consult with its legal advisors regarding the consequences of such investment
and consider whether the Plan or IRA can make the representations noted above.
Further, the sale of investments to Plans and IRAs is in no respect a
representation by the Trust, InterWest Bancorp, the property trustee, the
initial purchasers or any other person associated with the sale of the capital
securities that such securities meet all relevant legal requirements with
respect to investments by Plans and IRAs generally or any particular Plan, or
that such securities are otherwise appropriate for Plans and IRAs generally or
any particular Plan.
Any purchaser proposing to acquire capital securities with assets of
any Plan or IRA should consult with its counsel.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B capital securities for its
own account in connection with the exchange offer must acknowledge that it will
deliver a Prospectus in connection with any resale of such Series B capital
securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by participating broker-dealers during the period referred to
below in connection with resales of Series B capital securities received in
exchange for Series A capital securities if such Series A capital securities
were acquired by such participating broker-dealers for their own accounts as a
result of market-making activities or other trading activities. InterWest
Bancorp and InterWest Capital Trust I have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a participating
broker-dealer in connection with resales of such Series B capital securities for
a period ending 90 days after the expiration date, subject to extension under
certain limited circumstances described herein or, if earlier, when all such
Series B capital securities have been disposed of by such participating
broker-dealer. However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Series B capital securities received
in exchange for Series A capital securities pursuant to the exchange offer must
notify InterWest Bancorp or InterWest Capital Trust I, or cause InterWest
Bancorp or InterWest Capital Trust I to be notified, on or prior to the
expiration date, that it is a participating broker-dealer. Such notice may be
given in the space provided for that purpose in the letter of transmittal or may
be delivered to the exchange agent at one of the addresses set forth herein
under "The Exchange Offer - Exchange Agent." See "The Exchange Offer - Resales
of Series B Capital Securities."
InterWest Bancorp or InterWest Capital Trust I will not receive any
cash proceeds from the issuance of the Series B capital securities offered
hereby. Series B capital securities received by broker-dealers for their own
accounts in connection with the exchange offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Series B capital securities
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers of
any such Series B capital securities.
Any broker-dealer that resells Series B capital securities that were
received by it for its own account in connection with the exchange offer and any
broker or dealer that participates in a distribution of such Series B capital
securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of Series B capital securities
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
Prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain matters relating to (1) the validity of the Series B
guarantee and the Series B debentures and (2) United States federal income tax
considerations will be passed upon for us by Graham & Dunn PC. Certain matters
of Delaware law relating to the validity of the Series B capital securities will
be passed upon on behalf of us and the Trust by Morris, James, Hitchens &
Williams LLP, special Delaware counsel to the Trust and us.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements included in our Annual Report on Form 10-K
for the year ended September 30, 1999, as set forth in their report, which is
incorporated by reference in this Prospectus and elsewhere in the
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Registration Statement. Our consolidated financial statements are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
RATINGS
The capital securities have been rated "BBB-" by Thomson Financial Bank
Watch. The rating of Thomson Financial assigned to the capital securities
address the likelihood of your receipt of all payments to which such capital
securities are entitled. The rating process addresses the structural and legal
aspects associated with the capital securities. In the event that the ratings
initially assigned to the capital securities are subsequently lowered for any
reason, no person or entity is obligated to provide any additional credit
support or credit enhancement with respect to the capital securities.
If another rating agency were to rate the capital securities, such rating agency
may assign a rating different from the rating described above. A security rating
is not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating organization.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a Registration Statement on Form S-4 under the Securities
Act of 1933, as amended, to register with the Securities and Exchange Commission
the Series B capital securities to be issued in the exchange offer. This
Prospectus is part of that Registration Statement. As allowed by Securities and
Exchange Commission rules, this Prospectus does not contain all of the
information that you can find in the Registration Statement or the exhibits to
the Registration Statement.
In addition, we are required to file annual, quarterly and current
reports, proxy statements, and other information with the Securities and
Exchange Commission. You may read and copy the Registration Statement and its
exhibits as well as any reports, statements, or other information that the
combined corporation files, at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the operation of the Public Reference Room. You can request copies of the
filed documents, upon payment of a duplicating fee, by writing to the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
Room 1024, Washington, D.C. 20549. Our Securities and Exchange Commission
filings are also available to the public on the Securities and Exchange
Commission Internet site (HTTP://WWW.SEC.GOV). We do not expect that the Trust
will file reports, proxy statements and other information under the Exchange Act
with the Securities and Exchange Commission.
Our common stock is traded on the Nasdaq National Market under the
symbol "IWBK." You may inspect the reports, proxy statements and other
information concerning us at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington D.C. 20006.
The following documents that we have filed with the Securities and
Exchange Commission are incorporated into this Prospectus by reference:
- InterWest Bancorp's Annual Report on Form 10-K for the year
ended September 30, 1999.
- InterWest Bancorp's Current Reports on Form 8-K filed January
27, 2000 and February 10, 2000.
All documents subsequently filed by InterWest Bancorp pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the capital
securities offered by this Prospectus shall be deemed to be incorporated by
reference into this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained in this Prospectus or in a
document incorporated or deemed to be incorporated by reference in
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this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained in this Prospectus or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus 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. You may
obtain a copy of our filings with the Commission at no cost, by writing or
telephoning us at the following address:
InterWest Bancorp, Inc.
Attention: Corporate Secretary
275 SE Pioneer Way
Oak Harbor, WA 98277
(360) 679-4181
When we refer to this Prospectus, we mean not only this Prospectus but
also any documents which are incorporated or deemed to be incorporated in this
Prospectus by reference. You should rely only on the information incorporated by
reference or provided in this Prospectus or any supplement. We have not
authorized anyone else to provide you with additional or different information.
This Prospectus is used to offer and sell the capital securities referred to in
this Prospectus, and only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this Prospectus is current only as
of the date of this Prospectus.
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You should rely only on the information contained in this
Prospectus or that we have referred you to. We have not
authorized anyone to provide you with information that is
different. The information in this Prospectus may be
accurate beyond the date indicated below, regardless of
when this Prospectus is delivered or when the securities
described in this Prospectus are sold. This Prospectus is
not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
____________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary..............................................
Summary Selected Consolidated
Financial Data...................................
Recent Developments..................................
Forward Looking Statements...........................
Risk Factors.........................................
Use of Proceeds......................................
Accounting Treatment.................................
Capitalization.......................................
Regulatory Capital...................................
InterWest Bancorp, Inc...............................
Regulation and Supervision...........................
InterWest Capital Trust I............................
Exchange Offer.......................................
Description of Series B Securities...................
Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee........
Certain Federal Income Tax Consequences..............
ERISA Considerations.................................
Plan of Distribution.................................
Legal Matters........................................
Experts..............................................
Ratings..............................................
Where You Can Find More Information..................
</TABLE>
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INTERWEST CAPITAL TRUST I
OFFER TO EXCHANGE
9.875% CAPITAL SECURITIES, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING
9.875% CAPITAL SECURITIES, SERIES A
FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED
IN THIS PROSPECTUS, BY
[LOGO]
INTERWEST BANCORP, INC.
______________________________
PROSPECTUS
______________________________
________ ___, 2000
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to InterWest's articles of incorporation, InterWest will,
to the fullest extent permitted by the WBCA, indemnify the officers,
directors, agents and employees of InterWest with respect to expenses,
settlements, judgments and fines in suits in which such person was made a
party by reason of the fact that he or she is or was an agent of InterWest.
No such indemnification may be given if the acts or omissions of the person
are adjudged to be in violation of law, if such person is liable to the
corporation for an unlawful distribution, or if such person personally
received a benefit to which he or she was not entitled. In addition,
InterWest's articles of incorporation provide that the directors of InterWest
shall not be personally liable for monetary damages to InterWest for certain
breaches of their fiduciary duty as directors, except for liabilities that
involve intentional misconduct by the director, the authorization or illegal
distributions or receipt of an improper personal benefit from their actions
as directors. This provision might, in certain instances, discourage or deter
stockholders or management from bringing a lawsuit against directors for a
breach of their duties even though such an action, if successful, might have
benefited InterWest.
In addition to the indemnification provisions set forth in
InterWest's Articles, InterWest has entered into separate Indemnity
Agreements with each of the directors of InterWest and InterWest Bank that
provide for the indemnification of such directors by InterWest to the fullest
extent allowed by the WBCA. The Indemnity Agreements indemnify each director
and hold such director harmless against any loss arising from a claim or
action relating to his or her services as a director. The Indemnity
Agreements further provide that InterWest will advance sufficient funds as
may be necessary to investigate or defend claims against a director, and to
reimburse funds that may be incurred by the director, with the proviso that
the director will reimburse InterWest any expenses paid to such director in
the event it is later determined that the payment of such sums were not
allowable under Washington law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits are listed on the accompanying "Exhibit Index."
(b) Financial Statement Schedules. None.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or
sells securities, a post-effective amendment to this
registration statement to;
(i) Include any Prospectus required by Section
10(a)(3) of the 1933 Act;
(ii) Reflect in the Prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of Prospectus filed with the SEC pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
<PAGE>
(iii) Include any additional or changed information on
the plan of distribution;
(2) For determining liability under the 1933 Act, to treat
each such post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) To advise all directors and officers that insofar as
indemnification for liabilities arising under the 1933 Act 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 SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
(c) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the Effective Date of the registration statement
through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 Act, the Registrant has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Oak Harbor,
Washington on February 11, 2000.
INTERWEST BANCORP, INC.
By: /s/ Stephen M. Walden
------------------------------------
Stephen M. Walden
President and Chief Executive Officer
Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated, on the 11th day of February, 2000.
SIGNATURE TITLE
President, Chief Executive
/s/ Stephen M. Walden Officer and
- -------------------------------------------- Director (Principal Executive
Stephen M. Walden Officer)
/s/ H. Glenn Mouw Executive Vice President
- -------------------------------------------- (Principal Financial Officer)
H. Glenn Mouw
/s/ Eric D. Jensen Chief Accounting Officer
- -------------------------------------------- (Principal Accounting Officer)
Eric D. Jensen
/s/ Barney R. Beeksma Chairman of the Board
- --------------------------------------------
Barney R. Beeksma
/s/ Gary M. Bolyard Director
- --------------------------------------------
Gary M. Bolyard
/s/ Larry Carlson Director
- --------------------------------------------
Larry Carlson
/s/ Michael T. Crawford Director
- --------------------------------------------
Michael T. Crawford
/s/ Patrick M. Fahey Director
- --------------------------------------------
Patrick M. Fahey
<PAGE>
/s/ Jean Gorton Director
- --------------------------------------------
Jean Gorton
/s/ Stephen Lewis Director
- --------------------------------------------
Stephen Lewis
Director
- --------------------------------------------
Clark H. Mock
/s/ Russel E. Olson Director
- --------------------------------------------
Russel E. Olson
/s/ Vern Sims Director
- --------------------------------------------
Vern Sims
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <S>
3.1 Restated Articles of Incorporation of InterWest Bancorp (1)
3.2 First Amendment to Articles of Incorporation of InterWest
Bancorp, Inc. (2)
3.3 Bylaws of InterWest Bancorp (3)
4.1 Indenture of InterWest Bancorp relating to the Debentures
4.2 Form of Certificate of Series B Debenture (4)
4.3 Certificate of Trust of InterWest Capital Trust I
4.4 Amended and Restated Declaration of Trust of InterWest Capital Trust I
4.5 Form of Series B Capital Security Certificate (5)
4.6 Form of Series B Guarantee of InterWest Bancorp relating to the Series B Capital Securities
4.7 Registration Rights Agreement among InterWest Bancorp, InterWest Capital Trust I, Sandler O'Neill &
Partners, L.P. and Keefe, Bruyette & Woods, Inc.
*5.1 Opinion of Morris, James, Hitchens & Williams LLP as to the legality of securities.
*5.2 Opinion of Graham & Dunn, P.C. as to federal income tax consequences.
*23.1 Consent of Morris, James, Hitchens & Williams LLP, as to its legal opinion (contained in
its opinion filed as Exhibit 5.1).
*23.2 Consent of Graham & Dunn, P.C. as to its legal opinion (contained in its opinion filed as Exhibit 5.2).
23.3 Consent of Independent Auditors
24.1 Power of Attorney (included in the signature page of this Registration Statement) and certified
resolutions of the InterWest Board.
*99.1 Letter of Transmittal
*99.2 Notice of Guaranteed Delivery
</TABLE>
- -------------------
* To be filed by amendment.
(1) Previously filed as Exhibit 3.1 to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1998.
(2) Previously filed as Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1998.
(3) Previously filed as Exhibit 3.3 to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1998.
(4) Included in Exhibit 4.1 as Exhibit A thereto.
(5) Included in Exhibit 4.4 as Exhibit A-1 thereto.
<PAGE>
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INTERWEST BANCORP, INC.
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INDENTURE
Dated as of November 15, 1999
---------------------------------------
WILMINGTON TRUST COMPANY,
as Debenture Trustee
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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01 Definitions .....................................................................1
SECTION 1.02 Business Day Certificate........................................................11
ARTICLE II
SECURITIES
SECTION 2.01 Forms Generally.................................................................11
SECTION 2.02 Execution and Authentication....................................................11
SECTION 2.03 Form and Payment................................................................12
SECTION 2.04 Legends.........................................................................12
SECTION 2.05 Global Security.................................................................12
SECTION 2.06 Interest........................................................................14
SECTION 2.07 Transfer and Exchange...........................................................14
SECTION 2.08 Replacement Securities..........................................................16
SECTION 2.09 Temporary Securities............................................................17
SECTION 2.10 Cancellation....................................................................17
SECTION 2.11 Defaulted Interest..............................................................17
SECTION 2.12 CUSIP Numbers...................................................................18
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01 Payment of Principal and Interest...............................................18
SECTION 3.02 Offices for Notices and Payments, etc...........................................19
SECTION 3.03 Appointments to Fill Vacancies in Debenture Trustee's Office....................19
SECTION 3.04 Provision as to Paying Agent....................................................19
SECTION 3.05 Certificate to Debenture Trustee................................................20
SECTION 3.06 Compliance with Consolidation Provisions........................................20
SECTION 3.07 Limitation on Dividends.........................................................20
SECTION 3.08 Covenants as to InterWest Capital Trust I.......................................21
SECTION 3.09 Payment of Expenses.............................................................21
SECTION 3.10 Payment Upon Resignation or Removal.............................................22
ARTICLE IV
LIST OF SECURITY HOLDERS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01 List of Securityholders.........................................................23
SECTION 4.02 Preservation and Disclosure of Lists............................................23
SECTION 4.03 Reports by the Corporation......................................................24
SECTION 4.04 Reports by the Debenture Trustee................................................25
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<PAGE>
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS UPON EVENT OF DEFAULT
SECTION 5.01 Events of Default...............................................................26
SECTION 5.02 Payment of Securities on Default; Suit Therefor.................................27
SECTION 5.03 Application of Moneys Collected by Debenture Trustee ...........................29
SECTION 5.04 Proceedings by Securityholders..................................................29
SECTION 5.05 Proceedings by Debenture Trustee................................................30
SECTION 5.06 Remedies Cumulative and Continuing..............................................31
SECTION 5.07 Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders.........................................................................31
SECTION 5.08 Notice of Defaults..............................................................32
SECTION 5.09 Undertaking to Pay Costs........................................................32
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01 Duties and Responsibilities of Debenture Trustee................................33
SECTION 6.02 Reliance on Documents, Opinions, etc............................................34
SECTION 6.03 No Responsibility for Recitals, etc ............................................35
SECTION 6.04 Debenture Trustee, Authenticating Agent, Paying Agents, Transfer Agents
and Registrar May Own Securities........................................................36
SECTION 6.05 Moneys to be Held in Trust......................................................36
SECTION 6.06 Compensation and Expenses of Debenture Trustee..................................36
SECTION 6.07 Officers' Certificate as Evidence...............................................37
SECTION 6.08 Conflicting Interest of Debenture Trustee.......................................37
SECTION 6.09 Eligibility of Debenture Trustee................................................37
SECTION 6.10 Resignation or Removal of Debenture Trustee.....................................38
SECTION 6.11 Acceptance by Successor Debenture Trustee.......................................39
SECTION 6.12 Succession by Merger, etc.......................................................39
SECTION 6.13 Limitation on Rights of Debenture Trustee as a Creditor.........................40
SECTION 6.14 Authenticating Agents...........................................................40
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01 Action by Securityholders.......................................................41
SECTION 7.02 Proof of Execution by Securityholders...........................................42
SECTION 7.03 Who Are Deemed Absolute Owners..................................................42
SECTION 7.04 Securities Owned by Corporation Deemed Not Outstanding..........................42
SECTION 7.05 Revocation of Consents; Future Holders Bound....................................43
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<PAGE>
ARTICLE VIII
MEETINGS OF SECURITYHOLDERS
SECTION 8.01 Purposes of Meetings............................................................43
SECTION 8.02 Call of Meetings by Debenture Trustee...........................................44
SECTION 8.03 Call of Meetings by Corporation or Securityholders..............................44
SECTION 8.04 Qualifications for Voting.......................................................44
SECTION 8.05 Regulations.....................................................................44
SECTION 8.06 Voting..........................................................................45
ARTICLE IX
AMENDMENTS
SECTION 9.01 Without Consent of Securityholders..............................................45
SECTION 9.02 With Consent of Securityholders.................................................47
SECTION 9.03 Compliance with Trust Indenture Act; Effect of Supplemental Indentures..........48
SECTION 9.04 Notation on Securities..........................................................48
SECTION 9.05 Evidence of Compliance of Supplemental Indenture to be Furnished to
Debenture Trustee.......................................................................48
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
SECTION 10.01 Corporation May Consolidate, etc., on Certain Terms............................48
SECTION 10.02 Successor Person to be Substituted for Corporation.............................49
SECTION 10.03 Opinion of Counsel to be Given Debenture Trustee...............................49
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01 Discharge of Indenture.........................................................50
SECTION 11.02 Deposited Moneys and U.S. Government Obligations to be Held in Trust
by Debenture Trustee....................................................................50
SECTION 11.03 Paying Agent to Repay Moneys Held..............................................51
SECTION 11.04 Return of Unclaimed Moneys.....................................................51
SECTION 11.05 Defeasance Upon Deposit of Moneys or U.S. Government Obligations...............51
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01 Indenture and Securities Solely Corporate Obligations..........................53
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Successors ....................................................................54
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<PAGE>
SECTION 13.02 Official Acts by Successor Corporation.........................................54
SECTION 13.03 Surrender of Corporation Powers................................................54
SECTION 13.04 Addresses for Notices, etc.....................................................54
SECTION 13.05 Governing Law..................................................................54
SECTION 13.06 Evidence of Compliance with Conditions Precedent...............................55
SECTION 13.07 Business Days..................................................................55
SECTION 13.08 Trust Indenture Act to Control.................................................55
SECTION 13.09 Table of Contents, Headings, etc...............................................55
SECTION 13.10 Execution in Counterparts......................................................55
SECTION 13.11 Separability...................................................................56
SECTION 13.12 Assignment.....................................................................56
SECTION 13.13 Acknowledgment of Rights.......................................................56
ARTICLE XIV
PREPAYMENT OF SECURITIES
SECTION 14.01 Special Event Prepayment.......................................................56
SECTION 14.02 Optional Prepayment by Corporation.............................................57
SECTION 14.03 No Sinking Fund................................................................58
SECTION 14.04 Notice of Prepayment; Selection of Securities..................................58
SECTION 14.05 Payment of Securities Called for Prepayment....................................59
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 Agreement to Subordinate.......................................................59
SECTION 15.02 Default on Senior Indebtedness.................................................59
SECTION 15.03 Liquidation; Dissolution; Bankruptcy...........................................60
SECTION 15.04 Subrogation....................................................................61
SECTION 15.05 Debenture Trustee to Effectuate Subordination..................................62
SECTION 15.06 Notice by the Corporation......................................................62
SECTION 15.07 Rights of the Debenture Trustee; Holders of Senior Indebtedness................63
SECTION 15.08 Subordination May Not Be Impaired..............................................64
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01 Extension of Interest Payment Period...........................................64
SECTION 16.02 Notice of Extension............................................................65
</TABLE>
TESTIMONIUM
SIGNATURES
EXHIBIT A
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<PAGE>
Tie Sheet of provisions of Trust Indenture Act of 1939 with Indenture
dated as of November 15, 1999 between InterWest Bancorp, Inc. and Wilmington
Trust Company, as Debenture Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) ...............................................................6.09
(a)(2) ...................................................6.09, 6.10, 6.11
310(a)(3) ................................................................N/A
(a)(4) ................................................................N/A
310(a)(5) ...................................................6.09, 6.10, 6.11
310(b) ...............................................................6.08
310(c) ................................................................N/A
311(a) ...............................................................6.13
311(b) ...............................................................6.13
311(c) ................................................................N/A
312(a) ................................................4.01(a) and 4.02(a)
312(b) ............................................................4.02(b)
312(c) ............................................................4.02(c)
313(a) ............................................................4.04(a)
313(b)(1) ............................................................4.04(a)
313(b)(2) ............................................................4.04(a)
313(c) ............................................................4.04(a)
313(d) ............................................................4.04(b)
314(a) .........................................................3.05, 4.03
314(b) ................................................................N/A
314(c)(1) .....................................................6.07 and 13.06
314(c)(2) .....................................................6.07 and 13.06
314(c)(3) ................................................................N/A
314(d) ................................................................N/A
314(e) ........................................................6.07, 13.06
314(f) ................................................................N/A
315(a)(c) and (d)..........................................................6.01
315(b) ...............................................................5.08
315(e) ...............................................................5.09
316(a)(1) ...............................................................5.07
316(a)(2) ................................................................N/A
316(a) last sentence.......................................................9.02
316(b) ......................................................5.07 and 9.02
316(c) ......................................................7.01 and 9.02
317(a) ...............................................................5.05
317(b) ...............................................................6.05
318 ..............................................................13.08
</TABLE>
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THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
-1-
<PAGE>
THIS INDENTURE, dated as of November 15, 1999, between InterWest Bancorp,
Inc., a Washington corporation (hereinafter called the "Corporation"), and
Wilmington Trust Company, a Delaware banking corporation, as debenture trustee
(hereinafter sometimes called the "Debenture Trustee").
WITNESSETH:
In consideration of the premises, and the purchase of the Securities (as
defined below) by the holders thereof, the Corporation covenants and agrees with
the Debenture Trustee for the equal and proportionate benefit of the respective
holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes
of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") or which
are by reference therein defined in the Securities Act of 1933, as amended
(the "Securities Act"), shall (except as herein otherwise expressly provided
or unless the context otherwise requires) have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force at
the date of this Indenture as originally executed. The following terms have
the meanings given to them in the Declaration: (i) Clearing Agency; (ii)
Delaware Trustee; (iii) Property Trustee; (iv) Administrative Trustees; (v)
Series A Capital Securities; (vi) Series B Capital Securities; (vii) Direct
Action; (viii) Series A Capital Securities Guarantee; (ix) Series B Capital
Securities Guarantee; (x) Distributions; and (xi) Initial Purchaser. All
accounting terms used herein and not expressly defined shall have the
meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting
principles" means such accounting principles as are generally accepted at the
time of any computation. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision. Headings are used for
convenience of reference only and do not affect interpretation. The singular
includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any prepayment date
pursuant to Section 14.01 as determined by the Quotation Agent, the rate per
annum equal to (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 three months
after the maturity corresponding to the Remaining Life, yields for the two
published maturities most closely corresponding to the Remaining Life shall be
determined, and the Adjusted Treasury Rate shall be interpolated or extrapolated
from such yields on a straight-line basis, rounding
-2-
<PAGE>
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, in each case
calculated on the third Business Day preceding the prepayment date, plus: 320
basis points.
"Affiliate" shall have the meaning given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Allocable Amounts," when used with respect to any Senior Indebtedness,
means all amounts due or to become due on such Senior Indebtedness less, if
applicable, any amount which would have been paid to, and retained by, the
holders of such Senior Indebtedness (whether as a result of the receipt of
payments by the holders of such Senior Indebtedness from the Corporation or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Indebtedness pursuant to any provision of such indebtedness for the payment over
of amounts received on account of such indebtedness to the holders of such
Senior Indebtedness or otherwise) but for the fact that such Senior Indebtedness
is subordinate or junior in right of payment to (or subject to a requirement
that amounts received on such Senior Indebtedness be paid over to obligees on)
trade accounts payable or accrued liabilities arising in the ordinary course of
business.
"Authenticating Agent" shall mean any agent or agents of the Debenture
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Corporation or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Corporation to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Debenture Trustee.
"Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.05(a)(i).
"Business Day" shall mean, with respect to any series of Securities, any
day other than a Saturday, a Sunday or a day on which banking institutions in
Wilmington, Delaware or New York, New York are authorized or required by law or
executive order to remain closed.
"Capital Securities" shall mean undivided beneficial interests in the
assets of the Trust which are designated as "Capital Securities" and rank
PARI PASSU with the Common Securities issued by the Trust; PROVIDED, HOWEVER,
that if an Event of Default has occurred and is continuing, no payments in
respect of Distributions on, or payments upon liquidation, redemption or
otherwise with respect to, the Common Securities shall be made until the
holders of the Capital Securities shall be paid in full the Distributions and
the liquidation, redemption and other payments to which they are
-3-
<PAGE>
entitled. References to "Capital Securities" shall include collectively
any Series A Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee agreement that
the Corporation may enter into with Wilmington Trust Company or other Persons
that operates directly or indirectly for the benefit of holders of Capital
Securities and shall include the Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee with respect to the Series A Capital
Securities and the Series B Capital Securities, respectively.
"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in the
assets of the Trust which are designated as "Common Securities" and rank PARI
PASSU with Capital Securities issued by the Trust; PROVIDED, HOWEVER, that if
an Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are then entitled.
"Common Securities Guarantee" shall mean any guarantee that the
Corporation may enter into that operates directly or indirectly for the benefit
of holders of Common Securities.
"Common Stock" shall mean the Common Stock, no par value per share,
of the Corporation or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Comparable Treasury Issue" shall mean the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
Remaining Life of the Securities 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
of the Securities, provided that if no United States Treasury security has a
maturity which is within a period from three months before to three months after
the Remaining Life, the two most closely corresponding United States Treasury
securities as selected by the Quotation Agent shall be used as the Comparable
Treasury Issue, and the Adjusted Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month, using such
securities.
"Comparable Treasury Price" shall mean, with respect to any prepayment
date pursuant to Section 14.01, (i) the average of three Reference Treasury
Dealer Quotations for such prepayment date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (ii) if the Quotation Agent
obtains fewer than five such Reference Treasury Dealer Quotations, the average
of all such Reference Treasury Dealer Quotations.
"Compounded Interest" shall have the meaning set forth in Section 16.01.
-4-
<PAGE>
"Corporation" shall mean the person identified as "corporation" in the
preamble to this Indenture and, subject to the provisions of Article X, shall
also include its successors and assigns.
"Corporation Request" or "Corporation Order" shall mean a written request
or order signed in the name of the Corporation by an Officer and delivered to
the Debenture Trustee.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debenture Trustee" shall mean the Person identified as "Debenture
Trustee" in the preamble to this Indenture and, subject to the provisions of
Article VI hereof, shall also include its successors and assigns.
"Declaration" shall mean the Amended and Restated Declaration of Trust of
the Trust, dated as of November 15, 1999, by and among the Trustees (as defined
therein), the Corporation, as sponsor, and the holders from time to time of
undivided beneficial interest in the assets of the Trust, as amended from time
to time.
"Default" shall mean any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.11.
"Deferred Interest" shall have the meaning set forth in Section 16.01.
"Definitive Securities" shall mean those Securities issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to the Securities for which the
Corporation shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, or another clearing
agency, or any successor registered as a clearing agency pursuant to Section 17A
of the Exchange Act or other applicable statute or regulation, which, in each
case, shall be designated by the Corporation pursuant to Section 2.05(d).
"Dissolution Event" shall mean any event resulting in the dissolution of
the Trust pursuant to the Declaration, and the distribution of the Securities
held by the Property Trustee to the holders of the Trust Securities issued by
the Trust PRO RATA in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" shall mean the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Corporation to exchange the Exchange
Securities for the Initial Securities and to execute the Series B Capital
Securities Guarantee in respect of the Series B Capital Securities and (ii) by
the Trust to exchange the Series B Capital Securities for the Series A Capital
Securities.
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"Exchange Securities" shall mean the Corporation's 9.875% Junior
Subordinated Deferrable Interest Debentures due November 15, 2029, Series B, as
authenticated and issued under this Indenture.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"Global Security" shall mean, with respect to the Securities, a Security
executed by the Corporation and delivered by the Debenture Trustee to the
Depositary or pursuant to the Depositary's instruction, or if no instructions
are received then held by the Property Trustee, all in accordance with this
Indenture, which Security shall be registered in the name of the Depositary or
its nominee.
"Indebtedness" shall mean, whether recourse as to all or a portion of the
assets of the Corporation and whether or not contingent, (i) every obligation of
the Corporation for money borrowed; (ii) every obligation of the Corporation
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 the Corporation with respect
to letters of credit, bankers' acceptances or similar facilities issued for the
account of the Corporation; (iv) every obligation of the Corporation issued,
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 or deferred compensation); (v) every capital lease obligation of the
Corporation; (vi) all indebtedness of the Corporation, whether incurred on or
prior to the date of this Indenture or hereafter incurred, for claims in respect
of derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps 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, the Corporation has guaranteed or is responsible or liable for
directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall mean (i)
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such Indebtedness by its
terms ranks PARI PASSU with and not prior or senior to the Securities in the
right of payment upon the happening of the dissolution, winding-up, liquidation
or reorganization of the Corporation and (ii) all other debt securities, and
guarantees in respect of those debt securities, issued to any trust other than
the Trust, or a trustee of such trust, partnership or other entity affiliated
with the Corporation, that is a financing vehicle of the Corporation (a
"financing entity") in connection with the issuance by such financing entity of
equity securities or other securities guaranteed by the Corporation pursuant to
an instrument that ranks PARI PASSU with or junior in right of payment to the
Capital Securities Guarantee. The securing of any Indebtedness otherwise
constituting Indebtedness Ranking on a Parity with the Securities shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking on a
Parity with the Securities with respect to any assets of the Corporation not
securing such Indebtedness.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such Indebtedness by its
terms ranks junior to and not PARI PASSU with or prior to the Securities in
right of payment upon the happening of the dissolution or winding-up or
liquidation
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or reorganization of the Corporation. The securing of any Indebtedness otherwise
constituting Indebtedness Ranking Junior to the Securities shall not be deemed
to prevent such Indebtedness from constituting Indebtedness Ranking Junior to
the Securities with respect to any assets of the Corporation not securing such
Indebtedness.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
"Initial Optional Redemption Date" shall mean November 15, 2009.
"Initial Securities" shall mean the Corporation's 9.875% Junior
Subordinated Deferrable Interest Debentures due November 15, 2029, Series A, as
authenticated and issued under this Indenture.
"Interest Payment Date" shall have the meaning set forth in Section
2.06(a).
"Investment Company" shall mean an investment company as defined in the
Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" shall mean the receipt by the Corporation and
the Trust of an opinion of independent securities counsel experienced in such
matters to the effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any rules, guidelines or policies of any
applicable regulatory authority for the Corporation or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the Initial Securities, the Trust is, or within 90 days of the date of such
opinion will be, considered an investment company that is required to be
registered under the Investment Company Act.
"Like Amount" shall mean (i) with respect to a redemption of the Trust
Securities, Trust Securities having a liquidation amount equal to the
principal amount of Securities to be paid in accordance with their terms and
(ii) with respect to a distribution of Securities upon the liquidation of the
Trust, Securities having a principal amount equal to the liquidation amount
of the Trust Securities of the holder to whom Securities are distributed.
"Liquidated Damages" shall have the meaning set forth in the Registration
Rights Agreement and the Liquidated Damages Agreement.
"Liquidated Damages Agreement" shall mean the Liquidated Damages
Agreement, dated as of November 9, 1999, by and among the Corporation, the Trust
and the Initial Purchaser named therein, as such agreement may be amended,
modified or supplemented from time to time.
"Maturity Date" shall mean November 15, 2029.
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"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.05(a)(ii).
"Officers" shall mean any of the Chairman, the Chief Executive Officer,
the President, an Executive or Senior Vice President, a Vice President, the
Chief Financial Officer, the Secretary or an Assistant Secretary of the
Corporation.
"Officers' Certificate" shall mean a certificate signed by two Officers
and delivered to the Debenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
an employee of the Corporation, and who shall be reasonably acceptable to the
Debenture Trustee.
"Optional Prepayment Price" shall have the meaning set forth in Section
14.02(a).
"Other Debentures" shall mean all junior subordinated debentures other
than the Securities issued by the Corporation from time to time and sold to
trusts other than the Trust to be established by the Corporation (if any), in
each case similar to the Trust.
"Other Guarantees" shall mean all guarantees other than the Capital
Securities Guarantee and the Common Securities Guarantee issued by the
Corporation with respect to preferred beneficial interests (if any) issued to
trusts other than the Trust to be established by the Corporation (if any), in
each case similar to the Trust.
The term "outstanding" when used with reference to the Securities, shall
mean, subject to the provisions of Section 7.04, as of any particular time, all
Securities authenticated and delivered by the Debenture Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore canceled by the Debenture Trustee or
the Authenticating Agent or delivered to the Debenture Trustee
for cancellation;
(b) Securities, or portions thereof, for the payment or prepayment
of which moneys in the necessary amount shall have been
deposited in trust with the Debenture Trustee or with any
paying agent (other than the Corporation) or shall have been
set aside and segregated in trust by the Corporation (if the
Corporation shall act as its own paying agent); provided that,
if such Securities, or portions thereof, are to be prepaid
prior to maturity thereof, notice of such prepayment shall
have been given as set forth in Article XIV or provision
satisfactory to the Debenture Trustee shall have been made for
giving such notice;
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.08 unless proof
satisfactory to the Corporation and the Debenture Trustee is
presented that any such Securities are held by bona fide
holders in due course and;
(d) Securities held by the Corporation, the Trust or any Affiliate
thereof.
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"Person" shall mean any individual, corporation, estate, partnership,
joint venture, national banking association, association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Predecessor Security" of any particular Security shall mean every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Prepayment Price" shall mean the Special Event Prepayment Price or
Optional Prepayment Price, as the context requires.
"Principal Office of the Debenture Trustee," or other similar term, shall
mean the office of the Debenture Trustee, at which at any particular time its
corporate trust business shall be administered.
"Purchase Agreement" shall mean the Purchase Agreement, dated November 9,
1999, by and among the Corporation, the Trust and the Initial Purchaser named
therein.
"Quotation Agent" shall mean the Reference Treasury Dealer appointed by
the Corporation.
"Reference Treasury Dealer" shall mean a nationally recognized U.S.
Government securities dealer in New York, New York selected by the Corporation.
"Reference Treasury Dealer Quotations" shall mean, with respect to each
Reference Treasury Dealer and any prepayment date pursuant to Section 14.01, the
average, as determined by the Quotation Agent, 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 Quotation Agent by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day
preceding such prepayment date.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of November 9, 1999, by and among the Corporation, the Trust
and the Initial Purchaser named therein, as such agreement may be amended,
modified or supplemented from time to time.
"Regulatory Capital Event" shall mean the receipt by the Corporation and
the Trust of an opinion of independent bank regulatory counsel experienced in
such matters to the effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of an
applicable regulatory authority for the Corporation or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the Initial Securities, the Capital Securities do not constitute, or within
90 days of the date of such opinion will not constitute, Tier I Capital (or its
then equivalent if the Corporation were subject to such capital requirement);
applied as if the Corporation (or its successors) were a bank holding company
for purposes of capital adequacy guidelines of the Federal Reserve Board (or any
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successor regulatory authority with jurisdiction over bank holding companies),
or any capital adequacy guidelines as then in effect and applicable to the
Corporation; PROVIDED, HOWEVER, that the distribution of the Securities in
connection with the liquidation of the Trust by the Corporation shall not in and
of itself constitute a Regulatory Capital Event.
"Remaining Life" shall mean the term of the Securities from any
prepayment date pursuant to Section 14.01 to the Maturity Date.
"Responsible Officer" shall mean any officer of the Debenture Trustee's
Corporate Trust Administration department with direct responsibility for the
administration of the Indenture and also means, with respect to a particular
corporate trust matter, any other officer of the Debenture Trustee to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Restricted Security" shall mean Securities that bear or are required to
bear the legends relating to transfer restrictions under the Securities Act set
forth in Exhibit A hereto.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" shall mean, collectively, the Initial Securities and the
Exchange Securities.
"Securityholder," "holder of Securities," or other similar terms,
shall mean any Person in whose name at the time a particular Security is
registered in the Security Register kept by the Corporation or the Debenture
Trustee for that purpose in accordance with the terms of this Indenture.
"Security Register" shall mean (i) prior to a Dissolution Event, the list
of holders provided to the Debenture Trustee pursuant to Section 4.01, and (ii)
following a Dissolution Event, any security register maintained by a security
registrar for the Securities appointed by the Corporation following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Corporation whether
or not such claim for post petition interest is allowed in such proceedings), on
all Indebtedness, whether outstanding on the date of execution of this
Indenture, or hereafter created, assumed or incurred, except Indebtedness
Ranking on a Parity with the Securities or Indebtedness Ranking Junior to the
Securities, and any deferrals, renewals or extensions of such Senior
Indebtedness.
"Special Event" shall mean an Investment Company Event, a Regulatory
Capital Event or a Tax Event, as the context requires.
"Special Event Prepayment Price" shall mean, with respect to any
prepayment of the Securities following a Special Event, an amount in cash equal
to the greater of (i) 100% of the principal amount of the Securities to be
prepaid or (ii) the sum, as determined by a Quotation Agent, of the present
values of the remaining scheduled payments of principal and interest on such
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Securities, discounted to the prepayment date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in the case of each of (i) or (ii), any accrued and unpaid interest
thereon (including Compounded Interest and Additional Sums, if any) to the date
of such prepayment.
"Subsidiary" shall mean with respect to any Person, (i) any corporation
at least a majority of the outstanding voting stock of which is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture, limited liability company or similar entity, at least a majority of
whose outstanding partnership, membership or similar interests shall at the time
be owned by such Person or by one or more of its Subsidiaries, or by such Person
and one or more of its Subsidiaries and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner. For the purposes of
this definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by the Trust and the Corporation of an
opinion of independent tax counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of original issuance of the Initial Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Securities, (ii) the interest payable by the
Corporation on the Securities is not, or within 90 days of the date of such
opinion will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a DE MINIMIS
amount of other taxes, duties or other governmental charges.
"Trust" shall mean InterWest Capital Trust I, a Delaware business trust
created for the purpose of issuing its undivided beneficial interests in
connection with the issuance of Securities under this Indenture.
"Trust Securities" shall mean, collectively, the Capital Securities and
the Common Securities.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii), are not callable or prepayable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation
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held by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction with respect to the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 1.02 BUSINESS DAY CERTIFICATE.
On the date of execution and delivery of this Indenture (with respect to
the remainder of calendar year 1999) and within 15 days prior to the end of each
calendar year while this Indenture remains in effect (with respect to succeeding
calendar years), the Corporation shall deliver to the Debenture Trustee an
Officers' Certificate specifying the days on which banking institutions or trust
companies in Wilmington, Delaware and New York, New York are then authorized or
obligated by law or executive order to remain closed.
ARTICLE II
SECURITIES
SECTION 2.01 FORMS GENERALLY.
The Securities and the Debenture Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Corporation is subject or usage. Each Security shall be
dated the date of its authentication.
SECTION 2.02 EXECUTION AND AUTHENTICATION.
An Officer shall sign the Securities for the Corporation by manual or
facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual signature
of the Debenture Trustee. The signature of the Debenture Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Debenture Trustee shall, upon a Corporation Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $41,238,000 aggregate principal amount
of the Securities, except as provided in Sections 2.07, 2.08, 2.09 and 14.05.
The series of Securities to be initially issued hereunder shall be the Initial
Securities.
SECTION 2.03 FORM AND PAYMENT.
Except as provided in Section 2.05, the Securities shall be issued in
fully registered certificated form without interest coupons. Principal of and
premium, if any, and interest on the Securities issued in certificated form will
be payable, the transfer of such Securities will be
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registrable and such Securities will be exchangeable for Securities bearing
identical terms and provisions, at the office or agency of the Corporation
maintained for such purpose under Section 3.02; PROVIDED, HOWEVER, that payments
of interest may be made at the option of the Corporation (i) by check mailed to
the holder at such address as shall appear in the Security Register, or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper transfer instructions have been received in writing by the relevant
record date. Notwithstanding the foregoing, so long as the holder of any
Securities is the Property Trustee, the payment of the principal of and premium,
if any, and interest (including Compounded Interest and Additional Sums, if any)
and Liquidated Damages, if any, on such Securities held by the Property Trustee
will be made at such place and to such account as may be designated by the
Property Trustee.
SECTION 2.04 LEGENDS.
(a) Except as permitted by subsection (b) of this Section 2.04, or as
otherwise determined by the Corporation in accordance with applicable law, each
Security shall bear the applicable legends relating to restrictions on transfer
pursuant to the Securities Act and any other applicable securities laws in
substantially the form set forth on Exhibit A hereto.
(b) In the event of an Exchange Offer, the Corporation shall issue and
the Debenture Trustee, upon Corporation Order, shall authenticate Exchange
Securities in exchange for Initial Securities accepted for exchange in the
Exchange Offer, which Exchange Securities shall not bear the legends required by
subsection (a) above, in each case unless the holder of such Initial Securities
is either (A) a broker-dealer who purchased such Initial Securities directly
from the Corporation for resale pursuant to Rule 144A or any other available
exemption under the Securities Act, (B) a Person participating in the
distribution of the Initial Securities or (C) a Person who is an Affiliate of
the Corporation or the Trust.
SECTION 2.05 GLOBAL SECURITY.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form ("Book-Entry
Capital Securities"), a Like Amount of Definitive Securities shall be presented
to the Debenture Trustee (if an arrangement with the Depositary has been
maintained) by the Property Trustee in exchange for one or more Global
Securities (as may be required pursuant to Section 2.07), to be registered in
the name of the Depositary, or its nominee, and delivered by the Debenture
Trustee to the Depositary for crediting to the accounts of its participants
pursuant to the instructions of the Administrative Trustees; the Corporation
upon any such presentation shall execute one or more Global Securities in such
aggregate principal amount and deliver the same to the Debenture Trustee for
authentication and delivery in accordance with this Indenture; and payments on
the Securities issued as a Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated form, the
related Definitive Securities may be presented to the Debenture Trustee, by the
Property Trustee and any Capital Security certificates which represent Capital
Securities other than Book-Entry Capital Securities ("Non Book-Entry Capital
Securities") will be deemed to represent beneficial interests in Securities
presented to the Debenture Trustee by the Property Trustee having an aggregate
principal amount
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equal to the aggregate liquidation amount of the Non Book-Entry Capital
Securities until such Capital Security certificates are presented to the
security registrar for the Securities for transfer or reissuance, at which time
such Capital Security certificates will be canceled, and a Security in a Like
Amount, registered in the name of the holder of the Capital Security certificate
or the transferee of the holder of such Capital Security certificate, as the
case may be, will be executed by the Corporation and delivered to the Debenture
Trustee for authentication and delivery in accordance with this Indenture; and
upon the issuance of such Securities, Securities with an equivalent aggregate
principal amount that were presented by the Property Trustee to the Debenture
Trustee will be canceled.
(b) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; PROVIDED, HOWEVER,
that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and prepayments. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the aggregate principal amount
of outstanding Securities represented thereby shall be made by the Debenture
Trustee, in accordance with instructions given by the Corporation as required by
this Section 2.05.
(e) The Global Securities may be transferred, in whole but not in part,
only to the Depositary, to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Corporation or to a nominee of such
successor Depositary.
(d) If at any time the Depositary notifies the Corporation that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to be
a clearing agency registered under the Exchange Act, and, in each case, a
successor Depositary is not appointed by the Corporation within 90 days after
the Corporation receives such notice or becomes aware of such condition, as the
case may be, the Corporation will execute, and the Debenture Trustee, upon
receipt of a Corporation Order, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security,
in exchange for such Global Security. If there is a Default or an Event of
Default, the Depositary shall have the right to exchange the Global Securities
for Definitive Securities. In addition, the Corporation may at any time
determine that the Securities shall no longer be represented by a Global
Security. In the event of such an Event of Default or such a determination, the
Corporation shall execute, and subject to Section 2.07, the Debenture Trustee,
upon receipt of an Officers' Certificate evidencing such determination by the
Corporation and a Corporation Order, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security,
in exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global Security
shall be canceled by the Debenture Trustee. Such Definitive Securities issued in
exchange for the Global Security shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Debenture
Trustee. The Debenture Trustee shall deliver such Definitive Securities to the
Depositary for delivery to the Persons in whose names such Definitive Securities
are so registered.
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SECTION 2.06 INTEREST.
(a) Each Security will bear interest, at the rate of 9.875% per annum
(the "Coupon Rate"), from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided
for, from November 15, 1999, until the principal thereof becomes due and
payable, and at the Coupon Rate on any overdue principal (and premium, if
any) and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest, compounded
semi-annually, payable (subject to the provisions of Article XVI)
semi-annually in arrears on May 15 and November 15 of each year, commencing
May 15, 2000 (each, an "Interest Payment Date"), to the Person in whose name
such Security or any predecessor Security is registered at the close of
business on the regular record date for such interest installment, which
shall be the first day of the month in which the relevant Interest Payment
Date falls.
(b) The amount of interest payable on the Securities shall be computed on
the basis of 360-day year of twelve 30-day months.
(c) During such time as the Property Trustee is the holder of any
Securities, the Corporation shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall not be reduced as
a result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event ("Additional Sums").
SECTION 1.07 TRANSFER AND EXCHANGE.
(a) TRANSFER RESTRICTIONS.
(i) The Initial Securities, and those Exchange Securities with respect
to which any Person described in Section 2.04(b)(A), (B) or (C) is the
beneficial owner, may not be transferred except in compliance with the legend
contained in Exhibit A unless otherwise determined by the Corporation in
accordance with applicable law. Upon any distribution of the Securities
following a Dissolution Event, the Corporation and the Debenture Trustee shall
enter into a supplemental indenture pursuant to Section 9.01 to provide for the
transfer restrictions and procedures with respect to the Securities
substantially similar to those contained in the Declaration to the extent
applicable in the circumstances existing at such time.
(ii) The Securities will be issued and may be transferred only in
blocks having an aggregate principal amount of not less than $100,000 and in
multiples of $1,000 in excess thereof. Any attempted transfer of the Securities
in a block having an aggregate principal amount of less than $100,000 shall be
deemed to be voided and of no legal effect whatsoever. Any such purported
transferee shall be deemed not to be a holder of such Securities for any
purpose, including, but not limited to the receipt of payments on such
Securities, and such purported transferee shall be deemed to have no interest
whatsoever in such Securities.
(b) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. To permit
registrations of transfers and exchanges, the Corporation shall execute and the
Debenture Trustee shall authenticate Definitive Securities and Global Securities
at the request of the security registrar for the Securities. All Definitive
Securities and Global Securities issued upon any registration of transfer or
exchange
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of Definitive Securities or Global Securities shall be the valid obligations
of the Corporation, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Definitive Securities or Global
Securities surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Corporation shall not be required to: (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of prepayment or
any notice of selection of Securities for prepayment under Article XIV hereof
and ending at the close of business on the day of such mailing; or (ii)
register the transfer of or exchange any Security so selected for prepayment
in whole or in part, except the nonprepaid portion of any Security being
prepaid in part.
Prior to due presentment for the registration of a transfer of any
Security, the Debenture Trustee, the Corporation and any agent of the
Debenture Trustee or the Corporation may deem and treat the Person in whose
name any Security is registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and premium, if any, and
interest on such Securities, and none of the Debenture Trustee, the
Corporation or any agents of the Debenture Trustee or the Corporation shall
be affected by notice to the contrary.
(c) EXCHANGE OF INITIAL SECURITIES FOR EXCHANGE SECURITIES. The
Initial Securities may be exchanged for Exchange Securities pursuant to the
terms of the Exchange Offer. The Debenture Trustee shall make the exchange as
follows:
The Corporation shall present the Debenture Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Exchange Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Initial Securities properly tendered in
the Exchange Offer that are represented by a Global Security, the
principal amount of Initial Securities properly tendered in the
Exchange Offer that are represented by Definitive Securities, the
name of each holder of such Definitive Securities, the principal
amount properly tendered in the Exchange Offer by each such holder
and the name and address to which Definitive Securities for
Exchange Securities shall be registered and sent for each such
holder.
The Debenture Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Exchange Securities have
been registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters set
forth in Section 3(q) of the Registration Rights Agreement and (iii) a
Corporation Order, shall authenticate (A) a Global Security representing
Exchange Securities in aggregate principal amount equal to the aggregate
principal amount of Initial Securities represented by a Global Security
indicated in such Officers' Certificate as having been properly tendered and (B)
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Definitive Securities representing Exchange Securities in aggregate principal
amount equal to the aggregate principal amount of Initial Securities represented
by Definitive Securities registered in the names and in the respective principal
amounts indicated in such Officers' Certificate.
If the principal amount of the Global Security for the Exchange
Securities is less than the principal amount of the Global Security for the
Initial Securities, the Debenture Trustee shall make an endorsement on such
Global Security for Initial Securities indicating a reduction in the principal
amount represented thereby.
The Debenture Trustee shall deliver such Definitive Securities
representing Exchange Securities to the holders thereof as indicated in such
Officers' Certificate.
SECTION 2.08 REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Debenture Trustee, or the
Corporation and the Debenture Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Security, the Corporation shall issue
and the Debenture Trustee shall authenticate a replacement Security if the
Debenture Trustee's requirements for replacements of Securities are met. An
indemnity bond must be supplied by the holder that is sufficient in the judgment
of the Debenture Trustee and the Corporation to protect the Corporation, the
Debenture Trustee, any agent thereof or any Authenticating Agent from any loss
that any of them may suffer if a Security is replaced. The Corporation or the
Debenture Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Corporation and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.09 TEMPORARY SECURITIES.
Pending the preparation of Definitive Securities, the Corporation may
execute, and upon Corporation Order the Debenture Trustee shall authenticate and
make available for delivery, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, in any
authorized denomination, substantially of the tenor of the Definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Corporation shall cause
Definitive Securities to be prepared without unreasonable delay. The Definitive
Securities shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
Officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Corporation for such purpose pursuant to Section
3.02 hereof, without charge to the holder thereof. Upon surrender for
cancellation of any one or more temporary Securities, the Corporation shall
execute, and the Debenture Trustee shall authenticate and make available for
delivery, in exchange therefor the same aggregate principal amount of Definitive
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Securities of authorized denominations. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 2.10 CANCELLATION.
The Corporation at any time may deliver Securities to the Debenture
Trustee for cancellation. The Debenture Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall return such canceled Securities to the
Corporation. The Corporation may not issue new Securities to replace Securities
that have been prepaid or paid or that have been delivered to the Debenture
Trustee for cancellation.
SECTION 2.11 DEFAULTED INTEREST.
Any interest on any Security that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the holder on the relevant
regular record date by virtue of having been such holder; and such Defaulted
Interest shall be paid by the Corporation, at its election, as provided in
clause (a) or clause (b) below:
(a) The Corporation may make payment of any Defaulted Interest
on Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Corporation
shall notify the Debenture Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Corporation shall deposit with
the Debenture Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Debenture Trustee for such deposit prior
to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon, the Debenture Trustee
shall fix a special record date for the payment of such Defaulted
Interest which shall not be more than 15 nor less than 10 days prior to
the date of the proposed payment and not less than 10 days after the
receipt by the Debenture Trustee of the notice of the proposed payment.
The Debenture Trustee shall promptly notify the Corporation of such
special record date and, in the name and at the expense of the
Corporation, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Corporation may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Corporation to the Debenture Trustee of the
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proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Debenture Trustee.
SECTION 2.12 CUSIP NUMBERS.
The Corporation in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Debenture Trustee shall use "CUSIP"
numbers in notices of prepayment as a convenience to Securityholders; PROVIDED,
HOWEVER, that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of a prepayment and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
prepayment shall not be affected by any defect in or omission of such numbers.
The Corporation will promptly notify the Debenture Trustee of any change in the
CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01 PAYMENT OF PRINCIPAL AND INTEREST.
The Corporation covenants and agrees for the benefit of the holders of
the Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on the Securities at the place,
at the respective times and in the manner provided herein. The Corporation
further covenants to pay any and all amounts due in respect of the Securities,
including, without limitation, Additional Sums, as may be required pursuant to
Section 2.06(c), Liquidated Damages, if any, on the dates and in the manner
required under the Registration Rights Agreement or the Liquidated Damages
Agreement and Compounded Interest, as may be required pursuant to Section 16.01.
SECTION 3.02 OFFICES FOR NOTICES AND PAYMENTS, ETC.
So long as any of the Securities remain outstanding, the Corporation will
maintain in Wilmington, Delaware an office or agency where the Securities may be
presented for payment, an office or agency where the Securities may be presented
for registration of transfer and for exchange as in this Indenture provided and
an office or agency where notices and demands to or upon the Corporation in
respect of the Securities or this Indenture may be served. The Corporation will
give to the Debenture Trustee written notice of the location of any such office
or agency and of any change of location thereof. Until otherwise designated from
time to time by the Corporation in a notice to the Debenture Trustee, any such
office or agency for all of the above purposes shall be the Principal Office of
the Debenture Trustee. In case the Corporation shall fail to maintain any such
office or agency in Wilmington, Delaware or shall fail to give such notice of
the location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the Principal Office of the Debenture
Trustee.
In addition to any such office or agency, the Corporation may from time
to time designate one or more offices or agencies outside Wilmington, Delaware
where the Securities may be presented for payment, for registration of transfer
and for exchange and where notices and demands
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to or upon the Corporation in respect of the Securities or this Indenture may be
served in the manner provided in this Indenture, and the Corporation may from
time to time rescind such designation, as the Corporation may deem desirable or
expedient; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Corporation of its obligation to maintain any such office
or agency in Wilmington, Delaware for the purposes above mentioned. The
Corporation will give to the Debenture Trustee prompt written notice of any such
designation or rescission thereof.
SECTION 3.03 APPOINTMENTS TO FILL VACANCIES IN DEBENTURE TRUSTEE'S
OFFICE.
The Corporation, whenever necessary to avoid or fill a vacancy in the
office of Debenture Trustee, will appoint, in the manner provided in Section
6.10, a Debenture Trustee, so that there shall at all times be a Debenture
Trustee hereunder.
SECTION 3.04 PROVISION AS TO PAYING AGENT.
(a) If the Corporation shall appoint a paying agent other than the
Debenture Trustee with respect to the Securities, it will cause such paying
agent to execute and deliver to the Debenture Trustee an instrument in which
such agent shall agree with the Debenture Trustee, subject to the provisions of
this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or
interest on the Securities (whether such sums have been
paid to it by the Corporation or by any other obligor on
the Securities) in trust for the benefit of the holders of
the Securities; and
(2) that it will give the Debenture Trustee notice of any
failure by the Corporation (or by any other obligor on the
Securities) to make any payment of the principal of or
premium, if any, or interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if
any, on the Securities when the same shall be due and
payable.
(b) If the Corporation shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust for the benefit of the
holders of the Securities a sum sufficient to pay such principal, premium or
interest so becoming due and will notify the Debenture Trustee of any failure to
take such action and of any failure by the Corporation (or by any other obligor
under the Securities) to make any payment of the principal of and premium, if
any, or interest on the Securities when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Corporation may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Securities hereunder, or for any other reason, pay
or cause to be paid to the Debenture Trustee all sums payable with respect to
the Securities, such sums to be held by the Debenture Trustee upon the trusts
herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
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SECTION 3.05 CERTIFICATE TO DEBENTURE TRUSTEE.
The Corporation will deliver to the Debenture Trustee on or before 120
days after the end of each fiscal year of the Corporation, commencing with the
first fiscal year ending after the date hereof, so long as Securities are
outstanding hereunder, an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal accounting
officer of the Corporation, stating that in the course of the performance by the
signers of their duties as officers of the Corporation they would normally have
knowledge of any Default by the Corporation in the performance of any covenants
contained herein, stating whether or not they have knowledge of any such
Default and, if so, specifying each such Default of which the signers have
knowledge, the nature thereof and the action, if any, the Corporation intends to
undertake as a result of such Default.
SECTION 3.06 COMPLIANCE WITH CONSOLIDATION PROVISIONS.
The Corporation will not, while any of the Securities remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other Person unless the provisions of
Article X hereof are complied with.
SECTION 3.07 LIMITATION ON DIVIDENDS.
The Corporation will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal of or premium, if any, or interest on or repay, repurchase
or redeem any debt securities of the Corporation (including Other Debentures)
that rank PARI PASSU with or junior in right of payment to the Securities or
(iii) make any guarantee payments with respect to any guarantee (other than the
Capital Securities Guarantee) by the Corporation of the debt securities of any
Subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks PARI PASSU with or junior in right of payment to the Securities (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Common Stock), (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (d) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged and (e) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Corporation's benefit or
compensation plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans), if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge that (a) is a
Default or an Event of Default and (b) in respect of which the Corporation shall
not have taken reasonable steps to cure, (2) the Securities are held by the
Property Trustee and the Corporation shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (3) the
Corporation shall have given notice of its election to exercise its right to
commence an Extended Interest Payment Period and shall not have rescinded such
notice, and such Extended Interest Payment Period or any extension thereof shall
have commenced and be continuing.
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SECTION 3.08 COVENANTS AS TO INTERWEST CAPITAL TRUST I
In the event Securities are issued to the Trust or a trustee of such
Trust in connection with the issuance of Trust Securities by the Trust, for
so long as such Trust Securities remain outstanding, the Corporation (i) will
maintain 100% direct or indirect ownership of the Common Securities of the
Trust; PROVIDED, HOWEVER, that any successor of the Corporation, permitted
pursuant to Article X, may succeed to the Corporation's ownership of such
Common Securities, (ii) will use commercially reasonable efforts to cause the
Trust (a) to remain a business trust, except in connection with a
distribution of Securities to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor
trust and not an association taxable as a corporation for United States
federal income tax purposes, (iii) will use commercially reasonable efforts
to cause each holder of the Trust Securities to be treated as owning an
undivided beneficial interest in the Securities and (iv) will not cause, as
sponsor of the Trust, or permit, as holder of the Common Securities, the
dissolution, winding-up or liquidation of the Trust, except as provided in
the Declaration.
SECTION 3.09 PAYMENT OF EXPENSES.
In connection with the offering, sale and issuance of the Securities to
the Trust and in connection with the sale of the Trust Securities by the Trust,
the Corporation, in its capacity as borrower with respect to the Securities,
shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including fees and expenses in
connection with any Exchange Offer, filing of a shelf registration
statement or other action to be taken pursuant to the Registration
Rights Agreement and Liquidated Damages Agreement and compensation
of the Debenture Trustee in accordance with the provisions of
Section 6.06;
(b) pay all costs and expenses of the Trust, including, but not
limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities
(including commissions payable to the Initial Purchaser pursuant
to the Purchase Agreement in connection therewith), the fees and
expenses of the Property Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition,
financing, and disposition of assets of the Trust;
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust; and
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(e) pay all other fees, expenses, debts and obligations (other than in
respect of the Trust Securities) related to the Trust.
SECTION 3.10 PAYMENT UPON RESIGNATION OR REMOVAL.
Upon termination of this Indenture or the removal or resignation of the
Debenture Trustee, unless otherwise stated, the Corporation shall pay to the
Debenture Trustee all amounts accrued and owing to the Debenture Trustee to the
date of such termination, removal or resignation. Upon termination of the
Declaration or the removal or resignation of the Delaware Trustee or the
Property Trustee, as the case may be, pursuant to Section 5.7 of the
Declaration, the Corporation shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts accrued and owing to such trustee(s) to
the date of such termination, removal or resignation.
ARTICLE IV
LIST OF SECURITYHOLDERS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01 LIST OF SECURITYHOLDERS.
The Corporation covenants and agrees that it will furnish or cause to
be furnished to the Debenture Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Debenture Trustee may
reasonably require, of the names and addresses of the
Securityholders as of such record date; and
(b) at such other times as the Debenture Trustee may request in
writing, within 30 days after the receipt by the Corporation, of
any such request, a list of similar form and content as of a date
not more than 15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Debenture Trustee is
in possession thereof by reason of its acting as security registrar for the
Securities.
SECTION 4.02 PRESERVATION AND DISCLOSURE OF LISTS.
(a) The Debenture Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of security
registrar (if so acting) hereunder. The Debenture Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Securities (hereinafter referred to
as "applicants") apply in writing to the Debenture Trustee and furnish to the
Debenture Trustee reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
holders of Securities or with holders of all Securities with respect to their
rights under this Indenture
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and is accompanied by a copy of the form of proxy or other communication which
such applicants propose to transmit, then the Debenture Trustee shall, within
five Business Days after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information preserved
at the time by the Debenture Trustee in accordance with the
provisions of subsection (a) of this Section 4.02, or
(2), inform such applicants as to the approximate number of
holders of all Securities whose names and addresses appear
in the information preserved at the time by the Debenture
Trustee in accordance with the provisions of subsection (a)
of this Section 4.02, and as to the approximate cost of
mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application.
If the Debenture Trustee shall elect not to afford such applicants access
to such information, the Debenture Trustee shall, upon the written request of
such applicants, mail to each Securityholder whose name and address appear in
the information preserved at the time by the Debenture Trustee in accordance
with the provisions of subsection (a) of this Section 4.02 a copy of the form of
proxy or other communication which is specified in such request with reasonable
promptness after a tender to the Debenture Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five Business Days after such tender, the Debenture
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Debenture Trustee, such mailing would be contrary to
the best interests of the holders of Securities or would be in violation of
applicable law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Debenture Trustee shall mail copies of such material to
all such Securityholders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Debenture Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and holding the
same, agrees with the Corporation and the Debenture Trustee that neither the
Corporation nor the Debenture Trustee nor any paying agent shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.02, regardless of the source from which such
information was derived, and that the Debenture Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
said subsection (b).
SECTION 4.03 REPORTS BY THE CORPORATION.
(a) The Corporation covenants and agrees to file with the Debenture
Trustee, within 15 days after the date on which the Corporation is required to
file the same with the Commission, copies
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of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as said Commission may from time
to time by rules and regulations prescribe) which the Corporation may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Corporation is not required to file information,
documents or reports pursuant to either of such sections, then to provide to the
Debenture Trustee, such of the supplementary and periodic information, documents
and reports which would have been required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations. The Corporation also covenants and agrees to comply with the
provisions of Section 314(a) of the Trust Indenture Act.
(b) The Corporation covenants and agrees to file with the Debenture
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Corporation with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Corporation covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders appear upon
the Security Register, within 30 days after the filing thereof with the
Debenture Trustee, such summaries of any information, documents and reports
required to be filed by the Corporation pursuant to subsections (a) and (b) of
this Section 4.03 as may be required by rules and regulations prescribed from
time to time by the Commission.
(d) Delivery of such reports, information and documents to the Debenture
Trustee is for informational purposes only and the Debenture Trustee's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Corporation's compliance with any of its covenants hereunder (as to which the
Debenture Trustee is entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the Securities to
qualify for an exemption under Rule 144A under the Securities Act, the
Corporation shall, upon request, provide the information required by clause
(d)(4) thereunder to each Securityholder and to each beneficial owner and
prospective purchaser of Securities identified by each Securityholder of
Restricted Securities, unless such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.04 REPORTS BY THE DEBENTURE TRUSTEE.
(a) The Debenture Trustee shall transmit to Securityholders such reports
concerning the Debenture Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Debenture Trustee shall, within 60 days after the date hereof, and no
later than the anniversary date hereof in each succeeding year, deliver to
Securityholders a brief report, dated as of each such date which complies with
the provisions of such Section 313(a).
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(b) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Debenture Trustee with each stock exchange, if
any, upon which the Securities are listed, with the Commission and with the
Corporation. The Corporation will promptly notify the Debenture Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS UPON EVENT OF DEFAULT
SECTION 5.01 EVENTS OF DEFAULT.
One or more of the following events of default shall constitute an Event
of Default hereunder (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest (including Compounded
Interest and Additional Sums, if any) or Liquidated Damages, if
any, on the Securities or any Other Debentures (about which a
Responsible Officer of the Debenture Trustee has actual knowledge)
when due, and continuance of such default for a period of 30 days;
PROVIDED, HOWEVER, that a valid extension of an interest payment
period by the Corporation in accordance with the terms hereof or
thereof shall not constitute a default in the payment of interest
for this purpose; or
(b) default in the payment of any principal of (or premium, if any,
on) the Securities or any Other Debentures (about which a
Responsible Officer of the Debenture Trustee has actual knowledge)
when due, whether at maturity, upon prepayment, by declaration of
acceleration of maturity or otherwise; or
(c) default in the performance, or breach, of any covenant or warranty
of the Corporation in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to
the Corporation by the Debenture Trustee or to the Corporation and
the Debenture Trustee by the holders of at least 25% in aggregate
principal amount of the outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Corporation in an
involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Corporation or for any substantial
part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
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(e) the Corporation shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Corporation or of any substantial part of
its property, or shall make any general assignment for the benefit
of creditors, or shall fail generally to pay its debts as they
become due.
If an Event of Default with respect to Securities at the time outstanding
occurs and is continuing, then in every such case the Debenture Trustee or the
holders of not less than 25% in aggregate principal amount of the Securities
then outstanding may declare the principal amount of all Securities to be due
and payable immediately, by a notice in writing to the Corporation (and to the
Debenture Trustee if given by the holders of the outstanding Securities), and
upon any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that if,
at any time after the principal of the Securities shall have been so declared
due and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, (i) the
Corporation shall pay or shall deposit with the Debenture Trustee a sum
sufficient to pay (A) all matured installments of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on all the
Securities and the principal of and premium, if any, on any and all Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest specified in the Securities
to the date of such payment or deposit) and (B) such amount as shall be
sufficient to cover compensation due to the Debenture Trustee and each
predecessor Debenture Trustee, their respective agents, attorneys and counsel,
pursuant to Section 6.06, and (ii) any and all Events of Default under the
Indenture, other than the non-payment of the principal of the Securities which
shall have become due solely by such declaration of acceleration, shall have
been cured, waived or otherwise remedied as provided herein, then, in every such
case, the holders of a majority in aggregate principal amount of the Securities
then outstanding, by written notice to the Corporation and to the Debenture
Trustee, may rescind and annul such declaration and its consequences, but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
In case the Debenture Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Debenture Trustee, then and in every
such case the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Corporation, the Debenture
Trustee and the holders of the Securities shall continue as though no such
proceeding had been taken.
SECTION 5.02 PAYMENT OF SECURITIES ON DEFAULT; SUIT THEREFOR.
The Corporation covenants that (a) in case default shall be made in the
payment of any installment of interest (including Compounded Interest and
Additional Sums, if any) and Liquidated
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Damages, if any, on any of the Securities as and when the same shall become due
and payable, and such default shall have continued for a period of 30 days, or
(b) in case default shall be made in the payment of the principal of or premium,
if any, on any of the Securities as and when the same shall have become due and
payable, whether at maturity of the Securities or upon prepayment or by
declaration or otherwise, then, upon demand of the Debenture Trustee, the
Corporation will pay to the Debenture Trustee, for the benefit of the holders of
the Securities, the whole amount that then shall have become due and payable on
all such Securities for principal and premium, if any, or interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
or both, as the case may be, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest is enforceable
under applicable law and, if the Securities are held by the Trust or a trustee
of such Trust, without duplication of any other amounts paid by the Trust or a
trustee in respect thereof) upon the overdue installments of interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
at the rate borne by the Securities; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable compensation to the Debenture Trustee, its agents,
attorneys and counsel, and any other amount due to the Debenture Trustee
pursuant to Section 6.06.
In case the Corporation shall fail forthwith to pay such amounts upon
such demand, the Debenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Corporation or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Corporation or any other obligor on the Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Corporation or any other obligor on the Securities under
Title 11, United States Code, or any other applicable law, or in case a receiver
or trustee shall have been appointed for the property of the Corporation or such
other obligor, or in the case of any other similar judicial proceedings relative
to the Corporation or other obligor upon the Securities, or to the creditors or
property of the Corporation or such other obligor, the Debenture Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Debenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Securities and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Debenture Trustee (including any claim for
amounts due to the Debenture Trustee pursuant to Section 6.06) and of the
Securityholders allowed in such judicial proceedings relative to the Corporation
or any other obligor on the Securities, or to the creditors or property of the
Corporation or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Securities in any election
of a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby
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authorized by each of the Securityholders to make such payments to the Debenture
Trustee, and, in the event that the Debenture Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Debenture
Trustee such amounts as shall be sufficient to cover reasonable compensation to,
and expenses of, the Debenture Trustee, each predecessor Debenture Trustee and
their respective agents, attorneys and counsel, and all other amounts due to the
Debenture Trustee pursuant to Section 6.06.
Nothing herein contained shall be construed to authorize the Debenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Debenture Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Debenture Trustee without
the possession of any of the Securities, or the production thereof on any trial
or other proceeding relative thereto, and any such suit or proceeding instituted
by the Debenture Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Debenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Debenture Trustee shall be a party), the Debenture Trustee shall be
held to represent all the holders of the Securities, and it shall not be
necessary to make any holders of the Securities parties to any such proceedings.
SECTION 5.03 APPLICATION OF MONEYS COLLECTED BY DEBENTURE TRUSTEE.
Any moneys collected by the Debenture Trustee shall be applied in the
following order, at the date or dates fixed by the Debenture Trustee for the
distribution of such moneys, upon presentation of the Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection applicable to
the Securities and all other amounts due to the Debenture Trustee under Section
6.06;
Second: To the payment of all Senior Indebtedness of the Corporation if
and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Securities
for principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according to the
amounts due on such Securities for principal (and premium, if any) and interest,
respectively; and
Fourth: To the Corporation.
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SECTION 5.04 PROCEEDINGS BY SECURITYHOLDERS.
No holder of any Security shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Debenture
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Debenture Trustee to institute such action, suit or proceeding
in its own name as Debenture Trustee hereunder and shall have offered to the
Debenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Debenture
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the taker and
holder of every Security with every other taker and holder and the Debenture
Trustee, that no one or more holders of Securities shall have any right in any
manner whatever by virtue of or by availing itself of any provision of this
Indenture to affect, disturb or prejudice the rights of any other holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of (and
premium, if any) and interest on (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on such Security, on or after the
same shall have become due and payable, or to institute suit for the enforcement
of any such payment, shall not be impaired or affected without the consent of
such holder, and by accepting a Security hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Security with every
other such taker and holder and the Debenture Trustee, that no one or more
holders of Securities shall have any right in any manner whatsoever by virtue or
by availing itself of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other Securities, or to obtain or
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Debenture Trustee shall be entitled to such relief as can
be given either at law or in equity.
The Corporation and the Debenture Trustee acknowledge that pursuant to
the Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action (as defined therein) with respect to any Event of Default referred
to in clause (a) or (b) of Section 5.01.
SECTION 5.05 PROCEEDINGS BY DEBENTURE TRUSTEE.
In case an Event of Default occurs with respect to Securities and is
continuing, the Debenture Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Debenture Trustee shall deem most effectual to
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protect and enforce any of such rights, either by suit in equity or by action at
law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Debenture Trustee by this Indenture or by
law.
SECTION 5.06 REMEDIES CUMULATIVE AND CONTINUING.
All powers and remedies given by this Article V to the Debenture Trustee
or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Debenture Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect to
the Securities, and no delay or omission of the Debenture Trustee or of any
holder of any of the Securities to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.04, every
power and remedy given by this Article V or by law to the Debenture Trustee or
to the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Debenture Trustee or by the Securityholders.
SECTION 5.07 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY
OF SECURITYHOLDERS.
The holders of a majority in aggregate principal amount of the Securities
at the time outstanding shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture Trustee;
PROVIDED, HOWEVER, that (subject to the provisions of Section 6.01) the
Debenture Trustee shall have the right to decline to follow any such direction
if the Debenture Trustee shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such direction or if the
Debenture Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Debenture Trustee in
good faith by one of its Responsible Officers shall determine that the action or
proceedings so directed would involve the Debenture Trustee in personal
liability. Prior to any declaration accelerating the maturity of the Securities,
the holders of a majority in aggregate principal amount of the Securities at the
time outstanding may on behalf of the holders of all of the Securities waive any
past Default or Event of Default and its consequences except a Default (a) in
the payment of principal of (or premium, if any) or interest on (including
Compounded Interest and Additional Sums, if any) or Liquidated Damages, if any,
on any of the Securities (unless such default has been cured and a sum
sufficient to pay all matured installments of interest (including Compounded
Interest and Additional Sums, if any) and principal (and premium, if any), due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
(b) in respect of covenants or provisions hereof which cannot be modified or
amended without the consent of the holder of each Security affected; PROVIDED,
HOWEVER, that if the Securities are held by the Property Trustee, such waiver
or modification to such waiver shall not be effective until the holders of a
majority in aggregate liquidation amount of Trust Securities shall have
consented to such waiver or modification to such waiver; PROVIDED, FURTHER, that
if the consent of the holder of each outstanding Security is required, such
waiver shall not be effective until each holder of the Trust Securities shall
have consented to such waiver. Upon any such waiver, the Default
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covered thereby shall be deemed to be cured for all purposes of this Indenture
and the Corporation, the Debenture Trustee and the holders of the Securities
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereon. Whenever any Default or Event of Default hereunder
shall have been waived as permitted by this Section 5.07, said Default or Event
of Default shall for all purposes of the Securities and this Indenture be deemed
to have been cured and to be not continuing.
SECTION 5.08 NOTICE OF DEFAULTS
(a) The Debenture Trustee shall, within 90 days after the occurrence of
a Default with respect to the Securities actually known to a Responsible Officer
of the Debenture Trustee, mail to all Securityholders, as the names and
addresses of such holders appear upon the Security Register, notice of all such
Defaults, unless such Default shall have been cured before the giving of such
notice (the term "Default" for the purpose of this Section 5.08 being hereby
defined to be any of the events specified in clauses (a), (b), (c), (d) and (e)
of Section 5.01, not including periods of grace, if any, provided for therein,
and irrespective of the giving of written notice specified in clause (c) of
Section 5.01); PROVIDED, HOWEVER, that, except in the case of Default in the
payment of the principal of (or premium, if any) or interest (including
Compounded Interest or Additional Sums, if any) or Liquidated Damages, if any,
on any of the Securities, the Debenture Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Debenture Trustee in good faith determines that the withholding of such notice
is in the interests of the Securityholders; PROVIDED, FURTHER, that in the case
of any Default of the character specified in Section 5.01(c), no such notice to
Securityholders shall be given until at least 60 days after the occurrence
thereof, but shall be given within 90 days after such occurrence.
(b) Within ten Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Debenture Trustee, the Debenture
Trustee shall transmit notice of such Event of Default to all Securityholders as
their names and addresses appear on the Security Register, unless such Event of
Default shall have been cured or waived.
SECTION 5.09 UNDERTAKING TO PAY COSTS.
All parties to this Indenture agree, and each holder of any Security by
its acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Debenture Trustee for any action
taken or omitted by it as Debenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Debenture Trustee, to any suit instituted by any Securityholder, or group
of Securityholders, holding in the aggregate more than 10% in aggregate
principal amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on any Security against the Corporation
on or after the same shall have become due and payable.
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ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01 DUTIES AND RESPONSIBILITIES OF DEBENTURE TRUSTEE.
With respect to the holders of the Securities issued hereunder, the
Debenture Trustee, prior to the occurrence of an Event of Default (which, other
than in the case of Sections 5.01(a) and 5.01(b) hereof, is known to the
Debenture Trustee) and after the curing or waiving of all such Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. In case an Event of Default
(which, other than in the case of Sections 5.01(a) and 5.01(b) hereof, is
known to the Debenture Trustee) has occurred (which has not been cured or
waived), the Debenture Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs.
No provision of this Indenture shall be construed to relieve the
Debenture Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default (which, other than
in the case of Sections 5.01(a) and 5.01(b) hereof, is known to
the Debenture Trustee) and after the curing or waiving of all such
Events of Default which may have occurred,
(1) the duties and obligations of the Debenture Trustee shall
be determined solely by the express provisions of this
Indenture, and the Debenture Trustee shall not be liable
except for the performance of such duties and obligations
as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this
Indenture against the Debenture Trustee; and
(2) in the absence of bad faith on the part of the Debenture
Trustee, the Debenture Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificate or opinion
furnished to the Debenture Trustee and conforming to the
requirements of this Indenture; but, in the case of any
such certificate or opinion which by any provision hereof
is specifically required to be furnished to the Debenture
Trustee, the Debenture Trustee shall be under a duty to
examine the same to determine whether or not it conforms on
its face to the requirements of this Indenture;
(b) the Debenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers, unless it shall be proved that the
Debenture Trustee was negligent in ascertaining the
pertinent facts; and
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(c) the Debenture Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Securityholders
pursuant to Section 5.07, relating to the time, method and
place of conducting any proceeding for any remedy available
to the Debenture Trustee, or exercising any trust or power
conferred upon the Debenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Debenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if it reasonably believes that the repayment of
such funds or liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably assured to
it.
SECTION 6.02 RELIANCE ON DOCUMENTS, OPINIONS, ETC.
Except as otherwise provided in Section 6.01:
(a) the Debenture Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, debenture or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Corporation
mentioned herein may be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution may be
evidenced to the Debenture Trustee by a copy thereof certified by
the Secretary or an Assistant Secretary of the Corporation;
(e) the Debenture Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Debenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Securityholders,
pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Debenture Trustee
reasonable and sufficient security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(e) the Debenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Indenture; nothing contained herein shall, however, relieve
the Debenture Trustee of the obligation, upon the occurrence of an
Event of Default (which, other than in the case of Sections
5.01(a) and 5.01(b) hereof, is known to the Debenture Trustee)
(that has not been cured or waived), to exercise such of the
rights
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and powers vested in it by this Indenture, and to use the same
degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of his or
her own affairs;
(f) the Debenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of a
majority in aggregate principal amount of the outstanding
Securities; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Debenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Debenture Trustee, not
reasonably assured to the Debenture Trustee by the security
afforded to it by the terms of this Indenture, the Debenture
Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding;
(g) the Debenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents (including any Authenticating Agent) or attorneys,
and the Debenture Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney
appointed by it with due care;
(h) the Debenture Trustee shall not be charged with knowledge of any
Default or Event of Default unless (1) such Default or Event of
Default falls within Section 5.01(a) (other than a default with
respect to the payment or nonpayment of Compounded Interest,
Liquidated Damages or Additional Sums) or Section 5.01(b) of the
Indenture, (2) a Responsible Officer shall have actual knowledge
of such Default or Event of Default or (3) written notice of such
Default or Event of Default shall have been given to the Debenture
Trustee by the Corporation or any other obligor on the Securities
or by any holder of the Securities; and
(i) the Debenture Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith, without negligence or
willful misconduct and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 6.03 NO RESPONSIBILITY FOR RECITALS, ETC.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Debenture Trustee or the Authenticating
Agent) shall be taken as the statements of the Corporation, and the Debenture
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Debenture Trustee and the Authenticating Agent make
no representations as to the validity or sufficiency of this Indenture or of the
Securities. The Debenture Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Corporation of any Securities or
the proceeds of any Securities authenticated and delivered by the Debenture
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
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SECTION 6.04 DEBENTURE TRUSTEE, AUTHENTICATING AGENT, PAYING AGENTS,
TRANSFER AGENTS AND REGISTRAR MAY OWN SECURITIES.
The Debenture Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any security registrar for the Securities, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not Debenture Trustee,
Authenticating Agent, paying agent, transfer agent or security registrar for the
Securities.
SECTION 6.05 MONEYS TO BE HELD IN TRUST.
Subject to the provisions of Section 11.04, all moneys received by the
Debenture Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Debenture Trustee and any paying agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Corporation. So long as no Event of Default shall have occurred
and be continuing, all interest allowed on any such moneys shall be paid from
time to time upon the written order of the Corporation, signed by an Officer
thereof.
SECTION 6.06 COMPENSATION AND EXPENSES OF DEBENTURE TRUSTEE.
The Corporation, as issuer of Securities under this Indenture, covenants
and agrees to pay to the Debenture Trustee from time to time, and the Debenture
Trustee shall be entitled to, such compensation as shall be agreed to in writing
between the Corporation and the Debenture Trustee (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust), and the Corporation will pay or reimburse the Debenture Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Debenture Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Corporation also covenants to indemnify each of the
Debenture Trustee (including in its individual capacity) and any predecessor
Debenture Trustee (and its officers, agents, directors and employees) for, and
to hold it harmless against, any and all loss, damage, claim, action, suit,
liability or expense including taxes (other than taxes based on the income of
the Debenture Trustee) incurred without negligence or bad faith on the part of
the Debenture Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability. The obligations of the Corporation under
this Section 6.06 to compensate and indemnify the Debenture Trustee and to pay
or reimburse the Debenture Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Debenture Trustee as such, except funds held in
trust for the benefit of the holders of particular Securities.
When the Debenture Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for its services are intended to constitute
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expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or removal
of the Debenture Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.07 OFFICERS' CERTIFICATE AS EVIDENCE.
Except as otherwise provided in Sections 6.01 and 6.02, whenever in the
administration of the provisions of this Indenture the Debenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Debenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Debenture Trustee, and such Officers' Certificate, in the absence of negligence
or bad faith on the part of the Debenture Trustee, shall be full warrant to the
Debenture Trustee for any action taken or omitted by it under the provisions of
this Indenture upon the faith thereof.
SECTION 6.08 CONFLICTING INTEREST OF DEBENTURE TRUSTEE.
If the Debenture Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Debenture
Trustee and the Corporation shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
SECTION 6.09 ELIGIBILITY OF DEBENTURE TRUSTEE.
The Debenture Trustee hereunder shall at all times be a Person
organized and doing business under the laws of the United States of America
or any state or territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least fifty million U.S. dollars
($50,000,000) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 6.09 the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
The Corporation may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Corporation, serve
as Debenture Trustee.
In case at any time the Debenture Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Debenture Trustee shall
resign immediately in the manner and with the effect specified in Section 6.10.
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SECTION 6.10 RESIGNATION OR REMOVAL OF DEBENTURE TRUSTEE.
(a) The Debenture Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Corporation and by mailing notice thereof to the holders of the
Securities at their addresses as they shall appear on the Security Register.
Upon receiving such notice of resignation, the Corporation shall promptly
appoint a successor trustee or trustees, in accordance with the provisions of
Section 6.09, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Debenture Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Debenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona fide holder of a Security for
at least six months may, subject to the provisions of Section 5.09, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Debenture Trustee shall fail to comply with the provisions
of Section 6.08 after written request therefor by the
Corporation or by any Securityholder who has been a bona fide
holder of a Security or Securities for at least six months, or
(2) the Debenture Trustee shall cease to be eligible in accordance
with the provisions of Section 6.09 and shall fail to resign
after written request therefor by the Corporation or by any
Securityholder who has been a bona fide holder of a Security
or Securities for at least six months, or
(3) the Debenture Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Debenture Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the
Debenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Corporation may remove the Debenture Trustee and
appoint a successor trustee, in accordance with the provisions of Section 6.09,
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the Debenture Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section 5.09, any Securityholder who
has been a bona fide holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Debenture Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Debenture Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Debenture Trustee
and nominate a successor trustee, which
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shall be deemed appointed as successor trustee unless within 10 days after
written notification of such nomination the Corporation objects thereto, or if
no successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after such removal, in which case the Debenture
Trustee so removed or any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10 provided, may petition any
court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Debenture Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.11.
SECTION 6.11 ACCEPTANCE BY SUCCESSOR DEBENTURE TRUSTEE.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Corporation and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Corporation or of the successor
trustee, the trustee ceasing to act shall, upon payment of all amounts then due
it pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Corporation shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.08 and eligible under the provisions
of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 6.11, the Corporation shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they shall
appear on the Security Register. If the Corporation fails to mail such notice
within 10 days after the acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Corporation.
SECTION 6.12 SUCCESSION BY MERGER, ETC.
Any Person into which the Debenture Trustee may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Debenture Trustee shall be a party, or
any Person succeeding to all or substantially all of the corporate trust
business of the Debenture Trustee, shall be the successor of the Debenture
Trustee
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hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
In case any Securities shall have been authenticated but not delivered
at the time such successor to the Debenture Trustee shall succeed to the
trusts created by this Indenture, any such successor to the Debenture Trustee
may adopt the certificate of authentication of any predecessor trustee, and
deliver such Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the
Debenture Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor trustee; and in all
such cases such certificates shall have the full force which the Securities
or this Indenture elsewhere provides that the certificate of the Debenture
Trustee shall have; PROVIDED, HOWEVER, that the right to adopt the
certificate of authentication of any predecessor Debenture Trustee or
authenticate Securities in the name of any predecessor Debenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 6.13 LIMITATION ON RIGHTS OF DEBENTURE TRUSTEE AS A CREDITOR.
The Debenture Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Debenture Trustee who has resigned or been removed
shall be subject to Section 311(a) of the Trust Indenture Act to the extent
included therein.
SECTION 6.14 AUTHENTICATING AGENTS.
There may be one or more Authenticating Agents appointed by the Debenture
Trustee upon the request of the Corporation with power to act on the Debenture
Trustee's behalf and subject to the Debenture Trustee's direction in the
authentication and delivery of Securities issued upon exchange or transfer
thereof as fully to all intents and purposes as though any such Authenticating
Agent had been expressly authorized to authenticate and deliver Securities;
PROVIDED, HOWEVER, that the Debenture Trustee shall have no liability to the
Corporation for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Securities. Any such Authenticating Agent
shall at all times be a Person organized and doing business under the laws of
the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such Person publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.
Any Person into which any Authenticating Agent may be merged, converted
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which any Authenticating Agent shall be a party, or any Person
succeeding to the corporate trust business of any Authenticating Agent, shall be
the successor of such Authenticating Agent hereunder, if such
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successor Person is otherwise eligible under this Section 6.14 without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Debenture Trustee and to the Corporation. The Debenture
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and to the
Corporation. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Debenture Trustee may, and upon the
request of the Corporation shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Corporation and shall mail notice of such appointment to all
Securityholders as the names and addresses of such holders appear on the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.
The Corporation, as issuer of the Securities, agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its services.
Any Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Debenture
Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01 ACTION BY SECURITYHOLDERS.
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument (including by way of electronic
transmission) or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of such holders of Securities voting in favor thereof at any meeting
of such Securityholders duly called and held in accordance with the provisions
of Article VIII or (c) by a combination of such instrument or instruments and
any such record of such a meeting of such Securityholders.
If the Corporation shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Corporation may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Corporation shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such
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request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities shall be computed as of
the record date; PROVIDED, HOWEVER, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.02 PROOF OF EXECUTION BY SECURITYHOLDERS.
Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Debenture Trustee or in such manner as shall be
satisfactory to the Debenture Trustee. The ownership of Securities shall be
proved by the Security Register or by a certificate of the security registrar
for the Securities. The Debenture Trustee may require such additional proof of
any matter referred to in this Section 7.02 as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 8.06.
SECTION 7.03 WHO ARE DEEMED ABSOLUTE OWNERS.
Prior to due presentment for registration of transfer of any Security,
the Corporation, the Debenture Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any security registrar for the Securities may deem
the person in whose name such Security shall be registered upon the Security
Register to be, and may treat him or her as, the absolute owner of such Security
(whether or not such Security shall be overdue) for the purpose of receiving
payment of or on account of the principal of and premium, if any, and (subject
to Section 2.06) interest on such Security and for all other purposes; and
neither the Corporation nor the Debenture Trustee nor any Authenticating Agent
nor any paying agent nor any transfer agent nor any security registrar for the
Securities shall be affected by any notice to the contrary. All such payments so
made to any holder for the time being or upon his or her order shall be valid
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04 SECURITIES OWNED BY CORPORATION DEEMED NOT OUTSTANDING.
In determining whether the holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent or waiver under
this Indenture, Securities that are owned by the Corporation or any other
obligor on the Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation or
any other obligor on the Securities shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; PROVIDED, HOWEVER, that
for the purposes of determining whether the Debenture Trustee shall be protected
in relying on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Debenture Trustee actually knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding for the purposes of this Section 7.04 if the pledgee
shall establish to the satisfaction of the Debenture Trustee the pledgee's right
to vote such Securities and that the pledgee is not the Corporation or any such
other obligor or Person directly or indirectly controlling or controlled by
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or under direct or indirect common control with the Corporation or any such
other obligor. In the case of a dispute as to such right, any decision by the
Debenture Trustee taken upon the advice of counsel shall be full protection to
the Debenture Trustee.
SECTION 7.05 REVOCATION OF CONSENTS: FUTURE HOLDERS BOUND.
At any time prior to (but not after) the evidencing to the Debenture
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by the evidence to
be included in the group of Securities the holders of which have consented to
such action, may, by filing written notice with the Debenture Trustee at its
principal office and upon proof of holding as provided in Section 7.02, revoke
such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid, any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VIII
MEETINGS OF SECURITYHOLDERS
SECTION 8.01 PURPOSES OF MEETINGS.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Corporation or to the Debenture Trustee,
or to give any directions to the Debenture Trustee, or to consent
to the waiving of any Default hereunder and its consequences, or
to take any other action authorized to be taken by Securityholders
pursuant to any of the provisions of Article V;
(b) to remove the Debenture Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of such
Securities under any other provision of this Indenture or under
applicable law.
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SECTION 8.02 CALL OF MEETINGS BY DEBENTURE TRUSTEE.
The Debenture Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in Wilmington, Delaware as the Debenture Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to holders of Securities at their addresses as
they shall appear on the Security Register. Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03 CALL OF MEETINGS BY CORPORATION OR SECURITYHOLDERS.
In case at any time the Corporation, pursuant to a resolution of the
Board of Directors, or the holders of at least 20% in aggregate principal amount
of the Securities then outstanding, shall have requested the Debenture Trustee
to call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Debenture Trustee shall not have mailed the notice of such meeting within 20
days after receipt of such request, then the Corporation or such Securityholders
may determine the time and the place in Oak Harbor, Washington or Seattle,
Washington for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section
8.02.
SECTION 8.04 QUALIFICATIONS FOR VOTING.
To be entitled to vote at any meeting of Securityholders, a Person shall
be (a) a holder of one or more Securities or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Debenture Trustee and its counsel and any
representatives of the Corporation and its counsel.
SECTION 8.05 REGULATIONS.
Notwithstanding any other provisions of this Indenture, the Debenture
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Debenture Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Corporation or by Securityholders as provided in Section 8.03, in which case
the Corporation or the Securitybolders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.04, at any meeting each holder of
Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or
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represented by him or her; PROVIDED, HOWEVER, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Securities held
by him or instruments in writing as aforesaid duly designating him as the person
to vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from
time to time by a majority of those present, and the meeting may be held as so
adjourned without further notice.
SECTION 8.06 VOTING.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Corporation and
the other to the Debenture Trustee to be preserved by the Debenture Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
The holders of the Initial Securities and the Exchange Securities shall vote for
all purposes as a single class.
ARTICLE IX
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF SECURITYHOLDERS.
The Corporation and the Debenture Trustee may from time to time and at
any time amend this Indenture, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another Person to the Corporation,
or successive successions, and the assumption by the successor
Person of the covenants, agreements and obligations of the
Corporation pursuant to Article X hereof;
(b) to add to the covenants of the Corporation such further covenants,
restrictions or conditions for the protection of the
Securityholders as the Board of Directors and the Debenture
Trustee shall consider to be for the protection of the
Securityholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions or conditions a Default or an Event of Default
permitting the enforcement of all or any of the remedies provided
in this Indenture as
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herein set forth; PROVIDED, HOWEVER, that in respect of any such
additional covenant, restriction or condition such amendment may
provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Debenture
Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities in
coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained
herein or in any supplemental indenture; or to make such other
provisions in regard to matters or questions arising under this
Indenture, provided that any such action shall not materially
adversely affect the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends,
if any, to be placed on Securities, and all other matters required
pursuant to Section 2.07 or otherwise necessary, desirable or
appropriate in connection with the issuance of Securities to
holders of Capital Securities in the event of a distribution of
Securities by the Trust following a Dissolution Event, provided
that any such action shall not materially adversely affect the
interests of the holders of the Securities;
(g) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act; or
(h) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Debenture Trustee is hereby authorized to join with the Corporation
in the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Debenture Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Debenture Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any amendment to this Indenture authorized by the provisions of this
Section 9.01 may be executed by the Corporation and the Debenture Trustee
without the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
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SECTION 9.02 WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Corporation, when authorized by a Board Resolution, and
the Debenture Trustee may from time to time and at any time amend this
Indenture for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of modifying
in any manner the rights of the holders of the Securities; PROVIDED, HOWEVER,
that no such amendment shall, without the consent of the holders of each
Security then outstanding and affected thereby (i) change the Maturity Date
of any Security, or reduce the rate or extend the time of payment of interest
thereon (except as contemplated by Article XVI), or reduce the principal
amount thereof, or change any prepayment provisions, or make the principal
thereof or any interest or premium thereon payable in any coin or currency
other than U.S. dollars, or impair or affect the right of any Securityholder
to institute suit for payment thereof, or (ii) reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such amendment to the Indenture; PROVIDED, HOWEVER, that if the Securities
are held by the Trust, such amendment shall not be effective until the
holders of a majority in liquidation amount of Trust Securities shall have
consented to such amendment; PROVIDED, FURTHER, that if the consent of the
holder of each outstanding Security is required, such amendment shall not be
effective until each holder of the Trust Securities shall have consented to
such amendment.
Upon the request of the Corporation accompanied by a copy of a resolution
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any supplemental indenture effecting such
amendment, and upon the filing with the Debenture Trustee of evidence of the
consent of Securityholders as aforesaid, the Debenture Trustee shall join with
the Corporation in the execution of such supplemental indenture unless such
supplemental indenture affects the Debenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Debenture
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Promptly after the execution by the Corporation and the Debenture
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Debenture Trustee shall transmit by mail, first class postage
prepaid, a notice, prepared by the Corporation, setting forth in general
terms the substance of such supplemental indenture, to the Securityholders as
their names and addresses appear upon the Security Register. Any failure of
the Debenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT; EFFECT OF
SUPPLEMENTAL INDENTURES.
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
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and immunities under this Indenture of the Debenture Trustee, the Corporation
and the holders of Securities shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 9.04 NOTATION ON SECURITIES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article IX may bear a
notation in form approved by the Debenture Trustee as to any matter provided for
in such supplemental indenture. If the Corporation or the Debenture Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Debenture Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Corporation, authenticated by the Debenture Trustee or the
Authenticating Agent and delivered in exchange for the Securities then
outstanding.
SECTION 9.05 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TO DEBENTURE TRUSTEE.
The Debenture Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
SECTION 10.01 CORPORATION MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Corporation with or into any other
Person (whether or not affiliated with the Corporation, as the case may be), or
successive consolidations or mergers in which the Corporation or its successor
or successors, as the case may be, shall be a party or parties, or shall prevent
any sale, conveyance, transfer or lease of the property of the Corporation, or
its successor or successors as the case may be, as an entirety, or substantially
as an entirety, to any other Person (whether or not affiliated with the
Corporation, or its successor or successors, as the case may be) authorized to
acquire and operate the same; PROVIDED, that (a) the Corporation is the
surviving Person, or the Person formed by or surviving any such consolidation or
merger (if other than the Corporation) or to which such sale, conveyance,
transfer or lease of property is made is a Person organized and existing under
the laws of the United States or any State thereof or the District of Columbia,
and (b) if the Corporation is not the surviving Person, upon any such
consolidation, merger, sale, conveyance, transfer or lease, the due and punctual
payment of the principal of (and premium, if any) and interest on the Securities
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Corporation shall be expressly assumed by the surviving Person, by
supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act as then in effect) satisfactory in form to
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the Debenture Trustee executed and delivered to the Debenture Trustee by the
Person formed by such consolidation, or into which the Corporation shall have
been merged, or by the Person which shall have acquired such property, as the
case may be, and (c) after giving effect to such consolidation, merger, sale,
conveyance, transfer or lease, no Default or Event of Default shall have
occurred and be continuing.
SECTION 10.02 SUCCESSOR PERSON TO BE SUBSTITUTED FOR CORPORATION.
In case of any such consolidation, merger, sale, conveyance, transfer or
lease, and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Debenture Trustee and satisfactory in
form to the Debenture Trustee, of the obligation of due and punctual payment of
the principal of (and premium, if any) and interest on all of the Securities and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Corporation,
such successor Person shall succeed to and be substituted for the Corporation,
with the same effect as if it had been named herein as a party hereto, and the
Corporation thereupon shall be relieved of any further liability or obligation
hereunder or upon the Securities. Such successor Person thereupon may cause to
be signed, and may issue either in its own name or in the name of the
Corporation, any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Corporation and delivered to the Debenture
Trustee or the Authenticating Agent; and, upon the order of such successor
Person instead of the Corporation and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Debenture Trustee or the
Authenticating Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by any Officer of the
Corporation to the Debenture Trustee or the Authenticating Agent for
authentication, and any Securities which such successor Person thereafter shall
cause to be signed and delivered to the Debenture Trustee or the Authenticating
Agent for that purpose. All the Securities so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.
SECTION 10.03 OPINION OF COUNSEL TO BE GIVEN DEBENTURE TRUSTEE.
The Debenture Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01 DISCHARGE OF INDENTURE.
When (a) the Corporation shall deliver to the Debenture Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced as provided in Section 2.08) and not theretofore canceled, or (b) all
the Securities not theretofore canceled or delivered to the Debenture Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or
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are to be called for prepayment within one year under arrangements satisfactory
to the Debenture Trustee for the giving of notice of prepayment, and the
Corporation shall deposit with the Debenture Trustee, in trust, funds sufficient
to pay on the Maturity Date or upon prepayment all of the Securities (other than
any Securities which shall have been destroyed, lost or stolen and which shall
have been replaced as provided in Section 2.08) not theretofore canceled or
delivered to the Debenture Trustee for cancellation, including principal (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, due or to become due to the
Maturity Date or prepayment date, as the case may be, but excluding, however,
the amount of any moneys for the payment of principal of (or premium, if any) or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Securities (1) theretofore repaid to the
Corporation in accordance with the provisions of Section 11.04, or (2) paid to
any State or to the District of Columbia pursuant to its unclaimed property or
similar laws, and if, in either case the Corporation shall also pay or cause to
be paid all other sums payable hereunder by the Corporation, then this Indenture
shall cease to be of further effect except for the provisions of Sections 2.02,
2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive
until such Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10
and 11.04 shall survive, and the Debenture Trustee, on demand of the Corporation
accompanied by any Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Corporation, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Corporation,
however, hereby agrees to reimburse the Debenture Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Debenture Trustee in
connection with this Indenture or the Securities.
SECTION 11.02 DEPOSITED MONEYS AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST BY DEBENTURE TRUSTEE.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Debenture Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Corporation if acting as its
own paying agent), to the holders of the particular Securities for the payment
of which such moneys or U.S. Government Obligations have been deposited with the
Debenture Trustee, of all sums due and to become due thereon for principal,
premium, if any, and interest.
The Corporation shall pay and indemnify the Debenture Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Governmental
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03 PAYING AGENT TO REPAY MONEYS HELD.
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Debenture Trustee)
shall, upon written demand of the Corporation, be repaid to it or paid to the
Debenture Trustee, and thereupon such paying agent shall be released from all
further liability with respect to such moneys.
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SECTION 11.04 RETURN OF UNCLAIMED MONEYS.
Any moneys deposited with or paid to the Debenture Trustee or any paying
agent for payment of the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on Securities and not applied but remaining unclaimed by the
holders of Securities for two years after the date upon which the principal of
(or premium, if any) or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on such Securities, as the case may
be, shall have become due and payable, shall be repaid to the Corporation by the
Debenture Trustee or such paying agent; and the holder of any of the Securities
shall thereafter look only to the Corporation for any payment which such holder
may be entitled to collect and all liability of the Debenture Trustee or such
paying agent with respect to such moneys shall thereupon cease.
SECTION 11.05 DEFEASANCE UPON DEPOSIT OF MONEYS OR U.S. GOVERNMENT
OBLIGATIONS.
The Corporation shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day after
the applicable conditions set forth below have been satisfied:
(a) the Corporation shall have deposited or caused to be deposited
irrevocably with the Debenture Trustee or the Defeasance Agent (as
defined below) as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders
of the Securities (i) money in an amount, or (ii) U.S. Government
Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an
amount, or (iii) a combination of (i) and (ii), sufficient, in the
opinion (with respect to (ii) and (iii)) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Debenture Trustee
and the Defeasance Agent, if any, to pay and discharge each
installment of principal of and interest on and premium, if any,
and Liquidated Damages, if any, in respect of the outstanding
Securities on the dates such installments of principal and
interest (and premium, if any) and Liquidated Damages, if any, are
due;
(b) if the Securities are then listed on any national securities
exchange, the Corporation shall have delivered to the Debenture
Trustee and the Defeasance Agent, if any, an Opinion of Counsel to
the effect that the exercise of the option under this Section
11.05 would not cause such Securities to be delisted from such
exchange;
(c) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit;
and
(d) the Corporation shall have delivered to the Debenture Trustee and
the Defeasance Agent, if any, an Opinion of Counsel to the effect
that holders of the Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of
the exercise of the option under this Section 11.05 and will be
subject to United States federal income tax on the same amount and
in the same manner and at the same times as would have been the
case if such option had not been exercised.
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"Discharged" means that the Corporation shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations under,
the Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Debenture Trustee, at the expense of the
Corporation, shall execute proper instruments acknowledging the same), except
(1) the rights of holders of Securities to receive, from the trust fund
described in clause (a) above, payment of the principal of and the interest
and premium, if any, and Liquidated Damages, if any, on the Securities when
such payments are due; (2) the Corporation's obligations with respect to the
Securities under Sections 2.07, 2.08, 5.02 and 11.04; and (3) the rights,
powers, trusts, duties and immunities of the Debenture Trustee hereunder.
"Defeasance Agent" means another financial institution which is eligible
to act as Debenture Trustee hereunder and which assumes all of the obligations
of the Debenture Trustee necessary to enable the Debenture Trustee to act
hereunder. In the event such a Defeasance Agent is appointed pursuant to this
Section, the following conditions shall apply:
(1) the Debenture Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth
such Defeasance Agent's rights and responsibilities; and
(2) the Defeasance Agent shall provide verification to the Debenture
Trustee acknowledging receipt of sufficient money and/or U.S.
Government Obligations to meet the applicable conditions set forth
in this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01 INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.
No recourse for the payment of the principal of or premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on any Security, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Corporation in this Indenture, or in any Security,
or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, officer or director, as such,
past, present or future, of the Corporation or of any successor Person to the
Corporation, either directly or through the Corporation or any successor Person
to the Corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
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SECTION 13.01 SUCCESSORS.
All of the covenants, stipulations, promises and agreements of the
Corporation contained in this Indenture shall also bind the Corporation's
successors and assigns whether so expressed or not.
SECTION 13.02 OFFICIAL ACTS BY SUCCESSOR CORPORATION.
Any act or proceeding that, by any provision of this Indenture, is
authorized or required to be done or performed by any board, committee or
officer of the Corporation shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that shall
at the time be the lawful sole successor of the Corporation.
SECTION 13.03 SURRENDER OF CORPORATION POWERS.
The Corporation by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Debenture Trustee
may surrender any of the powers reserved to the Corporation hereunder, and
thereupon such power so surrendered shall terminate both as to the Corporation,
as the case may be, and as to any successor Person.
SECTION 13.04 ADDRESSES FOR NOTICES, ETC.
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Debenture Trustee or by the holders of
Securities on the Corporation may be given or served by being deposited postage
prepaid by first class mail, registered or certified mail, overnight courier
service or conformed telecopy addressed (until another address is filed by the
Corporation with the Debenture Trustee for the purpose) to InterWest Bancorp,
Inc. at 275 Southeast Pioneer Way, Oak Harbor, Washington 98277, Attention:
Chief Financial Officer. Any notice, direction, request or demand by any
Securityholder to or upon the Debenture Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of Wilmington Trust Company at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration (unless another address is provided by the Debenture Trustee to
the Corporation for such purpose). Any notice or communication to a
Securityholder shall be mailed by first class mail to his or her address shown
on the Security Register kept by the security registrar for the Securities.
Notices required to be given to the Debenture Trustee or the Authenticating
Agent shall be in writing, personally delivered or mailed first class postage
prepaid to each of the foregoing, or at such other address as shall be
designated by written notice to the other parties.
SECTION 13.05 GOVERNING LAW.
This Indenture and each Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State without regard to
conflict of law principles thereof.
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SECTION 13.06 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Upon any application or demand by the Corporation to the Debenture
Trustee to take any action under any of the provisions of this Indenture, the
Corporation shall furnish to the Debenture Trustee an Officers' Certificate
stating that in the opinion of the signers all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered
to the Debenture Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07 BUSINESS DAYS.
In any case where the date of payment of principal of (or premium, if
any) or interest on the Securities is not a Business Day, the payment of such
principal of (or premium, if any) or interest on the Securities will not be made
on such date but will be made on the next succeeding Business Day, except if
such Business Day is in the next succeeding calendar year, such payment will be
made on the immediately preceding Business Day, with the same force and effect
as if made on the original date of payment, and no interest shall accrue for the
period from and after such date.
SECTION 13.08 TRUST INDENTURE ACT TO CONTROL.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09 TABLE OF CONTENTS, HEADINGS, ETC.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.10 EXECUTION IN COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
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SECTION 13.11 SEPARABILITY.
In case any one or more of the provisions contained in this Indenture or
in the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12 ASSIGNMENT.
The Corporation will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Corporation, provided that, in the event of any
such assignment, the Corporation will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13 ACKNOWLEDGMENT OF RIGHTS.
The Corporation acknowledges that, with respect to any Securities held by
the Trust or a trustee of such Trust, if the Property Trustee of such Trust
fails to enforce its rights under this Indenture as the holder of the Securities
held as the assets of the Trust, any holder of Capital Securities may institute
legal proceedings, subject to Section 5.09, directly against the Corporation to
enforce such Property Trustee's rights under this Indenture without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Corporation to pay principal of (or premium, if any) or interest on the
Securities when due, the Corporation acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of (or premium, if any) or interest on the
Securities having an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due date specified in the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES
SECTION 14.01 SPECIAL EVENT PREPAYMENT.
If, prior to the Initial Optional Redemption Date, a Special Event has
occurred and is continuing, then notwithstanding Section 14.02(a) but subject to
Section 14.02(c), the Corporation shall have the right, at any time within 90
days following the occurrence of such Special Event, upon (i) not less than 45
days' written notice to the Debenture Trustee and (ii) not less than 30 days nor
more than 60 days' written notice to the Securityholders, to prepay the
Securities, in whole (but not in part), at the Special Event Prepayment Price.
Following a Special Event, the Corporation shall take such action as is
necessary to promptly determine the Special Event Prepayment Price,
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including, without limitation, the appointment of a Quotation Agent. The Special
Event Prepayment Price shall be paid prior to 12:00 noon, New York City time, on
the date of such prepayment or such earlier time as the Corporation determines,
provided that the Corporation shall deposit with the Debenture Trustee an amount
sufficient to pay the Special Event Prepayment Price by 10:00 a.m., New York
City time, on the date such Special Event Prepayment Price is to be paid.
SECTION 14.02 OPTIONAL PREPAYMENT BY CORPORATION.
(a) Subject to Sections 14.02(b) and (c), the Corporation shall have the
right to prepay the Securities, in whole or in part, at any time on or after the
Initial Optional Redemption Date, upon (i) not more than 45 days' written notice
to the Debenture Trustee and (ii) not less than 30 days and not more than 60
days' written notice to the Securityholders, at the prepayment prices set forth
below plus, in each case, accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) to the applicable date of
prepayment (the "Optional Prepayment Price"), if prepaid during the 12-month
period beginning November 15 of the years indicated below.
<TABLE>
<CAPTION>
Year Percentage of Principal
------ -------------------------
<S> <C>
2009 104.938%
2010 104.444%
2011 103.950%
2012 103.457%
2013 102.963%
2014 102.469%
2015 101.975%
2016 101.481%
2017 100.988%
2018 100.494%
2019 and thereafter 100.000%
</TABLE>
If the Securities are only partially prepaid pursuant to this Section
14.02, the Securities to be prepaid shall be selected on a PRO RATA basis not
more than 60 days prior to the date fixed for prepayment from the outstanding
Securities not previously called for prepayment; PROVIDED, HOWEVER, that with
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $100,000 but more than an aggregate
principal amount of zero as a result of such PRO RATA prepayment, the
Corporation shall prepay Securities of each such Securityholder so that after
such prepayment such Securityholder shall hold Securities either with an
aggregate principal amount of at least $100,000 or such Securityholder no longer
holds any Securities, and shall use such method (including, without limitation,
by lot) as the Corporation shall deem fair and appropriate; PROVIDED, FURTHER,
that any such proration may be made on the basis of the aggregate principal
amount of Securities held by each Securityholder and may be made by making such
adjustments as the Corporation deems fair and appropriate in order that only
Securities in denominations of $1,000 or integral multiples thereof shall be
prepaid. The Optional Prepayment
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Price shall be paid prior to 12:00 noon New York City time, on the date of such
prepayment or at such earlier time as the corporation determines, PROVIDED that
the Corporation shall deposit with the Debenture Trustee an amount sufficient to
pay the Optional Prepayment Price by 10:00 a.m., New York City time, on the date
such Optional Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02(a), upon the
entry of an order for dissolution of the Trust by a court of competent
jurisdiction, the Securities thereafter will be subject to optional prepayment,
in whole only, but not in part, on or after the Initial Optional Redemption
Date, at the applicable Optional Prepayment Price and otherwise in accordance
with this Article XIV.
(c) Any prepayment of Securities pursuant to Section 14.01 or Section
14.02 shall be subject to the Corporation obtaining any and all required
regulatory approvals.
SECTION 14.03 NO SINKING FUND.
The Securities are not entitled to the benefit of any sinking fund.
SECTION 14.04 NOTICE OF PREPAYMENT; SELECTION OF SECURITIES.
In case the Corporation shall desire to exercise the right to prepay all,
or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for prepayment and shall mail a notice of such
prepayment at least 30 and not more than 60 days' prior to the date fixed for
prepayment to the holders of Securities to be so prepaid as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Security.
Each such notice of prepayment shall specify the CUSIP number of the
Securities to be prepaid, the date fixed for prepayment, the Prepayment Price at
which the Securities are to be prepaid (or the method by which such Prepayment
Price is to be calculated), the place or places of payment where payment will be
made upon presentation and surrender of the Securities, that interest accrued to
the date fixed for prepayment will be paid as specified in said notice, and that
on and after said date interest thereon or on the portions thereof to be
prepaid will cease to accrue. If less than all the Securities are to be
prepaid, the notice of prepayment shall specify the numbers of the Securities to
be prepaid. In case any Security is to be prepaid in part only, the notice of
prepayment shall state the portion of the principal amount thereof to be prepaid
and shall state that on and after the date fixed for prepayment, upon surrender
of such Security, a new Security or Securities in principal amount equal to the
portion thereof that has not been prepaid will be issued.
By 10:00 a.m., New York City time, on the prepayment date specified in
the notice of prepayment given as provided in this Section, the Corporation will
deposit with the Debenture Trustee or with one or more paying agents an amount
of money sufficient to prepay on the prepayment date all the Securities so
called for prepayment at the Prepayment Price.
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SECTION 14.05 PAYMENT OF SECURITIES CALLED FOR PREPAYMENT.
If notice of prepayment has been given as provided in Section 14.04, the
Securities or portions of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the Prepayment Price (subject to the rights of holders of
Securities at the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date) and on and
after said date (unless the Corporation shall default in the payment of such
Securities at the Prepayment Price) interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on the Securities or
portions of Securities so called for prepayment shall cease to accrue. On
presentation and surrender of such Securities at a place of payment specified in
said notice, the said Securities or the specified portions thereof shall be paid
and prepaid by the Corporation at the applicable Prepayment Price, (subject to
the rights of holders of Securities on the close of business on a regular record
date in respect of an Interest Payment Date occurring on or prior to the
prepayment date).
Upon presentation of any Security prepaid in part only, the Corporation
shall execute and the Debenture Trustee shall authenticate and make available
for delivery to the holder thereof, at the expense of the Corporation, a new
Security or Securities of authorized denominations, in principal amount equal to
the portion of the Security so presented that has not been prepaid.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 AGREEMENT TO SUBORDINATE
The Corporation covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall be
issued subject to the provisions of this Article XV; and each holder of a
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Corporation of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and subject in
right of payment to the prior payment in full of all Allocable Amounts then due
and payable in respect of Senior Indebtedness, whether outstanding at the date
of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any
Default or Event of Default hereunder.
SECTION 15.02 DEFAULT ON SENIOR INDEBTEDNESS.
In the event and during the continuation of any default by the
Corporation in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness, or in the event
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that the maturity of any Senior Indebtedness has been accelerated because of a
default and such acceleration has not been rescinded or canceled, then, in
either case, no payment shall be made by the Corporation with respect to the
principal (including prepayment payments) of (or premium, if any) or interest on
the Securities (including Compounded Interest and Additional Sums, if any, and
Liquidated Damages, if any, or any other amounts which may be due on the
Securities pursuant to the terms hereof or thereof).
In the event of the acceleration of the maturity of the Securities, then
no payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of (or premium, if any) or interest on the
Securities (including Compounded Interest and Additional Sums, if any, and
Liquidated Damages, if any, or any other amounts which may be due on the
Securities pursuant to the terms hereof or thereof) until the holders of all
Senior Indebtedness outstanding at the time of such acceleration shall receive
payment, in full, of all Allocable Amounts due on or in respect of such Senior
Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment is received
by the Debenture Trustee, or any Securityholder, when such payment is prohibited
by the preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered by the Debenture
Trustee (if the notice requested by Section 15.06 has been received by the
Debenture Trustee) or by any Securityholder, to the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent of
the Allocable Amounts in respect of such Senior Indebtedness and to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Debenture Trustee in writing within 90
days of such payment of the Allocable Amounts then due and owing on such Senior
Indebtedness, and only the Allocable Amounts specified in such notice to the
Debenture Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment by the Corporation or distribution of assets of the
Corporation of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution, winding-up, liquidation or reorganization of
the Corporation, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, the holders of all Senior Indebtedness of the
Corporation will first be entitled to receive payment in full of Allocable
Amounts due on or in respect of such Senior Indebtedness, before any payment is
made by the Corporation on account of the principal of (or premium, if any) or
interest on the Securities (including Compounded Interest and Additional Sums
(if any) and Liquidated Damages, if any, or any other amounts which may be due
on the Securities pursuant to the terms hereof or thereof); and upon any such
dissolution, winding-up, liquidation or reorganization, any payment by the
Corporation, or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, which the Securityholders or
the Debenture Trustee would be entitled to receive from the Corporation, except
for the provisions of this Article XV, shall be paid by the Corporation or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Securityholders or by the
Debenture Trustee under the Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Corporation (PRO RATA to such holders on
the basis of the
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respective Allocable Amounts of Senior Indebtedness held by such holders, as
calculated by the Corporation) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Allocable Amounts
of Senior Indebtedness in full, in money or moneys worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Debenture Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Corporation of any kind or character prohibited by
the foregoing, whether in cash, property or securities, shall be received by the
Debenture Trustee, or any Securityholder, before the Allocable Amounts of all
Senior Indebtedness is paid in full, or provision is made for such payment in
money in accordance with its terms, such payment or distribution shall be held
in trust for the benefit of and shall be paid over or delivered by the Debenture
Trustee (if the Notice requested by Section 15.06 has been received by the
Debenture Trustee) or by any Securityholder, to the holders of such Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Corporation, for application to the payment of all
Allocable Amounts of Senior Indebtedness remaining unpaid to the extent
necessary to pay all Allocable Amounts due on or in respect of such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Corporation as reorganized
or readjusted, or securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Securities to the payment of Senior Indebtedness that may at the time be
outstanding, PROVIDED that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Corporation with, or the merger of the Corporation into,
another Person or the liquidation or dissolution of the Corporation following
the sale, conveyance, transfer or lease of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article X of this Indenture shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 15.03
if such other Person shall, as a part of such consolidation, merger, sale,
conveyance, transfer or lease, comply with the conditions stated in Article X of
this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply to
claims of, or payments to, the Debenture Trustee under or pursuant to Section
6.06 of this Indenture.
SECTION 15.04 SUBROGATION.
Subject to the payment in full of all Allocable Amounts of Senior
Indebtedness, the rights of the Securityholders shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Corporation, as the case
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may be, applicable to such Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Securityholders or the Debenture Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to the provisions of
this Article XV to or for the benefit of the holders of such Senior Indebtedness
by Securityholders or the Debenture Trustee, shall, as between the Corporation,
its creditors other than holders of Senior Indebtedness of the Corporation, and
the holders of the Securities, be deemed to be a payment by the Corporation to
or on account of such Senior Indebtedness. It is understood that the provisions
of this Article XV are and are intended solely for the purposes of defining the
relative rights of the holders of the Securities, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Corporation, its
creditors other than the holders of Senior Indebtedness of the Corporation, and
the holders of the Securities, the obligation of the Corporation, which is
absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on the Securities
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Securities and creditors of the Corporation, as the case may be, other than
the holders of Senior Indebtedness of the Corporation, as the case may be, nor
shall anything herein or therein prevent the Debenture Trustee or the holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XV of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Corporation, as the case may be, received upon the
exercise of any such remedy.
SECTION 15.05 DEBENTURE TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Securityholder, by such Securityholder's acceptance thereof,
authorizes and directs the Debenture Trustee on such Securityholder's behalf to
take such action (as the Debenture Trustee, in its discretion, deems necessary
or appropriate, upon instruction or otherwise) to effectuate the subordination
provided in this Article XV and appoints the Debenture Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06 NOTICE BY THE CORPORATION.
The Corporation shall give prompt written notice to a Responsible Officer
of the Debenture Trustee of any fact known to the Corporation that would
prohibit the making of any payment of monies to or by the Debenture Trustee in
respect of the Securities pursuant to the provisions of this Article XV.
Notwithstanding the provisions of this Article XV or any other provision of this
Indenture, the Debenture Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Debenture Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible Officer of the
Debenture Trustee shall have received written notice thereof from the
Corporation or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Debenture
Trustee, subject to the provisions of Article VI of this Indenture, shall
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be entitled in all respects to assume that no such facts exist; PROVIDED,
HOWEVER, that if the Debenture Trustee shall not have received the notice
provided for in this Section 15.06 at least two Business Days prior to the
date upon which, by the terms hereof, any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on any Security), then,
anything herein contained to the contrary notwithstanding, the Debenture
Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Debenture Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on a written notice
delivered to it by a Person representing himself to be a holder of Senior
Indebtedness of the Corporation (or a trustee on behalf of such holder), as
the case may be, to establish that such notice has been given by a holder of
such Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Debenture Trustee determines in good faith
that further evidence is required with respect to the right of any Person as
a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XV, the Debenture Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the
Debenture Trustee as to the amount of such Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Debenture Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Upon any payment or distribution of assets of the Corporation referred
to in this Article XV, the Debenture Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding-up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Debenture
Trustee or to the Securityholders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders
of Senior Indebtedness and other indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XV.
SECTION 15.07 RIGHTS OF THE DEBENTURE TRUSTEE; HOLDERS OF SENIOR
INDEBTEDNESS.
The Debenture Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XV in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Debenture Trustee
of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Corporation,
the Debenture Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such
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Senior Indebtedness shall be read into this Indenture against the Debenture
Trustee. The Debenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Debenture Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to
Securityholders, the Corporation or any other Person money or assets to which
any holder of such Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Debenture Trustee under or pursuant to Section 6.06.
SECTION 15.08 SUBORDINATION MAY NOT BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness of
the Corporation to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Corporation, as the case may be, or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Corporation, as the
case may be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Corporation may, at any time and from
time to time, without the consent of or notice to the Debenture Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Corporation, as the case may be, and any
other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01 EXTENSION OF INTEREST PAYMENT PERIOD.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable, PROVIDED that no
Extended Interest Payment Period shall end on a date other than an Interest
Payment Date or extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
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extension of the interest payment period pursuant to this Section 16.01, will
bear interest thereon at the Coupon Rate compounded semi-annually for each
semi-annual period during the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended interest Payment Period, the Corporation
shall pay all interest accrued and unpaid on the Securities, including any
Additional Sums and Compounded Interest (together, "Deferred Interest"), that
shall be payable to the holders of the Securities in whose names the Securities
are registered in the Security Register on the record date immediately preceding
the end of the Extended Interest Payment Period. Before the termination of any
Extended Interest Payment Period, the Corporation may further defer payments of
interest by further extending such Extended Interest Payment Period, PROVIDED
that such Extended Interest Payment Period, together with all such previous and
further extensions within such Extended Interest Payment Period, shall not (i)
exceed 10 consecutive semi-annual periods, including the first such semi-annual
period during such Extended Interest Payment Period, (ii) end on a date other
than an Interest Payment Date or (iii) extend beyond the Maturity Date of the
Securities. Upon the termination of any Extended Interest Payment Period and the
payment of all amounts then due, the Corporation may commence a new Extended
Interest Payment Period, subject to the foregoing requirements. No interest
shall be due and payable during an Extended Interest Payment Period, except at
the end thereof, but the Corporation may prepay at any time all or any portion
of the interest accrued during an Extended Interest Payment Period.
SECTION 16.02 NOTICE OF EXTENSION.
(a) If the Property Trustee is the only holder of the Securities at the
time the Corporation elects to commence an Extended Interest Payment Period, the
Corporation shall give written notice to the Administrative Trustees, the
Property Trustee and the Debenture Trustee of its election to commence such
Extended Interest Payment Period at least five Business Days before the earlier
of (i) the next succeeding date on which Distributions on the Trust Securities
would have been payable, and (ii) the date the Property Trustee is required to
give notice of the record date, or the date such Distributions are payable, to
any national securities exchange or to holders of the Capital Securities, but in
any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the Securities at
the time the Corporation elects to commence an Extended Interest Payment Period,
the Corporation shall give the holders of the Securities and the Debenture
Trustee written notice of its election of such Extended Interest Payment Period
at least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date, and (ii) the date the Debenture Trustee is required to give notice
of the record or payment date of such interest payment to any national
securities exchange.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
Wilmington Trust Company hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
INTERWEST BANCORP, INC.
BY: /s/ Stephen M. Walden
---------------------------------------
Stephen M. Walden
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Debenture Trustee
By:
---------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
INTERWEST BANCORP, INC.
By:
---------------------------------
Stephen M. Walden
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Debenture Trustee
By: /s/ W. Chris Sponenberg
---------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
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EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO
DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH INTERWEST BANCORP, INC.
(THE "CORPORATION") OR ANY "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE CORPORATION, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
A-1
<PAGE>
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2),(3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE CORPORATION PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO THE CORPORATION, AND (ii) PURSUANT TO CLAUSE (D)
TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE
CORPORATION. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $ 100,000. ANY
ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL
AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY
PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR
INTEREST ON SUCH SECURITIES, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS"
BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING
"PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23,95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION
OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
A-2
<PAGE>
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF NOVEMBER 9, 1999, BY AND AMONG
THE TRUST, THE ISSUER AND THE INITIAL PURCHASER NAMED THEREIN, AS AMENDED FROM
TIME TO TIME.
A-3
<PAGE>
SUBORDINATED DEBENTURE CERTIFICATE
INTERWEST BANCORP, INC.
CUSIP No.: 480931 AA8
$41,238,000
9.875% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE NOVEMBER 15, 2029 Series A/Series B
InterWest Bancorp, Inc., a Washington corporation (the "Corporation,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to InterWest Capital
Trust I or registered assigns, the principal sum of $41,238,000 (Forty-One
Million Two Hundred Thirty-Eight Thousand Dollars) on November 15, 2029 (the
"Maturity Date"), unless previously prepaid, and to pay interest on the
outstanding principal amount hereof from November 15, 1999, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on May 15 and November 15 of each year,
commencing May 15, 2000 at the rate of 9.875% per annum, until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually ("Compounded
Interest"). The amount of interest payable hereon shall be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
the principal of (or premium, if any) or interest on this Security is payable is
not a Business Day (as defined in the Indenture), then the payment payable on
such date will be made on the next succeeding day that is a Business Day, except
that if such next succeeding Business Day falls in the next succeeding calendar
year such payment shall be made on the immediately preceding Business Day (and
without any interest or other payment in respect of any such delay), with the
same force and effect as if made on such date. Pursuant to the Indenture, in
certain circumstances the Corporation will be required to pay Additional Sums
(as defined in the Indenture) with respect to this Security. Pursuant to the
Registration Rights Agreement and the Liquidated Damages Agreement, in certain
limited circumstances the Corporation will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement and the Liquidated Damages
Agreement) with respect to this Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be at the
close of business on the 1st day of the month in which the relevant Interest
Payment Date falls. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the holders on such regular
record date and may be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Debenture Trustee for the payment of such
defaulted interest, notice whereof shall be given to the holders of Securities
not less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
A-4
<PAGE>
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture.
The principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on this
Security shall be payable at the office or agency of the Debenture Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that payment of interest may be made at the
option of the Corporation by (i) check mailed to the holder at such address as
shall appear in the Security Register or (ii) transfer to an account maintained
by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding the
foregoing, so long as the holder of this Security is the Property Trustee of
InterWest Capital Trust I, the payment of the principal of (and premium, if any)
and interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security will be made at such place and to
such account as may be designated by such Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Debenture Trustee on his or
her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Debenture Trustee his or her attorney-in-fact for any and all such purposes.
Each holder hereof, by his or her acceptance hereof, hereby waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Security shall not be entitled to any benefit under the Indenture or
be valid or become obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of the Debenture
Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
A-5
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed and sealed this 15th day of November, 1999.
INTERWEST BANCORP, INC.
By:
------------------------------------
Stephen M. Walden
President and Chief Executive Officer
Attest:
By:
----------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the 9.875% Junior Subordinated Deferrable Interest
Debentures, Series A/Series B, of INTERWEST BANCORP, INC. referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Debenture Trustee
Dated: By:
----------------- -----------------------------
Authorized Signatory
A-6
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Corporation (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of November
15, 1999 (the "Indenture"), duly executed and delivered between the Corporation
and Wilmington Trust Company, as Debenture Trustee (the "Debenture Trustee"), to
which Indenture reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Debenture Trustee, the Corporation and the holders of the Securities.
Upon the occurrence and continuation of a Special Event (as defined in
the Indenture) prior to November 15, 2009 (the "Initial Optional Redemption
Date"), the Corporation shall have the right, at any time within 90 days
following the occurrence of such Special Event, to prepay this Security in
whole (but not in part) at the Special Event Prepayment Price. "Special Event
Prepayment Price" shall mean, with respect to any prepayment of the
Securities following a Special Event, an amount in cash equal to the greater
of (i) 100% of the principal amount of the Securities to be prepaid, or (ii)
the sum, as determined by a Quotation Agent, of the present values of the
remaining scheduled payments of principal and interest on such Securities,
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus,
in the case of each of (i) and (ii), any accrued and unpaid interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, thereon to the date of such prepayment.
In addition, the Corporation shall have the right to prepay this
Security, in whole or in part, at any time on or after the Initial Optional
Redemption Date (an "Optional Prepayment"), at the prepayment prices set
forth below plus, in each case, accrued and unpaid interest thereon
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, thereon to the applicable date of prepayment (the "Optional
Prepayment Price"), if prepaid during the 12-month period beginning November
15, of the years indicated below.
<TABLE>
<CAPTION>
Year Percentage of Principal
---- -----------------------
<S> <C>
2009 104.938%
2010 104.444%
2011 103.950%
2012 103.457%
2013 102.963%
2014 102.469%
2015 101.975%
2016 101.481%
2017 100.988%
2018 100.494%
2019 and thereafter 100.000%
</TABLE>
A-7
<PAGE>
The Prepayment Price shall be paid prior to 12:00 noon, New York City
time, on the date of such prepayment or at such earlier time as the Corporation
determines, PROVIDED that the Corporation shall deposit with the Debenture
Trustee an amount sufficient to pay the Prepayment Price by 10:00 a.m., New York
City time, on the date such Prepayment Price is to be paid. Any prepayment
pursuant to this paragraph will be made upon not less than 30 days nor more than
60 days' prior written notice.
If the Securities are only partially prepaid by the Corporation pursuant
to an Optional Prepayment, the particular Securities to be prepaid shall be
selected on a PRO RATA basis from the outstanding Securities not previously
called for prepayment; PROVIDED, HOWEVER, that with respect to Securityholders
that would be required to hold Securities with an aggregate principal amount of
less than $100,000 but more than an aggregate principal amount of zero as a
result of such pro rata prepayment, the Corporation shall prepay Securities of
each such Securityholder so that after such prepayment such Securityholder shall
hold Securities either with an aggregate principal amount of at least $100,000
or such Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate; PROVIDED, FURTHER, that any such proration may be made on the basis
of the aggregate principal amount of Securities held by each Securityholder
thereof and may be made by making such adjustments as the Corporation deems fair
and appropriate in order that only Securities in denominations of $1,000 or
integral multiples thereof shall be prepaid. In the event of prepayment of this
Security in part only, a new Security or Securities for the portion hereof that
has not been prepaid will be issued in the name of the holder hereof upon the
cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by the
Corporation shall be subject to the receipt of any and all required regulatory
approvals.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding (as defined in the
Indenture), to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or change any of the
prepayment provisions or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any holder of Securities to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Securities the holders of
which are required to consent to any such supplemental indenture. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Securities at the time outstanding affected thereby, on
behalf of all of the holders of the Securities, to waive any past default in the
performance of any
A-8
<PAGE>
of the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision under which the Indenture cannot
be modified or amended without the consent of each holder of Securities then
outstanding. Any such consent or waiver by the holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Security and of any
Security issued in exchange herefor or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Corporation, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security at the time and place and at the
rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and be continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period (an "Extended Interest Payment Period") of such Securities for a
period not (i) exceeding 10 consecutive semi-annual periods, including the first
such semi-annual period during such extension period, (ii) extending beyond the
Maturity Date of the Securities or (iii) ending on a date other than an Interest
Payment Date, at the end of which period the Corporation shall pay all interest
then accrued and unpaid (together with interest thereon at the rate specified
for the Securities to the extent that payment of such interest is enforceable
under applicable law). Before the termination of any such Extended Interest
Payment Period, the Corporation may further defer payments of interest by
further extending such Extended Interest Payment Period, PROVIDED that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Corporation may commence a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end thereof,
but the Corporation may prepay at any time all or any portion of the interest
accrued during an Extended Interest Payment Period.
The Corporation has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities (including other Debentures) of
the Corporation that rank PARI PASSU with or junior in right of payment to the
Securities or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any Subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks PARI PASSU with or junior
in right of payment to the Securities (other than (a) dividends or distributions
of Corporation's capital stock (which includes Common Stock and preferred
stock), (b) any declaration of a dividend
A-9
<PAGE>
in connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, as defined in the Indenture, (d) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Corporation's benefit or
compensation plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans), if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would constitute, an
Event of Default and (b) in respect of which the Corporation shall not have
taken reasonable steps to cure, (2) if such Securities are held by the Property
Trustee of InterWest Capital Trust I, the Corporation shall be in default with
respect to its payment of any obligations under the Capital Securities Guarantee
or (3) the Corporation shall have given notice of its election to exercise its
right to commence an Extended Interest Payment Period, and shall not have
rescinded such Notice, and such Extended Interest Payment Period or any
extension thereof shall have commenced and be continuing.
Subject to (i) the Corporation having received any required regulatory
approvals and (ii) the Administrative Trustees of InterWest Capital Trust I
having received an opinion of counsel to the effect that such distribution will
not cause the holders of Capital Securities to recognize gain or loss for
federal income tax purposes, the Corporation will have the right at any time to
liquidate the Trust and, after satisfaction of liabilities of creditors of the
Trust as required by applicable law, to cause the Securities to be distributed
to the holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
minimum denominations of $100,000 and multiples of $1,000 in excess thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Corporation,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in Wilmington, Delaware accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this Security,
the Corporation, the Debenture Trustee, any authenticating agent, any paying
agent, any transfer agent and the security registrar may deem and treat the
holder hereof as the absolute owner hereof (whether or not this Security shall
be overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and (subject to the Indenture) interest due hereon and for all other purposes,
and neither the Corporation nor the Debenture Trustee nor any
A-10
<PAGE>
authenticating agent nor any paying agent nor any transfer agent nor any
security registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest (including Compounded Interest and Additional Sums, if any)
or Liquidated Damages, if any, on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, employee, officer or director, past,
present or future, as such, of the Corporation or of any predecessor or
successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.
A-11
<PAGE>
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
INTERWEST CAPITAL TRUST I
This Certificate of Trust of InterWest Capital Trust I (the "Trust"),
is being duly executed and filed by the undersigned trustee to form a
business trust under the Delaware Business Trust Act (12 DEL. C. Section 3801
ET SEQ.)(the "Act").
(a) NAME. The name of the business trust formed hereby is InterWest
Capital Trust I.
(b) DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 N. Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Trust in accordance with Section 3811 of the Act.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By: /s/ Patricia A. Evans
--------------------------------------
Name: Patricia A. Evans
Title: Financial Services Officer
<PAGE>
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
INTERWEST CAPITAL TRUST I
Dated as of November 15, 1999
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
<S> <C> <C>
SECTION 1.1 DEFINITIONS............................................................................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION......................................................10
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES........................................................10
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.......................................................11
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE..................................................11
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT......................................11
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.............................................................11
SECTION 2.7 DEFAULT; NOTICE.......................................................................13
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME..................................................................................13
SECTION 3.2 OFFICE................................................................................14
SECTION 3.3 PURPOSE...............................................................................14
SECTION 3.4 AUTHORITY.............................................................................14
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST........................................................14
SECTION 3.6 POWERS AND DUTIES OF THE ADMINISTRATIVE TRUSTEES......................................14
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES..................................17
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.............................................18
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE...........................20
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE....................................................22
SECTION 3.11 DELAWARE TRUSTEE......................................................................24
SECTION 3.12 EXECUTION OF DOCUMENTS................................................................25
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES................................25
SECTION 3.14 DURATION OF TRUST.....................................................................25
SECTION 3.15 MERGERS...............................................................................25
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES...............................................27
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.......................................................27
SECTION 4.3 RIGHT TO PROCEED......................................................................28
SECTION 4.4 RIGHT TO DISSOLVE TRUST...............................................................28
i
<PAGE>
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES; APPOINTMENT OF CO-TRUSTEE.........................................28
SECTION 5.2 DELAWARE TRUSTEE......................................................................29
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.........................................................29
SECTION 5.4 CERTAIN QUALIFICATIONS OF ADMINISTRATIVE TRUSTEES AND DELAWARE TRUSTEE GENERALLY......30
SECTION 5.5 ADMINISTRATIVE TRUSTEES...............................................................31
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES......................................31
SECTION 5.7 VACANCIES AMONG TRUSTEES..............................................................33
SECTION 5.8 EFFECT OF VACANCIES...................................................................33
SECTION 5.9 MEETINGS..............................................................................33
SECTION 5.10 DELEGATION OF POWER...................................................................34
SECTION 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS...........................34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.........................................................................34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES...............................................35
SECTION 7.2 EXECUTION AND AUTHENTICATION..........................................................35
SECTION 7.3 FORM AND DATING.......................................................................36
SECTION 7.4 REGISTRAR, PAYING AGENT AND EXCHANGE AGENT............................................38
SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST...................................................38
SECTION 7.6 REPLACEMENT SECURITIES................................................................38
SECTION 7.7 OUTSTANDING CAPITAL SECURITIES........................................................39
SECTION 7.8 CAPITAL SECURITIES IN TREASURY........................................................39
SECTION 7.9 TEMPORARY SECURITIES..................................................................39
SECTION 7.10 CANCELLATION..........................................................................40
SECTION 7.11 CUSIP NUMBERS.........................................................................40
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 DISSOLUTION OF TRUST..................................................................41
ii
<PAGE>
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES................................................................42
SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS..................................................43
SECTION 9.3 DEEMED SECURITY HOLDERS...............................................................52
SECTION 9.4 BOOK-ENTRY INTERESTS..................................................................52
SECTION 9.5 NOTICES TO CLEARING AGENCY............................................................53
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY..............................................53
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.............................................................................53
SECTION 10.2 EXCULPATION...........................................................................54
SECTION 10.3 FIDUCIARY DUTY........................................................................54
SECTION 10.4 INDEMNIFICATION.......................................................................55
SECTION 10.5 OUTSIDE BUSINESSES....................................................................58
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR...........................................................................58
SECTION 11.2 CERTAIN ACCOUNTING MATTERS............................................................58
SECTION 11.3 BANKING...............................................................................59
SECTION 11.4 WITHHOLDING...........................................................................59
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS............................................................................59
SECITON 12.2 MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT....................................61
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE....................................63
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE....................................63
iii
<PAGE>
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 REGISTRATION RIGHTS AGREEMENT; LIQUIDATED DAMAGES.....................................64
ARCTICLE XV
MISCELLANEOUS
SECTION 15.1 NOTICES...............................................................................64
SECTION 15.2 GOVERNING LAW.........................................................................66
SECTION 15.3 INTENTION OF THE PARTIES..............................................................66
SECTION 15.4 HEADINGS..............................................................................66
SECTION 15.5 SUCCESSORS AND ASSIGNS................................................................66
SECTION 15.6 PARTIAL ENFORCEABILITY................................................................66
SECTION 15.7 COUNTERPARTS..........................................................................66
TERMS OF
9.875% CAPITAL SECURITIES, SERIES A/SERIES B
9.875% COMMON SECURITIES.............................................................I-1
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE................................................A1-1
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE.................................................A2-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture
Act of 1939, as Section of
amended Declaration
- ---------------- ----------------
<S> <C>
310(a)................................................................................ 5.3
310(b)........................................................................... 5.3(c); 5.3(d)
311(a)................................................................................ 2.2(b)
311(b)................................................................................ 2.2(b)
312(a)................................................................................ 2.2(a)
312(b)................................................................................ 2.2(b)
313................................................................................... 2.3
314(a)........................................................................... 2.4, 2.7(c);
3.6(j)
314(c)................................................................................ 2.5
315(a)........................................................................... 3.6(j); 3.9
315(b)................................................................................ 2.7(a)
315(c)................................................................................ 3.9(a)
315(d)................................................................................ 3.9(b)
316(a)................................................................................ 2.6
316(c)................................................................................ 3.6(e)
317(a)........................................................................... 3.8(e); 3.8(h)
317(b)........................................................................... 3.8(i); 7.5
</TABLE>
- --------------------------------
* This Cross-Reference Table does not constitute part of this Declaration
and shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
INTERWEST CAPITAL TRUST I
Dated as of November 15, 1999
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of November 15, 1999, by and among the Trustees (as defined
herein), the Sponsor (as defined herein) and the Holders (as defined herein),
from time to time, of undivided beneficial interests in the assets of the
Trust to be issued pursuant to this Declaration;
WHEREAS, the Delaware Trustee (as defined herein) and the Sponsor
established InterWest Capital Trust I (the "Trust"), a trust created under
the Delaware Business Trust Act pursuant to a Declaration dated as of
November 3, 1999 (the "Original Declaration"), and a Certificate of Trust
filed with the Secretary of State of the State of Delaware on November 3,
1999, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust,
investing the proceeds thereof in certain Debentures of the Debenture Issuer
(each as hereinafter defined), and engaging in only those activities
necessary, advisable or incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
ratify the actions of each Trustee taken prior to the date hereof;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration and, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above or elsewhere herein have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration and each Annex and Exhibit hereto, as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires;
(f) a term defined in the Indenture (as defined herein) has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"ADMINISTRATIVE TRUSTEE" has the meaning set forth in Section 5.1.
"AFFILIATE" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"AGENT" means any Paying Agent, Registrar or Exchange Agent.
"AUTHORIZED OFFICER" of a Person means any other Person that is
authorized to legally bind such former Person.
"BOOK-ENTRY INTEREST" means a beneficial interest in the Global
Capital Security registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
2
<PAGE>
"BUSINESS DAY" means any day other than a Saturday or a Sunday or a
day on which banking institutions in Wilmington, Delaware or New York, New York,
are authorized or required by law or executive order to remain closed.
"BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 ET SEQ., as it may be amended from time to
time, or any successor legislation.
"CAPITAL SECURITIES" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"CAPITAL SECURITIES GUARANTEE" means, collectively, the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"CAPITAL SECURITY BENEFICIAL OWNER" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"CAPITAL SECURITY CERTIFICATE" has the meaning set forth in Section
9.4.
"CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a global certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING TIME" means the "Closing Time" as defined in the Purchase
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"COMMISSION" means the United States Securities and Exchange
Commission as from time to time constituted, or if at any time after the
execution of this Declaration such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
"COMMON SECURITIES" has the meaning specified in Section 7.1(a).
"COMMON SECURITY CERTIFICATE" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
A-2.
3
<PAGE>
"COMMON SECURITIES GUARANTEE" means the Common Securities Guarantee
Agreement, dated as of the Closing Time, entered into by InterWest Bancorp,
Inc., with respect to the Common Securities.
"COMMON SECURITIES SUBSCRIPTION AGREEMENT" means the Common
Securities Subscription Agreement, dated as of the Closing Time, between the
Trust and InterWest Bancorp, Inc. relating to the Common Securities.
"COMPANY INDEMNIFIED PERSON" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"CORPORATE TRUST OFFICE" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.
"COVERED PERSON" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"DEBENTURE ISSUER" means InterWest Bancorp, Inc., a Washington
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"DEBENTURE SUBSCRIPTION AGREEMENT" means the Debenture Subscription
Agreement, dated as of the Closing Time, between the Debenture Issuer and the
Trust in respect of the Series A Debentures.
"DEBENTURE TRUSTEE" means Wilmington Trust Company, a Delaware
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"DEBENTURES" means, collectively, the Series A Debentures and the
Series B Debentures.
"DEFAULT" means an event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"DEFINITIVE CAPITAL SECURITIES" has the meaning set forth in Section
7.3(c).
"DELAWARE TRUSTEE" has the meaning set forth in Section 5.1.
"DIRECT ACTION" has the meaning set forth in Section 3.8(e).
4
<PAGE>
"DISTRIBUTION" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"EVENT OF DEFAULT" with respect to the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing with
respect to the Debentures.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"EXCHANGE AGENT" has the meaning set forth in Section 7.4.
"EXCHANGE OFFER" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and to execute the Series B
Capital Securities Guarantee in respect of the Series B Capital Securities.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"FIDUCIARY INDEMNIFIED PERSON" has the meaning set forth in Section
10.4(b).
"FISCAL YEAR" has the meaning set forth in Section 11.1.
"GLOBAL CAPITAL SECURITY" has the meaning set forth in Section
7.3(a).
"HOLDER" means a Person in whose name a Security or Successor
Security is registered on the register maintained by or on behalf of the
Registrar, such Person being a beneficial owner of the Trust within the meaning
of the Business Trust Act.
"INDEMNIFIED PERSON" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"INDENTURE" means the Indenture, dated as of the Closing Time,
between the Debenture Issuer and the Debenture Trustee, as amended from time to
time.
"INITIAL OPTIONAL REDEMPTION DATE" has the meaning set forth in
Section 4(b) of Annex I hereto.
"INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
5
<PAGE>
"INVESTMENT COMPANY EVENT" has the meaning set forth in Section 4(c)
of Annex I hereto.
"LEGAL ACTION" has the meaning set forth in Section 3.6(g).
"LIKE AMOUNT" has the meaning set forth in Section 3 of Annex I
hereto.
"LIQUIDATED DAMAGES AGREEMENT" means the Liquidated Damages
Agreement, dated as of November 9, 1999, by and among the Debenture Issuer, the
Trust and the Initial Purchaser named therein, as amended from time to time.
"LIST OF HOLDERS" has the meaning set forth in Section 2.2(a).
"MAJORITY IN LIQUIDATION AMOUNT" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holders of outstanding Trust Securities voting together as
a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, excluding the Trust and the Debenture Issuer and any Affiliate thereof,
who are the record owners of more than 50% of the aggregate liquidation amount
(including the amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"OFFERING MEMORANDUM" has the meaning set forth in Section
3.6(b)(i).
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officers'
Certificate delivered by the Trust shall be signed by at least one
Administrative Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:
(a) a statement that each officer signing the Certificate has read
the covenants or conditions and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such
officer, such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property Trustee.
6
<PAGE>
"PARTICIPANTS" has the meaning specified in Section 7.3(b).
"PAYING AGENT" has the meaning specified in Section 7.4.
"PAYMENT AMOUNT" has the meaning specified in Section 6.1.
"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PROPERTY TRUSTEE" has the meaning set forth in Section 5.3(a).
"PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section
3.8(c)(i).
"PURCHASE AGREEMENT" means the Purchase Agreement relating to the
Series A Capital Securities, dated November 9, 1999, by and among the Trust, the
Debenture Issuer and the Initial Purchaser named therein.
"QIBs" shall mean qualified institutional buyers as defined in Rule
144A.
"QUORUM" means a majority of the Administrative Trustees or, if
there are only two Administrative Trustees, both of them.
"REDEMPTION PRICE" has the meaning set forth in Section 4(a) of
Annex I hereto.
"REGISTRAR" has the meaning set forth in Section 7.4.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of November 9, 1999, by and among the Trust, the Debenture
Issuer and the Initial Purchaser named therein, as amended from time to time.
"REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.
"REGULATORY CAPITAL EVENT" has the meaning set forth in Section 4(c)
of Annex I hereto.
"RELATED PARTY" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"RESPONSIBLE OFFICER" means any officer within the Corporate Trust
Office of the Property Trustee with direct responsibility for the administration
of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer of the Property Trustee to whom
7
<PAGE>
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"RESTRICTED CAPITAL SECURITY" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"RESTRICTED DEFINITIVE CAPITAL SECURITIES" has the meaning set forth
in Section 7.3(c).
"RESTRICTED SECURITIES LEGEND" has the meaning set forth in Section
9.2(i).
"RULE 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"RULE 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"RULE 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"SECURITIES" or "TRUST SECURITIES" means the Common Securities
and the Capital Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"SECURITIES GUARANTEES" means the Common Securities Guarantee and
the Capital Securities Guarantee.
"SERIES A CAPITAL SECURITIES" has the meaning specified in Section
7.1(a).
"SERIES A CAPITAL SECURITIES GUARANTEE" means the Series A Capital
Securities Guarantee Agreement, dated as of the Closing Time, by, InterWest
Bancorp, Inc. in respect of the Series A Capital Securities.
"SERIES A DEBENTURES" means the 9.875% Junior Subordinated
Deferrable Interest Debentures due November 15, 2029, Series A, of the Debenture
Issuer issued pursuant to the Indenture.
"SERIES B CAPITAL SECURITIES" has the meaning specified in Section
7.1(a).
"SERIES B CAPITAL SECURITIES GUARANTEE" means the Series B Capital
Securities Guarantee Agreement to be entered into in connection with the
Exchange Offer by InterWest Bancorp, Inc., in respect of the Series B Capital
Securities.
8
<PAGE>
"SERIES B DEBENTURES" means the 9.875% Junior Subordinated
Deferrable Interest Debentures due November 15, 2029, Series B, of the Debenture
Issuer to be issued pursuant to the Indenture in connection with the Exchange
Offer.
"SPECIAL EVENT" has the meaning set forth in Section 4(c) of Annex I
hereto.
"SPECIAL EVENT REDEMPTION PRICE" has the meaning set forth in
Section 4(c) of Annex I hereto.
"SPONSOR" means InterWest Bancorp, Inc., a Washington corporation,
or any successor entity resulting from any merger, consolidation, amalgamation
or other business combination, in its capacity as sponsor of the Trust.
"SUCCESSOR DELAWARE TRUSTEE" has the meaning set forth in Section
5.6(b)(ii).
"SUCCESSOR ENTITY" has the meaning set forth in Section 3.15(b)(i).
"SUCCESSOR PROPERTY TRUSTEE" has the meaning set forth in Section
3.8(f)(ii).
"SUCCESSOR SECURITIES" has the meaning set forth in Section
3.15(b)(i).
"SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii).
"TAX EVENT" has the meaning set forth in Section 4(c) of Annex I
hereto.
"10% IN LIQUIDATION AMOUNT" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holders of outstanding Trust Securities voting together as
a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, excluding the Trust and the Debenture Issuer and any Affiliate thereof,
who are the record owners of 10% or more of the aggregate liquidation amount
(including the amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit
in or owing to the Property Trustee Account and (c) all proceeds and rights in
respect of the foregoing and any other property and assets for the time being
held or deemed to be held by the Property Trustee pursuant to this Declaration.
9
<PAGE>
"TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee of
the Trust in accordance with the terms hereof, and all other Persons who may
from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"UNRESTRICTED GLOBAL CAPITAL SECURITY" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, PROVIDED THAT, neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ from
the most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), PROVIDED THAT the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
10
<PAGE>
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after the date hereof, and no later than the
anniversary date hereof in each succeeding year, the Property Trustee shall
provide to the Holders of the Capital Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Property Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee and the Commission such documents,
reports and information as are required by Section 314 (if any) of the Trust
Indenture Act and shall provide to the Property Trustee the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act may be given in the form of an
Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in Liquidation Amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
the Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Default shall cease to exist, and any Event of Default with respect to the
Capital Securities
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arising therefrom shall be deemed to have been cured, for every purpose of
this Declaration, but no such waiver shall extend to any subsequent or other
Default or an Event of Default with respect to the Capital Securities or
impair any right consequent thereon. Any waiver by the Holders of the Capital
Securities of an Event of Default with respect to the Capital Securities
shall also be deemed to constitute a waiver by the Holders of the Common
Securities of any such Event of Default with respect to the Common Securities
for all purposes of this Declaration without any further act, vote, or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed
to have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding;
PROVIDED FURTHER, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to
the Common Securities and their consequences if all Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Capital Securities and only the Holders of
the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act are hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon such waiver, any such
Default shall cease to exist and any Event of Default with respect to the
Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other Default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act
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is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
SECTION 2.7 DEFAULT; NOTICE.
(a) The Property Trustee shall, within 90 days after a
Responsible Officer has actual knowledge of the occurrence of a Default with
respect to the Securities, transmit by mail, first class postage prepaid, to
the Holders, notices of all such Defaults, unless such Defaults have been
cured before the giving of such notice or previously waived; PROVIDED,
HOWEVER, that except in the case of a Default arising from the nonpayment of
principal of (or premium, if any) or interest (including Compounded Interest
and Additional Sums (as such terms are defined in the Indenture), if any) or
Liquidated Damages, if any (as defined in the Registration Rights Agreement),
on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Property Trustee shall not be deemed to have knowledge of
any Default or Event of Default except:
(i) a Default or Event of Default under Sections 5.01(a)
(other than the payment or nonpayment of Compounded Interest,
Additional Sums and Liquidated Damages) and 5.01(b) of the Indenture;
or
(ii) any Default or Event of Default as to which the Property
Trustee shall have received written notice or of which a Responsible
Officer charged with the administration of the Declaration shall have
actual knowledge.
(c) Within ten Business Days after a Responsible Officer has
actual knowledge of the occurrence of any Event of Default, the Property
Trustee shall transmit notice of such Event of Default to the Holders of the
Capital Securities, the Administrative Trustees and the Sponsor, unless such
Event of Default shall have been cured or waived. The Sponsor and the
Administrative Trustees shall file annually with the Property Trustee a
certification as to whether or not they are in compliance with all the
conditions and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named InterWest Capital Trust I as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Delaware Trustee, the Property Trustee and the Holders. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
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SECTION 3.2 OFFICE.
The address of the principal office of the Trust is c/o InterWest
Bancorp, Inc., 275 Southeast Pioneer Way, Oak Harbor, Washington 98277. On
ten Business Days' prior written notice to the Delaware Trustee, the Property
Trustee and the Holders of Securities, the Administrative Trustees may
designate another principal office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities, (b) use the proceeds from the sale of the
Securities to acquire the Debentures, and (c) except as otherwise limited
herein, to engage in only those other activities necessary, advisable or
incidental thereto, including without limitation, those activities specified
in Sections 3.6, 3.8, 3.9, 3.10, 3.11 and/or 3.12. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage or
pledge any of its assets, or otherwise undertake (or permit to be undertaken)
any activity that would cause the Trust not to be classified for United
States federal income tax purposes as a grantor trust.
SECTION 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees
shall have exclusive and complete authority to carry out the purposes of the
Trust. An action taken by one or more of the Administrative Trustees in
accordance with their powers shall constitute the act of and serve to bind
the Trust and an action taken by the Property Trustee on behalf of the Trust
in accordance with its powers shall constitute the act of and serve to bind
the Trust. In dealing with the Trustees acting on behalf of the Trust, no
Person shall be required to inquire into the authority of the Trustees to
bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of
the Trust, but shall have an undivided beneficial interest in the assets of
the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE ADMINISTRATIVE TRUSTEES.
Subject to Section 5.5, the Administrative Trustees acting
individually or together shall have the exclusive right, power, duty and
authority, and are hereby authorized and directed, to cause the Trust to
engage in the following activities:
(a) to execute, enter into and deliver the Common Securities
Subscription Agreement and to execute, deliver, issue and sell the Securities
in accordance with this Declaration; PROVIDED, HOWEVER, that except as
contemplated in Section 7.1(a), (i) the Trust may issue no more
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than one series of Capital Securities and no more than one series of Common
Securities, (ii) there shall be no interests in the Trust other than the
Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities at the
Closing Time;
(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer, at the direction of
the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum
(the "Offering Memorandum") in preliminary and final form prepared by
the Sponsor, in relation to the offering and sale of Series A Capital
Securities to QIBs in reliance on Rule 144A and to institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act), and to execute and file with the Commission,
at such time as is determined by the Sponsor, any Registration
Statement, including any amendments thereto, as contemplated by the
Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the Capital Securities in any
State in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to permit the Capital Securities to trade or be quoted or
listed in or on any securities exchange, quotation system or the Nasdaq
Stock Market's National Market;
(iv) execute, enter into, deliver and perform the Common
Securities Subscription Agreement, the Purchase Agreement, the
Registration Rights Agreement, the Liquidated Damages Agreement and
letters, documents or instruments with DTC and other Clearing Agencies
relating to the Capital Securities; and
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) or 12(g) of the Exchange Act, as the
case may be.
(c) to execute, enter into and deliver the Debenture Subscription
Agreement, to acquire the Series A Debentures with the proceeds of the sale
of the Series A Capital Securities and the Common Securities and to exchange
the Series A Debentures for a like principal amount of Series B Debentures,
pursuant to the Exchange Offer; PROVIDED, HOWEVER, that the Administrative
Trustees shall cause legal title to the Debentures to be held of record in
the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
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(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date to be established, including and
with respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders with respect to such actions and applicable
record dates;
(f) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of the
Securities;
(g) to the fullest extent permitted by law, to bring or defend,
pay, collect, compromise, arbitrate, resort to legal action, or otherwise
adjust claims or demands of or against the Trust ("Legal Action"), unless
pursuant to Section 3.8(e), the Property Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees, agents (who may be
designated as officers with titles), managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
the Holders of any notice received from the Debenture Issuer of its election
to defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the
Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
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(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to continue to be classified for United
States federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange Offer
or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement;
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust; and
(r) to execute and deliver all documents, agreements,
certificates and instruments, exercise all rights and powers, perform all
duties and do all things for and on behalf of the Trust in all matters
necessary, advisable or incidental to the foregoing or the transactions
contemplated thereby.
The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative
Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall not, and the Administrative Trustees
shall cause the Trust not to, engage in any activity other than as required
or authorized by this Declaration. Notwithstanding any provision in this
Declaration to the contrary, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
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(iii) possess Trust Property for other than a Trust purpose
or execute any mortgage in respect of, or pledge, any Trust
Property;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust Property or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures, (B) waive any
past default that is waivable under the Indenture, or (C) exercise
any right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable; or
(viii) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of
independent tax counsel experienced in such matters to the effect
that such amendment, modification or termination will not cause
more than an insubstantial risk that the Trust will not be
classified as a grantor trust for United States federal income tax
purposes.
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Trust and the Holders. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter
be appointed as Property Trustee in accordance with Section 5.6. Such vesting
and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee on behalf of
the Holders and, upon the receipt of
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payments of funds made in respect of the Debentures held by the
Property Trustee, deposit such funds into the Property Trustee
Account and make payments or cause the Paying Agent to make
payments to the Holders from the Property Trustee Account in
accordance with Section 6.1; funds in the Property Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration; and the Property Trustee Account shall be an account
that is maintained with a banking institution the rating on whose
long-term unsecured indebtedness by a "nationally recognized
statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least
equal to the rating assigned to the Capital Securities, unless the
Capital Securities are not rated, in which case the banking
institution's long-term unsecured indebtedness shall be rated at
least investment grade by a "nationally recognized statistical
rating organization";
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Securities
to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the
Debentures to Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to
the terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take
any Legal Action which arises out of or in connection with an Event of
Default of which a Responsible Officer has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust
Indenture Act; and if the Property Trustee shall have failed to take such
Legal Action following a written request from the Holders, the Holders of the
Capital Securities may, to the fullest extent permitted by law, take such
Legal Action, to the same extent as if such Holders of Capital Securities
held an aggregate principal amount of Debentures equal to the aggregate
liquidation amount of such Capital Securities, without first proceeding
against the Property Trustee or the Trust; PROVIDED, HOWEVER, that if an
Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of
or premium, if any, or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Debentures on the date
such principal, premium, if any, or interest (including Compounded Interest
and Additional Sums, if any) or Liquidated Damages, if any, is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder
of Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) or Liquidated
Damages, if any, on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the Holders of the Common
Securities will
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be subrogated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Capital
Securities in such Direct Action. Except as provided in the preceding
sentences, the Holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders pursuant to the terms
of the Securities and this Declaration; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer
occurs and is continuing, the Property Trustee shall, for the benefit of
Holders, enforce its rights as holder of the Debentures subject to the rights
of the Holders pursuant to the terms of this Declaration and the Securities.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent,
the Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
such additional Paying Agent may be removed by the Property Trustee at any
time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be)
appointed at any time by the Property Trustee while the Property Trustee is
acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in
this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee
must exercise the powers set forth in this Section 3.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section 3.3,
and (ii) the Property Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.
(a) The Property Trustee, before the occurrence of any Event of
Default (of which, other than in the case of Events of Default under Sections
5.01(a) and 5.01(b) of the Indenture, which the Property Trustee is deemed to
have knowledge of as provided in Section 2.7(b)
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hereof, a Responsible Officer of the Property Trustee has actual knowledge)
and after the curing or waiving of all such Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities and no implied covenants
shall be read into this Declaration against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default (of which,
other than in the case of Events of Default under Sections 5.01(a)
and 5.01(b) of the Indenture, which the Property Trustee is deemed
to have knowledge of as provided in Section 2.7(b) hereof, a
Responsible Officer of the Property Trustee has actual knowledge)
and after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration and in the Securities and the Property Trustee
shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations shall be read into this Declaration against the
Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Property Trustee and conforming to the requirements of
this Declaration; PROVIDED, HOWEVER, that in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not on their face they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Securities relating to the time, method
and place of conducting any proceeding for any remedy
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available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers;
(v) the Property Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant
to Section 3.8(c)(i) and except to the extent otherwise required by
law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced
by an Officers' Certificate;
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(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection, and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of
such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion; such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its employees; and the Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Property Trustee; PROVIDED, HOWEVER, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default (of which, other
than in the case of Events of Default under Sections 5.01(a) and
5.01(b) of the Indenture, which the Property Trustee is deemed to have
knowledge of as provided in Section 2.7(b) hereof, a Responsible
Officer of the Property Trustee has actual knowledge), of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
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(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys, and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any such agent, custodian, nominee or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of
the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be entitled
to direct the Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence or willful misconduct, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Property Trustee shall be construed to be a duty.
SECTION 3.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee
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have any of the duties and responsibilities of the Trustees described in this
Declaration (except as required under the Business Trust Act). Except as set
forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole
and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act. In the event the Delaware Trustee shall at any time be
required to take any action or perform any duty hereunder, the Delaware
Trustee shall be entitled to the benefits of Section 3.9(b)(ii) to (viii),
inclusive, and Section 3.10. No implied covenants or obligations shall be
read into this Declaration against the Delaware Trustee.
SECTION 3.12 EXECUTION OF DOCUMENTS.
Unless otherwise required by applicable law, each Administrative
Trustee, individually, is authorized to execute and deliver on behalf of the
Trust any documents, agreements, instruments or certificates that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.6.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the Trust Property or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 DURATION OF TRUST.
The Trust, unless earlier dissolved pursuant to the provisions of
Article VIII hereof, shall dissolve on November 15, 2034.
SECTION 3.15 MERGERS.
(a) The Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) and except with respect to the
distribution of Debentures to Holders pursuant to Section 8.1 (a)(iii) of
this Declaration or Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the
Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to, a trust
organized as such under the laws of any State; PROVIDED THAT:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
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(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same
as the Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee with respect to the Debentures;
(iii) the Successor Securities (excluding any securities
substituted for the Common Securities) are listed, quoted or included
for trading, or any Successor Securities will be listed, quoted or
included for trading upon notification of issuance, on any national
securities exchange or with any other organization on which the Capital
Securities are then listed, quoted or included;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) or the Debentures to be downgraded
by any nationally recognized statistical rating organization that
publishes a rating on the Capital Securities or the Debentures;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of any
Successor Securities) in any material respect (other than with respect
to any dilution of the interests of such Holders or holders, as the
case may be, in the Successor Entity);
(vi) the Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including
the holders of any Successor Securities) in any material
respect (other than with respect to any dilution of the
interests of such Holders or holders, as the case may be, in
the Successor Entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust
nor the Successor Entity will be required to register as an
Investment Company; and
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(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the
Successor Entity) will continue to be classified as a grantor
trust for United States federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee of
the Sponsor owns all of the common securities of the Successor Entity
and guarantees the obligations of the Successor Entity under the
Successor Securities at least to the extent provided by the Securities
Guarantees; and
(ix) there shall have been furnished to the Property Trustee
an Officers' Certificate and an Opinion of Counsel, each to the effect
that all conditions precedent in this Declaration to such transaction
have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other Person or permit any other Person
to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the Successor Entity not to be classified as a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
At the Closing Time, pursuant to the Common Securities Subscription
Agreement, the Sponsor will purchase all of the Common Securities then issued
by the Trust, in an amount equal to at least 3% of the total capital of the
Trust, at the same time as the Series A Capital Securities are issued and
sold.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in, or
direct the Administrative Trustees to engage in, the following activities:
(a) to prepare the Offering Memorandum, in preliminary and final
form, and to prepare for filing by the Trust with the Commission any
Registration Statement, including any amendments thereto, as contemplated by
the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by the Trust,
and advise the Trust of actions it must take, and prepare for
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execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade
or be quoted or listed in or on any securities exchange, quotation system or
the Nasdaq Stock Market's National Market;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto,
relating to the registration of the Capital Securities under Section 12(b) or
12(g) of the Exchange Act, as the case may be, including any amendments
thereto; and
(e) to negotiate the terms of, execute, enter into and deliver the
Purchase Agreement, the Registration Rights Agreement and the Liquidated
Damages Agreement.
SECTION 4.3 RIGHT TO PROCEED.
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on
the Capital Securities is attributable to the failure of the Debenture Issuer
to pay the principal of or premium (if any) or interest on the Debentures, to
institute a proceeding directly against the Debenture Issuer for enforcement
of its payment obligations in respect of the Debentures.
SECTION 4.4 RIGHT TO DISSOLVE TRUST.
The Sponsor will have the right at any time to dissolve the Trust
and, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, to cause the Debentures to be distributed to the Holders
in liquidation of the Trust. Such right is subject to the Sponsor's having
received (i) an Opinion of Counsel to the effect that such distribution will
not cause the Holders of Capital Securities to recognize gain or loss for
United States federal income tax purposes and (ii) all required regulatory
approvals.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES; APPOINTMENT OF CO-TRUSTEE.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
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PROVIDED, HOWEVER, that, the number of Trustees shall in no event be less than
two (2); PROVIDED FURTHER that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with, the Sponsor (an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee
for so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the time be located,
the Holders of a Majority in Liquidation Amount of the Common Securities acting
as a class at a meeting of the Holders of the Common Securities, and the
Administrative Trustees shall have power to appoint one or more Persons either
to act as a co-trustee, jointly with the Property Trustee, of all or any part of
the Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of this Declaration. In case an Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make any such
appointment of a co-trustee.
SECTION 5.2 DELAWARE TRUSTEE.
For so long as required by the Business Trust Act, the Delaware
Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
PROVIDED, HOWEVER, that, if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
SECTION 5.3 PROPERTY TRUSTEE: ELIGIBILITY.
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee and which shall:
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(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an indenture trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least fifty million U.S.
dollars ($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 330(b) of the Trust Indenture Act,
the Property Trustee and the Holder of the Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall
in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
SECTION 5.4 CERTAIN QUALIFICATIONS OF ADMINISTRATIVE TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
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SECTION 5.5 ADMINISTRATIVE TRUSTEES.
The initial Administrative Trustees shall be:
H. Glenn Mouw
Clark W. Donnell
Kenneth G. Hulett
c/o InterWest Bancorp, Inc.
275 Southeast Pioneer Way
Oak Harbor, Washington 98277
Telephone: (360) 679-4181
Telecopier: (360) 675-8860
(a) Except as otherwise expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to
any matter over which the Administrative Trustees have power to act, any
power of the Administrative Trustees may be exercised by, or with the consent
of, any one such Administrative Trustee.
(b) Unless otherwise required by the Business Trust Act or other
applicable law, any Administrative Trustee acting alone is authorized to
execute on behalf of the Trust any documents which the Administrative
Trustees have the power and authority to cause the Trust to execute pursuant
to Section 3.6.
(c) An Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to
execute pursuant to Section 3.6.
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b) hereof and to Section 6(b) of Annex I
hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in Liquidation Amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities, and with
respect to the Administrative Trustees, in the manner set forth in
Section 5.6(a)(ii) hereof.
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(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the removed
Property Trustee, the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2
and 5.4 (a "Successor Delaware Trustee") has been appointed and has accepted
such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the removed Delaware Trustee, the Property Trustee
(if the removed Delaware Trustee is not also the Property Trustee), the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the other Trustees, the Sponsor and the Trust, which resignation
shall take effect upon such delivery or upon such later date as is specified
therein; PROVIDED, HOWEVER, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the
Sponsor, the Delaware Trustee (if the resigning Property
Trustee is not also the Delaware Trustee) and the resigning
Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and delivered
to the Trust, the Property Trustee (if the resigning Delaware
Trustee is not also the Property Trustee), the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default
shall have occurred and be continuing after the issuance of the Securities,
the Holders of the Capital Securities shall use their best efforts to
promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers
an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee
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resigning or being removed, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper to prescribe, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(g) At the time of resignation or removal of the Property Trustee or
the Delaware Trustee, the Sponsor shall pay to such Trustee any amounts that
may be owed to such Trustee pursuant to Section 10.4.
(h) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Successor
Delaware Trustee in the State of Delaware.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or,
if there are more than two, a majority of the Administrative Trustees shall
be conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of
a Trustee shall not operate to dissolve, liquidate or annul the Trust or to
terminate this Declaration. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 5.6, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.9 MEETINGS.
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may
be held at a time and place fixed by resolution of the Administrative
Trustees. Notice of any in-person meetings of the Administrative Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours
before such meeting. Notice of any telephonic meetings of the Administrative
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours
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before a meeting. Notices shall contain a brief statement of the time, place
and anticipated purposes of the meeting. The presence (whether in person or
by telephone) of an Administrative Trustee at a meeting shall constitute a
waiver of notice of such meeting except where an Administrative Trustee
attends a meeting for the express purpose of objecting to the transaction of
any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Administrative Trustees may be taken at a meeting by vote of a majority of
the Administrative Trustees present (whether in person or by telephone) and
eligible to vote with respect to such matter, PROVIDED THAT, a Quorum is
present, or without a meeting by the unanimous written consent of the
Administrative Trustees. In the event there is only one Administrative
Trustee, any and all action of such Administrative Trustee shall be evidenced
by a written consent of such Administrative Trustee.
SECTION 5.10 DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is
not prohibited by applicable law or contrary to the provisions of this
Declaration.
SECTION 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, as the case may
be, may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee, as the case may be, shall be a
party, or any Person succeeding to all or substantially all the corporate
trust business of the Property Trustee or the Delaware Trustee, as the case
may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
provided such Person shall be otherwise qualified and eligible under this
Article and provided further that such Person shall file an amendment to the
Certificate of Trust with the Delaware Secretary of State as contemplated in
Section 5.6(h).
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of
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interest (including Compounded Interest and Additional Sums), premium and/or
principal on the Debentures held by the Property Trustee or Liquidated
Damages or any other payments pursuant to the Registration Rights Agreement
or Liquidated Damages Agreement with respect to the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment Amount"),
the Property Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders in accordance with the terms of the Securities.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Administrative Trustees shall, on behalf of the Trust, issue
one class of capital securities representing undivided preferred beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Series A Capital Securities") and one class of common
securities representing undivided common beneficial interests in the assets
of the Trust having such terms as are set forth in Annex I (the "Common
Securities"). The Administrative Trustees shall, on behalf of the Trust,
issue one class of capital securities representing undivided preferred
beneficial interests in the assets of the Trust having such terms as set
forth in Annex I (the "Series B Capital Securities") in exchange for the
Series A Capital Securities accepted for exchange in the Exchange Offer,
which Series B Capital Securities shall not bear the legends required by
Section 9.2(i) unless the Holder of such Series A Capital Securities is
either (A) a broker-dealer who purchased such Series A Capital Securities
directly from the Trust for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person participating in
the distribution of the Series A Capital Securities or (C) a Person who is an
Affiliate of the Sponsor or the Trust. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Capital Securities
and the Common Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued and, subject to
the terms of this Declaration, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust and entitled to the benefits
of this Declaration, and the Holders thereof shall be entitled to the
benefits of this Declaration.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.
SECTION 7.2 EXECUTION AND AUTHENTICATION.
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities
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shall cease to be such Administrative Trustee before the Securities so signed
shall be delivered by the Trust, such Securities nevertheless may be
delivered as though the Person who signed such Securities had not ceased to
be such Administrative Trustee; and any Securities may be signed on behalf of
the Trust by such persons who, at the actual date of execution of such
Security, shall be the Administrative Trustees of the Trust, although at the
date of the execution and delivery of this Declaration any such person was
not an Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by an
Administrative Trustee on behalf of the Trust, an Administrative Trustee
shall sign the Common Securities for the Trust by manual signature.
A Capital Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration. A Common Security shall be valid upon
execution by an Administrative Trustee without any act of the Property
Trustee.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in Annex I hereto except as
provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee hereunder with respect to the Sponsor or an
Affiliate.
SECTION 7.3 FORM AND DATING.
The Capital Securities shall be evidenced by one or more
certificates substantially in the form of Exhibit A-1, and the Common
Securities shall be evidenced by one or more certificates substantially in
the form of Exhibit A-2. The Property Trustee's certificate of authentication
shall be substantially in the form set forth in Exhibit A-1. Certificates
representing the Securities may be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to an
Administrative Trustee, as evidenced by the execution thereof. The Securities
may have letters, "CUSIP" or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by
law, stock exchange rule, agreements to which the Trust is subject, if any,
or usage, PROVIDED THAT, any such notation, legend or endorsement is in a form
acceptable to the Administrative Trustees, as evidenced by their execution
thereof. The Trust at the direction of the Sponsor, shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration
and, to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
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(a) GLOBAL CAPITAL SECURITY. Capital Securities offered and sold to
QIBs in reliance on Rule 144A, as provided in the Purchase Agreement, shall
be issued in the form of a single permanent global Capital Security in
definitive, fully registered form without distribution coupons with the
appropriate global legends and Restricted Securities Legend set forth in
Exhibit A-1 hereto (the "Global Capital Security"), which shall be deposited
on behalf of the purchasers of the Capital Securities represented thereby
with the Property Trustee, at its Corporate Trust Office, as custodian for
the Clearing Agency, and registered in the name of the Clearing Agency or a
nominee of the Clearing Agency, duly executed by the Trust and authenticated
by the Property Trustee as hereinafter provided. The number of Capital
Securities represented by the Global Capital Security may from time to time
be increased or decreased by adjustments made on the records of the Property
Trustee and the Clearing Agency or its nominee as hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 7.3(b) shall apply only to
the Global Capital Security and such other Capital Securities in global form
as may be authorized by the Trust to be deposited with or on behalf of the
Clearing Agency.
An Administrative Trustee shall execute and the Property Trustee
shall, in accordance with this Section 7.3, authenticate and make available
for delivery initially a single Global Capital Security that (i) shall be
registered in the name of Cede & Co. or other nominee of such Clearing
Agency, and (ii) shall be delivered by the Property Trustee to such Clearing
Agency or pursuant to such Clearing Agency's written instructions or, if no
such written instructions are received by the Property Trustee, held by the
Property Trustee as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to the Global
Capital Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Capital Security, and the Clearing Agency may be treated by the Trust, the
Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Clearing Agency or impair, as between the Clearing Agency
and its Participants, the operation of customary practices of such Clearing
Agency governing the exercise of the rights of a holder of a beneficial
interest in the Global Capital Security.
(c) DEFINITIVE CAPITAL SECURITIES. Except as provided in Section 7.9
or 9.2(f)(i), owners of beneficial interests in the Global Capital Security
will not be entitled to receive physical delivery of certificated Capital
Securities ("Definitive Capital Securities"). Purchasers of Securities who
are "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) and who are not QIBs will receive Capital
Securities in the form of individual certificates in definitive, fully
registered form without distribution coupons and with the Restricted
Securities Legend set forth in Exhibit A-1 hereto ("Restricted Definitive
Capital Securities"); PROVIDED, HOWEVER, that upon registration of transfer
of such Restricted Definitive Capital Securities to a QIB, such Restricted
Definitive Capital Securities will, unless the Global Capital Security has
previously been exchanged, be exchanged for an interest in the Global Capital
Security pursuant to the
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provisions of Section 9.2. Restricted Definitive Capital Securities will bear
the Restricted Securities Legend set forth on Exhibit A-1 unless removed in
accordance with this Section 7.3 or Section 9.2.
SECTION 7.4 REGISTRAR, PAYING AGENT AND EXCHANGE AGENT.
The Trust shall maintain in Wilmington, Delaware (i) an office or
agency where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for exchange ("Exchange Agent"). The Registrar
shall keep a register of the Capital Securities and of their transfer. The
Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying agents
and one or more additional Exchange Agents in such other locations as it
shall determine. The term "Registrar" includes any additional registrar, the
term "Paying Agent" includes any additional paying agent and the term
"Exchange Agent" includes any additional Exchange Agent. The Trust may change
any Paying Agent, Registrar, co-registrar or Exchange Agent without prior
notice to any Holder. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Property Trustee, the
Administrative Trustees and the Sponsor. The Trust shall notify the Property
Trustee of the name and address of any Agent not a party to this Declaration.
If the Trust fails to appoint or maintain another entity as Registrar, Paying
Agent or Exchange Agent, the Property Trustee shall act as such. The Trust or
any of its Affiliates may act as Paying Agent, Registrar, or Exchange Agent.
The Trust shall act as Paying Agent, Registrar and Exchange Agent for the
Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent and Exchange Agent for the Capital Securities.
SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent
to pay all money held by it to the Property Trustee. The Trust at any time
may require a Paying Agent to pay all money held by it to the Property
Trustee and to account for any money disbursed by it. Upon payment over to
the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
SECTION 7.6 REPLACEMENT SECURITIES.
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, an Adminstrative Trustee shall execute and the Property
Trustee shall authenticate and make available for delivery a replacement
Security if the Property
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Trustee's requirements are met. An indemnity bond must be provided by the
Holder which, in the judgment of the Property Trustee, is sufficient to
protect the Trustees, the Sponsor, the Trust or any authenticating agent from
any loss which any of them may suffer if a Security is replaced. The Trust
may charge such Holder for its expenses in replacing a Security.
SECTION 7.7 OUTSTANDING CAPITAL SECURITIES.
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this
Section as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased
Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 CAPITAL SECURITIES IN TREASURY.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding,
except that for the purposes of determining whether the Property Trustee
shall be fully protected in relying on any such direction, waiver or consent,
only Securities which the Property Trustee actually knows are so owned shall
be so disregarded.
SECTION 7.9 TEMPORARY SECURITIES.
(a) Until Definitive Capital Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall
be substantially in the form of Definitive Capital Securities but may have
variations that the Trust considers appropriate for temporary Securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive
Capital Securities in exchange for temporary Securities.
(b) The Global Capital Security deposited with the Clearing Agency
or with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form
of Definitive Capital Securities only if such transfer complies with
Section 9.2 and (i) the Clearing Agency notifies the Sponsor that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing
agency" registered under the Exchange Act, and, in each case, a clearing
agency is not appointed by the Sponsor within 90 days of receipt of such
notice or
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of becoming aware of such condition, (ii) a Default or an Event of Default
has occurred and is continuing, or (iii) the Trust at its sole discretion
elects to cause the issuance of Definitive Capital Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of Definitive Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to
the Property Trustee to be so transferred, in whole or from time to time in
part, without charge, and the Property Trustee shall authenticate and make
available for delivery, upon such transfer of each portion of such Global
Capital Security, an equal aggregate liquidation amount of Capital Securities
of authorized denominations in the form of Definitive Capital Securities. Any
portion of the Global Capital Security transferred pursuant to this Section
shall be registered in such names as the Clearing Agency shall direct. Any
Definitive Capital Security delivered in exchange for an interest in the
Restricted Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in
Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of the
Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property
Trustee a reasonable supply of certificated Capital Securities in fully
registered form without distribution coupons.
SECTION 7.10 CANCELLATION.
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent
shall forward to the Property Trustee any Capital Securities surrendered to
them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of canceled Capital Securities in accordance
with its customary procedures unless the Trust otherwise directs. The Trust
may not issue new Capital Securities to replace Capital Securities that it
has paid or that have been delivered to the Property Trustee for cancellation
or that any Holder has exchanged.
SECTION 7.11 CUSIP NUMBERS.
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; PROVIDED THAT, any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the
Capital Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on
the Capital Securities, and any such redemption shall not be
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affected by any defect in or omission of such numbers. The Sponsor will
promptly notify the Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 DISSOLUTION OF TRUST.
(a) The Trust shall automatically dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, PROVIDED THAT, the Property Trustee has
received written notice from the Sponsor directing the Property Trustee
to dissolve the Trust (which direction is optional, and except as
otherwise expressly provided below, within the discretion of the
Sponsor), and PROVIDED, FURTHER, that such direction and such
distribution is conditioned on (a) the receipt by the Sponsor of any
and all required regulatory approvals, and (b) the Sponsor's receipt
and delivery to the Administrative Trustees of an opinion of
independent tax counsel experienced in such matters, which opinion may
rely on public or private rulings of the Internal Revenue Service, to
the effect that the Holders of the Capital Securities will not
recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the
distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the redemption or repayment of the Debentures or
at such time as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable upon completion of winding up of the
Trust following the occurrence of an event referred to in Section 8.1(a) and
the satisfaction of creditors of the Trust in accordance with applicable law,
the Administrative Trustees shall terminate the Trust
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by filing a certificate of cancellation with the Secretary of State of the
State of Delaware in accordance with the Business Trust Act.
(c) The provisions of Section 3.9 and Article X shall survive the
dissolution and termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and
in accordance with the terms of the Securities. To the fullest extent
permitted by law, any transfer or purported transfer of any Security not
made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(c) For so long as the Securities remain outstanding, the Sponsor
agrees (i) not to transfer ownership of the Common Securities of the Trust,
provided that any permitted successor of the Sponsor under the Indenture
may succeed to the Sponsor's ownership of the Common Securities, (ii) not to
cause, as Sponsor of the Trust, or to permit, as Holder of the Common
Securities, the dissolution, winding-up or liquidation of the Trust, except
as provided in this Declaration and (iii) to use its best efforts to cause
the Trust (a) to remain a business trust, except in connection with the
distribution of Debentures to the Holders in liquidation of the Trust, the
redemption of all of the Securities, or certain mergers, consolidations or
amalgamations, each as permitted by this Declaration, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
(d) The Registrar shall provide for the registration of Capital
Securities and of the transfer of Capital Securities, which will be effected
without charge but only upon payment (with such indemnity as the Registrar
may require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Capital Securities, an Administrative Trustee shall cause one or more new
Capital Securities to be issued in the name of the designated transferee or
transferees. Every Capital Security surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory
to the Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Capital Security surrendered for registration of
transfer shall be delivered to the Registrar and canceled in accordance with
Section 7.10. A transferee of a Capital Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt
by such transferee of a Capital Security. By acceptance of a Capital Security
or any interest therein, each transferee shall be deemed to have agreed to be
bound by this Declaration.
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SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS.
(a) GENERAL. Except as otherwise provided in Section 9.2(b), if
Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted
Securities Legend on Capital Securities, the Capital Securities so issued
shall bear the Restricted Securities Legend, or the Restricted Securities
Legend shall not be removed, as the case may be, unless there is delivered to
the Trust and the Property Trustee such satisfactory evidence, which shall
include an Opinion of Counsel, as may be reasonably required by the Trust and
the Property Trustee, that neither the Restricted Securities Legend nor the
restrictions on transfer set forth therein are required to ensure that
transfers thereof are made pursuant to an exception from the registration
requirements of the Securities Act or, with respect to Restricted Capital
Securities, that such Securities are not "restricted" within the meaning of
Rule 144. Upon provision of such satisfactory evidence, the Property Trustee,
at the written direction of an Administrative Trustee on behalf of the Trust,
shall authenticate and deliver Capital Securities that do not bear the legend.
(b) TRANSFERS AFTER EFFECTIVENESS OF A REGISTRATION STATEMENT. After
the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply (other than the legend requiring that transfers of
Capital Securities be made in blocks having an aggregate liquidation amount
of not less than $100,000 (100 Capital Securities) and multiples of $1,000 in
excess thereof), and beneficial interests in the Global Capital Security
without legends will be available to transferees of such Capital Securities,
upon exchange of the transferring Holder's Restricted Definitive Capital
Security or directions to transfer such Holder's beneficial interest in the
Global Capital Security, as the case may be. No such transfer or exchange of
a Restricted Definitive Capital Security or of an interest in the Global
Capital Security shall be effective unless the transferor delivers to the
Property Trustee a certificate in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A-1. Except as
otherwise provided in Section 9.2(m), after the effectiveness of a
Registration Statement, an Administrative Trustee on behalf of the Trust
shall issue and the Property Trustee, upon a written order of the Trust
signed by one Administrative Trustee, shall authenticate a Global Capital
Security without the Restricted Securities Legend (the "Unrestricted Global
Capital Security") to deposit with the Clearing Agency to evidence transfers
of beneficial interests from the Global Capital Security and Restricted
Definitive Capital Securities.
(c) TRANSFER AND EXCHANGE OF DEFINITIVE CAPITAL SECURITIES. When
Definitive Capital Securities are presented to the Registrar or co-registrar:
(x) to register the transfer of such Definitive Capital Securities;
or
(y) to exchange such Definitive Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive Capital Securities, the Registrar or co-registrar shall
register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Capital Securities surrendered
for registration of transfer or exchange:
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(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to
the Trust and the Registrar or co-registrar, duly executed
by the Holder thereof or his attorney duly authorized in
writing; and
(ii) in the case of Definitive Capital Securities that
are Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, certification(s) from such Holder to that
effect, or
(B) if such Restricted Capital Securities are being
transferred: (i) certification(s) in a form
substantially similar to that attached hereto as the
form of "Assignment" in Exhibit A-1, and (ii) if the
Trust or Registrar so requests, evidence reasonably
satisfactory to them as to the compliance with the
restrictions set forth in the Restricted Securities
Legend.
(d) RESTRICTIONS ON TRANSFER OF A DEFINITIVE CAPITAL
SECURITY FOR A BENEFICIAL INTEREST IN THE GLOBAL CAPITAL SECURITY. A
Definitive Capital Security may not be exchanged for a beneficial interest in
the Global Capital Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Property Trustee of a Definitive Capital
Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification(s) in a form substantially
similar to that attached hereto as the form of "Assignment"
in Exhibit A-1; and
(ii) whether or not such Definitive Capital Security
is a Restricted Capital Security, written instructions
directing the Property Trustee to make, or to direct the
Clearing Agency to make, an adjustment on its books and
records with respect to the Global Capital Security to
reflect an increase in the number of the Capital Securities
represented by such Global Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of
Capital Securities represented by the Global Capital Security to be increased
accordingly. If the Global Capital Security is not then outstanding, an
Administrative Trustee on behalf of the Trust shall issue and the Property
Trustee shall authenticate, upon written order of any Administrative Trustee,
a new Global Capital Security representing an appropriate number of Capital
Securities.
(e) TRANSFER AND EXCHANGE OF THE GLOBAL CAPITAL SECURITY.
Subject to Section 9.2(f), the transfer and exchange of the Global Capital
Security or beneficial interests therein shall be effected through the
Clearing Agency in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
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(f) TRANSFER OF A BENEFICIAL INTEREST IN THE GLOBAL CAPITAL SECURITY
FOR A DEFINITIVE CAPITAL SECURITY.
(i) Any Person having a beneficial interest in the
Global Capital Security may upon request, but only upon 20
days prior notice to the Property Trustee, and if
accompanied by the information specified below, exchange
such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon
receipt by the Property Trustee from the Clearing Agency or
its nominee on behalf of any Person having a beneficial
interest in the Global Capital Security of written
instructions or such other form of instructions as is
customary for the Clearing Agency or the Person designated
by the Clearing Agency as having such a beneficial interest
in a Restricted Capital Security and certification(s) from
the transferor in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit
A-1, which may be submitted by facsimile, then the Property
Trustee will cause the aggregate number of Capital
Securities represented by the Global Capital Security to be
reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee
will authenticate and make available for delivery to the
transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange
for a beneficial interest in the Global Capital Security
pursuant to this Section 9.2(f) shall be registered in such
names and in such authorized denominations as the Clearing
Agency, pursuant to instructions from its Clearing Agency
Participants or indirect participants or otherwise, shall
instruct the Property Trustee in writing. The Property
Trustee shall deliver such Capital Securities to the Persons
in whose names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(g) RESTRICTIONS ON TRANSFER AND EXCHANGE OF THE GLOBAL
CAPITAL SECURITY. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (h) of this Section 9.2),
the Global Capital Security may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(h) AUTHENTICATION OF DEFINITIVE CAPITAL SECURITIES. If
at any time:
(i) a Default or an Event of Default has occurred
and is continuing,
(ii) the Trust, in its sole discretion, notifies the
Property Trustee in writing that it elects to cause the
issuance of Definitive Capital Securities under this
Declaration, or
(iii) the Clearing Agency notifies the Sponsor that
it is unwilling or unable to continue as Clearing Agency
for such Global Capital Security or if at any time
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such Clearing Agency ceases to be a "clearing agency"
registered under the Exchange Act, and, in each case, a
clearing agency is not appointed by the Sponsor within 90
days of receipt of such notice or of becoming aware of such
condition,
then an Administrative Trustee on behalf of the Trust will execute, and the
Property Trustee, upon receipt of a written order of the Trust signed by one
Administrative Trustee requesting the authentication and delivery of
Definitive Capital Securities to the Persons designated by the Trust, will
authenticate and make available for delivery Definitive Capital Securities,
equal in number to the number of Capital Securities represented by the Global
Capital Security, in exchange for such Global Capital Security.
(i) LEGEND.
(i) Except as permitted by the following paragraph
(ii), each Capital Security Certificate evidencing the
Global Capital Security and each Definitive Capital Security
(and all Capital Securities issued in exchange therefor or
substitution thereof) shall bear a legend (the "Restricted
Securities Legend") in substantially the following form:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
CAPITAL SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE
LAST DATE ON WHICH INTERWEST BANCORP, INC. (THE
"CORPORATION") OR ANY "AFFILIATE" OF THE CORPORATION WAS
THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF
THIS CAPTIAL SECURITY) ONLY (A) TO THE CORPORATION, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
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DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF INTERWEST CAPITAL TRUST I (THE
"TRUST") AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
(ii) PURSUANT TO CLAUSE (D) TO REQUIRE THAT THE TRANSFEROR
DELIVER TO THE TRUST A LETTER FROM THE TRANSFEREE
SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM DATED NOVEMBER 9,1999. SUCH HOLDER FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS
NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF EMPLOYEE
RETIREMENT INCOME
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SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, (THE
"CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER
OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23,95-60,91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF CAPITAL
SECURITIES IS NOT PROHIBITED BY SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES
OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS
NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA OR A PLAN TO WHICH SECTION 4975 OF THE CODE
IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF
OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON
OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL
NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
In all circumstances, each Capital Security Certificate bear the following
legend:
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF
NOT LESS THAN $100,000 (100 CAPITAL SECURITIES) AND
MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 (100 CAPITAL
SECURITIES) SHALL BE
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DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
ON SUCH CAPITAL SECURITIES, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
CAPITAL SECURITIES.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented
by the Global Capital Security) pursuant to an effective
registration statement under the Securities Act or pursuant to
Rule 144:
(A) in the case of any Restricted Capital Security that
is a Definitive Capital Security, the Registrar shall permit
the Holder thereof to exchange such Restricted Capital
Security for a Definitive Capital Security that does not
bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital
Security; and
(B) in the case of any Restricted Capital Security that
is represented by the Global Capital Security, the Registrar
shall permit the Holder of such Global Capital Security to
exchange such Global Capital Security for another Global
Capital Security that does not bear the Restricted
Securities Legend.
(j) CANCELLATION OR ADJUSTMENT OF GLOBAL CAPITAL SECURITY. At
such time as all beneficial interests in the Global Capital Security have
either been exchanged for Definitive Capital Securities to the extent
permitted by this Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Capital Security
shall be returned to the Clearing Agency for cancellation or retained and
canceled by the Property Trustee. At any time prior to such cancellation, if
any beneficial interest in the Global Capital Security is exchanged for
Definitive Capital Securities, Capital Securities represented by such Global
Capital Security shall be reduced and an adjustment shall be made on the
books and records of the Property Trustee and the Clearing Agency or its
nominee to reflect such reduction.
(k) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
CAPITAL SECURITIES.
(i) To permit registrations of transfers and exchanges,
the Trust shall execute and the Property Trustee shall
authenticate Definitive Capital Securities and the Global
Capital Security at the Registrar's or co-registrar's request
in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor
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may require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of (a) Capital Securities
during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption or any notice
of selection of Capital Securities for redemption and ending at
the close of business on the day of such mailing or (b) any
Capital Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being
redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Capital Security, the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the Person in whose name a Capital Security
is registered as the absolute owner of such Capital Security
for the purpose of receiving Distributions on such Capital
Security and for all other purposes whatsoever, and none of the
Trust, the Property Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any registration
of transfer or exchange pursuant to the terms of this Declaration
shall evidence the same security and shall be entitled to the
same benefits under this Declaration as the Capital Securities
surrendered upon such registration of transfer or exchange.
(l) NO OBLIGATION OF THE PROPERTY TRUSTEE.
(i) The Property Trustee shall have no responsibility
or obligation to any Capital Security Beneficial Owner, a
Participant in the Clearing Agency or other Person with respect
to the accuracy of the records of the Clearing Agency or its
nominee or of any Participant thereof, with respect to any
ownership interest in the Capital Securities or with respect to
the delivery to any Participant, beneficial owner or other
Person (other than the Clearing Agency) of any notice (including
any notice of redemption) or the payment of any amount, under or
with respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or
made only to or upon the order of the registered Holders (which
shall be the Clearing Agency or its nominee in the case of the
Global Capital Security). The rights of Capital Security
Beneficial Owners shall be exercised only through the Clearing
Agency subject to the applicable rules and procedures of the
Clearing Agency. The Property Trustee may conclusively rely and
shall be fully protected in relying upon information furnished
by the Clearing Agency or any agent thereof with respect to its
Participants and any Capital Security Beneficial Owners.
(ii) The Property Trustee and the Registrar shall have
no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on
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transfer imposed under this Declaration or under applicable law
with respect to any transfer of any interest in any Capital
Security (including any transfers between or among Clearing
Agency Participants or Capital Security Beneficial Owners) other
than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do
so if and when expressly required by, the terms of this
Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof
(m) EXCHANGE OF SERIES A CAPITAL SECURITIES FOR SERIES B CAPITAL
SECURITIES. The Series A Capital Securities shall be exchanged for Series B
Capital Securities pursuant to the terms of the Exchange Offer if the
following conditions are satisfied:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions contemplated by the Exchange Offer have been
consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by the
Global Capital Security and the number of Series A Capital
Securities properly tendered in the Exchange Offer that are
represented by Definitive Capital Securities, the name of
each Holder of such Definitive Capital Securities, the
liquidation amount of Capital Securities properly tendered
in the Exchange Offer by each such Holder and the name and
address to which Definitive Capital Securities for Series B
Capital Securities shall be registered and sent for each
such Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B
Capital Securities and the Series B Capital Securities Guarantee have been
registered under Section 5 of the Securities Act and that this Declaration
and the Series B Capital Securities Guarantee have been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth in Section
3(q) of the Registration Rights Agreement, shall authenticate (A) the Global
Capital Security, executed and delivered by the Trust to the Property
Trustee, for Series B Capital Securities in aggregate liquidation amount
equal to the aggregate liquidation amount of Series A Capital Securities
represented by the Global Capital Security indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Capital
Securities, executed and delivered by the Trust to the Property Trustee,
representing Series B Capital Securities registered in the names and in the
liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the
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reduction in the number and aggregate liquidation amount represented thereby
as a result of the Exchange Offer.
The Trust shall deliver such authenticated Definitive Capital
Securities for Series B Capital Securities to the Holders thereof as
indicated in such Officers' Certificate.
(n) MINIMUM TRANSFERS. Series A Capital Securities and, if and when
issued, Series B Capital Securities may only be transferred in minimum blocks
of $100,000 aggregate liquidation amount (100 Capital Securities) and
multiples of $1,000 in excess thereof. Any attempted transfer of Series A
Capital Securities or Series B Capital Securities in a block having an
aggregate liquidation amount of less than $100,000 shall be deemed to be
voided and of no legal effect whatsoever. Any such purported transferee shall
be deemed not to be a Holder of such Series A Capital Securities or Series B
Capital Securities for any purpose, including, but not limited to, the
receipt of Distributions on such Capital Securities, and such purported
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Security shall
be registered on the books and records of the Trust as the sole owner and
Holder of such Security for purposes of receiving Distributions and for all
other purposes whatsoever and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such Security on the part of
any Person, whether or not the Trust shall have actual or other notice
thereof.
SECTION 9.4 BOOK-ENTRY INTERESTS.
The Global Capital Security shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency and no Capital Security Beneficial Owner will receive
physical delivery of a definitive Capital Security certificate (a "Capital
Security Certificate") representing such Capital Security Beneficial Owner's
interests in such Global Capital Security, except as provided in Section 9.2
and Section 7.9. Unless and until Definitive Capital Securities have been
issued to the Capital Security Beneficial Owners pursuant to Section 9.2 or
Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Capital Security and receiving approvals,
votes or consents hereunder) as the sole Holder of the Global Capital
Security and shall have no obligation to the Capital Security Beneficial
Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements
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between such Capital Security Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants, and the Clearing Agency shall
receive and transmit payments of Distributions on the Global Capital Security
to such Clearing Agency Participants; PROVIDED, HOWEVER, that solely for the
purposes of determining whether the Holders of the requisite amount of
Capital Securities have voted on any matter provided for in this Declaration,
the Trustees, with respect to the Global Capital Security, may conclusively
rely on, and shall be protected in relying on, any written instrument
(including a proxy) delivered to the Trustees by the Clearing Agency setting
forth the Capital Security Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part; and the
Clearing Agency will also make book-entry transfers among the Clearing Agency
Participants.
SECTION 9.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Capital Security
Holders is required to be given by a Trustee under this Declaration, such
Trustee shall give all such notices and communications specified herein to be
given to the Holder of the Global Capital Security to the Clearing Agency and
shall have no notice obligations to the Capital Security Beneficial Owners.
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any
deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than in respect of the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware.
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SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust
and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence (or in the case of the Property Trustee or the
Delaware Trustee, negligence) or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets
from which Distributions to Holders might properly be paid.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to
the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties
and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Person and any Indemnified Person, or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action
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or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 INDEMNIFICATION.
(a) (i) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person, against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself,
create a presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of the
fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees and expenses) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the
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circumstances of the case, such Person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim,
issue or matter therein, he or she shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only
as authorized in the specific case upon a determination that indemnification
of the Company Indemnified Person is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in paragraphs (i)
and (ii). Such determination shall be made (1) by the Administrative Trustees
by a majority vote of a Quorum consisting of such Administrative Trustees who
were not parties to such action, suit or proceeding, (2) if such a Quorum is
not obtainable, or, even if obtainable, if a Quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by
a Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 10.4(a) shall be paid by the Sponsor in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he or she is not entitled to
be indemnified by the Sponsor as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a Quorum of disinterested Administrative
Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable, if
a Quorum of disinterested Administrative Trustees so directs, by independent
legal counsel in a written opinion or (iii) by the Common Security Holder of
the Trust, that, based upon the facts known to the Administrative Trustees,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that the
Common Security Holder did not believe to be in, or believed was opposed to,
the best interests of the Trust, or, with respect to any criminal proceeding,
that such Company Indemnified Person believed or had reasonable cause to
believe his or her conduct was unlawful. In no event shall any advance be
made in instances where the Administrative Trustees, independent legal
counsel or Common Security Holder reasonably determine that a Company
Indemnified Person deliberately breached his or her duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4(a) shall not
be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor or
Capital Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this
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Section 10.4(a) shall be deemed to be provided by a contract between the
Sponsor and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4(a) is in effect. Any repeal or modification
of this Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against
any liability asserted against him or her and incurred by him or her in any
such capacity, or arising out of his or her status as such, whether or not
the Debenture Issuer would have the power to indemnify him or her against
such liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was serving
at the request of such constituent entity as a director, trustee, officer,
employee or agent of another entity, shall stand in the same position under
the provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he or she would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a Person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a Person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv), including the Property Trustee and the Delaware Trustee in their
respective individual capacities, being referred to as a "Fiduciary
Indemnified Person") for, and to hold each Fiduciary Indemnified Person
harmless against, any and all loss, liability, damage, action, suit, claim or
expense including taxes (other than taxes based on the income of such
Fiduciary Indemnified Person) of any kind and nature whatsoever incurred
without negligence or bad faith on the part of such Fiduciary Indemnified
Person, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending against or investigating any
claim or liability in connection with the exercise or performance of any of
the powers or duties of such Fiduciary Indemnified Person hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive
the resignation or removal of the Property Trustee or the Delaware Trustee
and the satisfaction and discharge of this Declaration.
(c) The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee, from time to time, such compensation for all services rendered by
the Property Trustee and the Delaware Trustee hereunder as may be mutually
agreed upon in writing by the Sponsor and the Property Trustee or the
Delaware Trustee, as the case may be, and, except as otherwise expressly
provided
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herein, to reimburse the Property Trustee and the Delaware Trustee upon its
or their request for all reasonable expenses (including legal fees and
expenses), disbursements and advances incurred or made by the Property
Trustee or the Delaware Trustee, as the case may be, in accordance with the
provisions of this Declaration, except any such expense, disbursement or
advance as may be attributable to its or their negligence or bad faith.
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee (subject to Section 5.3(c)) may engage in or possess an
interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive
with the business of the Trust, shall not be deemed wrongful or improper. No
Covered Person, the Sponsor, the Delaware Trustee, or the Property Trustee
shall be obligated to present any particular investment or other opportunity
to the Trust even if such opportunity is of a character that, if presented to
the Trust, could be taken by the Trust, and any Covered Person, the Sponsor,
the Delaware Trustee and the Property Trustee shall have the right to take
for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or
be interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for,
or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect in reasonable
detail each transaction of the Trust. The books of account shall be maintained
on the accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The Trust shall use the accrual
method of accounting for United States federal income tax purposes. The books
of account and the records of the Trust shall be examined by and reported
upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders any annual United States federal income tax
information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is
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required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the
Administrative Trustees shall endeavor to deliver all such information
statements within 30 days after the end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust
with any state or local taxing authority.
SECTION 11.3 BANKING.
The Trust may maintain one or more bank accounts in the name and for
the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust
shall be deposited in the Property Trustee Account. The sole signatories for
such accounts shall be designated by the Administrative Trustees; PROVIDED,
HOWEVER, that the Property Trustee shall designate the signatories for the
Property Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrative
Trustees shall cause to be filed required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established by a
Holder, shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay
over any amounts to any authority with respect to Distributions or
allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In the event of
any claim of excess withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld
was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration (including
Section 7 of Annex I hereto) or by any applicable terms of the Securities,
this Declaration may only be amended by a written instrument approved and
executed by:
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(i) the Sponsor and the Administrative Trustees (or, if there
are more than two Administrative Trustees, a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an Opinion of Counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities) and that all conditions precedent
to the execution and delivery of such amendment have been
satisfied;
PROVIDED, HOWEVER, that the Property Trustee shall not be required to sign
any such amendment; and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act.
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any
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Holder (other than an amendment pursuant to (g) below) may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 10.1 (c) and this Section 12.1 shall not be amended
without the consent of all of the Holders;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
Liquidation Amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision
in this Declaration that may be inconsistent with any other provision
of this Declaration or to make any other provisions with respect to
matters or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration;
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or
to ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act; and
(iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the Trust or
the Sponsor to conduct an Exchange Offer in the manner contemplated by
the Registration Rights Agreement;
PROVIDED, HOWEVER, that in each clause above, such action shall not adversely
affect in any material respect the interests of the Holders, and any such
amendments of this Declaration shall become effective when notice thereof is
given to the Holders.
SECTION 12.2 MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrative Trustees (or as provided in the terms of
the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading. The Administrative
Trustees shall call a meeting of the Holders of such class if directed to do
so by the Holders of at least 10% in Liquidation Amount of such class of
Securities. Such direction shall be given by delivering to the Administrative
Trustees
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one or more notices in writing stating that the signing Holders wish to call
a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders calling a meeting shall specify in
writing the Capital Security Certificates held by the Holders exercising the
right to call a meeting and only those Securities specified shall be counted
for purposes of determining whether the required percentage set forth in the
second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and not more
than 60 days before the date of such meeting. Whenever a vote, consent
or approval of the Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders; any action that may
be taken at a meeting of the Holders may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the
Holders owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders having a right to vote thereon
were present and voting; prompt notice of the taking of action without
a meeting shall be given to the Holders entitled to vote who have not
consented in writing; and the Administrative Trustees may specify that
any written ballot submitted to the Security Holder for the purpose of
taking any action without a meeting shall be returned to the Trust
within the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting; no proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy;
every proxy shall be revocable at the pleasure of the Holder executing
it; and, except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies,
and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are then
listed or trading, otherwise provides, the Administrative Trustees,
in their sole discretion, shall establish all other provisions
relating to meetings of Holders, including notice of the time, place
or
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purpose of any meeting at which any matter is to be voted on by any
Holders, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a Delaware banking corporation, a
national banking association or a bank or trust company, duly organized,
validly existing and in good standing under the laws of the United States or
the State of Delaware as the case may be, with corporate power and authority
to execute and deliver, and to carry out and perform its obligations under
the terms of, this Declaration;
(b) the execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee; and this Declaration has been
duly executed and delivered by the Property Trustee and under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and
to general principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
(c) the execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or state banking authority governing the trust powers of
the Property Trustee is required for the execution, delivery or performance
by the Property Trustee of this Declaration.
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
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(a) the Delaware Trustee is a Delaware banking corporation, a
national banking association or a bank or trust company, duly organized,
validly existing and in good standing under the laws of the United States or
the State of Delaware, as the case may be, with corporate power and authority
to execute and deliver, and to carry out and perform its obligations under
the terms of, this Declaration;
(b) the execution, delivery and performance by the Delaware Trustee
of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; and this Declaration has been
duly executed and delivered by the Delaware Trustee and under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors` rights generally and
to general principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
(c) the execution, delivery and performance of this Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Delaware Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any federal or Delaware banking authority governing the trust
powers of the Delaware Trustee is required for the execution, delivery or
performance by the Delaware Trustee of this Declaration; and
(e) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware, and is a Person that
satisfies for the Trust Section 3807(a) of the Business Trust Act.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 REGISTRATION RIGHTS AGREEMENT; LIQUIDATED DAMAGES.
The Holders of the Series A Capital Securities, the Series A
Debentures and the Series A Capital Securities Guarantee are entitled to the
benefits of the Registration Rights Agreement and the Liquidated Damages
Agreement. In certain limited circumstances set forth in the Registration
Rights Agreement and the Liquidated Damages Agreement, the Debenture Issuer
shall be required to pay liquidated damages with respect to the Series A
Debentures. Unless otherwise stated, the term "Distribution," as used in this
Declaration, includes any and all liquidated damages.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 NOTICES.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, overnight courier service or
confirmed telecopy, as follows:
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(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee and
the Holders):
INTERWEST CAPITAL TRUST I
c/o InterWest Bancorp, Inc.
275 Southeast Pioneer Way
Oak Harbor, Washington 98277
Attention.: Chief Financial Officer
Telephone: (360) 679-4181
Telecopier: (360) 675-8860
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to
the Holders):
WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder
of the Common Securities may give notice to the Trust):
INTERWEST BANCORP, INC.
275 Southeast Pioneer Way
Oak Harbor, Washington 98277
Attention: Chief Financial Officer
Telephone: (360) 679-4181
Telecopier: (360) 675-8860
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
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All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 15.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of
Delaware without regard to conflict of laws principles thereof.
SECTION 15.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 15.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 SUCCESSORS AND ASSIGNS.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 15.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one or more of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of
the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ H. Glenn Mouw
------------------------------------
H. Glenn Mouw
as Administrative Trustee
/s/ Clark W. Donnell
------------------------------------
Clark W. Donnell
as Administrative Trustee
-----------------------------------
Kenneth G. Hulett
as Administrative Trustee
WILMINGTON TRUST COMPANY
as Delaware Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
By:
--------------------------------
Name:
Title:
INTERWEST BANCORP, INC.,
as Sponsor and Debenture Issuer
By:
--------------------------------
Stephen M. Walden
President and Chief Executive
Officer
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
------------------------------------
H. Glenn Mouw
as Administrative Trustee
------------------------------------
Clark W. Donnell
as Administrative Trustee
-----------------------------------
Kenneth G. Hulett
as Administrative Trustee
WILMINGTON TRUST COMPANY
as Delaware Trustee
By: /s/ W. Chris Sponenberg
--------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
WILMINGTON TRUST COMPANY
as Property Trustee
By: /s/ W. Chris Sponenberg
--------------------------------
Name: W. Chris Sponenberg
Title: Assistant Vice President
INTERWEST BANCORP, INC.,
as Sponsor and Debenture Issuer
By:
--------------------------------
Stephen M. Walden
President and Chief Executive
Officer
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above written.
------------------------------------
H. Glenn Mouw
as Administrative Trustee
------------------------------------
Clark W. Donnell
as Administrative Trustee
/s/ Kenneth G. Hulett
-----------------------------------
Kenneth G. Hulett
as Administrative Trustee
WILMINGTON TRUST COMPANY
as Delaware Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
By:
--------------------------------
Name:
Title:
INTERWEST BANCORP, INC.,
as Sponsor and Debenture Issuer
By:
--------------------------------
Stephen M. Walden
President and Chief Executive
Officer
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
------------------------------------
H. Glenn Mouw
as Administrative Trustee
------------------------------------
Clark W. Donnell
as Administrative Trustee
-----------------------------------
Kenneth G. Hulett
as Administrative Trustee
WILMINGTON TRUST COMPANY
as Delaware Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
By:
--------------------------------
Name:
Title:
INTERWEST BANCORP, INC.,
as Sponsor and Debenture Issuer
By: /s/ Stephen M. Walden
--------------------------------
Stephen M. Walden
President and Chief Executive
Officer
<PAGE>
ANNEX I
TERMS OF
9.875% CAPITAL SECURITIES, SERIES A/SERIES B
9.875% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration,
dated as of November 15, 1999 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration, the Indenture or, if not defined in such
Declaration, as defined in the Offering Memorandum referred to below in
Section 2(c) of this Annex I):
1. DESIGNATION AND NUMBER.
(a) CAPITAL SECURITIES. 40,000 Series A Capital Securities of the Trust
and 40,000 Series B Capital Securities of the Trust, each series with an
aggregate liquidation amount with respect to the assets of the Trust of Forty
Million Dollars ($40,000,000) and with a liquidation amount with respect to
the assets of the Trust of One Thousand Dollars ($1,000) (the "Liquidation
Amount") per security, are hereby designated for the purposes of
identification only as "9.875% Capital Securities, Series A" and "9.875%
Capital Securities, Series B," respectively (collectively, the "Capital
Securities"). The certificates evidencing the Capital Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any exchange
or quotation system on or in which the Capital Securities are listed, traded
or quoted.
(b) COMMON SECURITIES. 1,237 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of One
Million Two Hundred Thirty-Seven Dollars ($1,237,000) and a liquidation
amount with respect to the assets of the Trust of $1,000 per security, are
hereby designated for the purposes of identification only as "9.875% Common
Securities" (the "Common Securities"). The certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom
as may be required by ordinary usage, custom or practice.
2. DISTRIBUTIONS.
(a) Distributions on each Security will be payable at a fixed rate per
annum of 9.875% (the "Coupon Rate") of the liquidation amount of $1000 per
Security, such rate being the rate of interest payable on the Debentures to
be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear additional Distributions thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement and the Liquidated Damages
Agreement, in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the Registration Rights
Registration Rights Agreement and the Liquidated Damages Agreement) with
respect to the Debentures. The term "Distributions" as used herein, includes
distributions of any and all such
I-1
<PAGE>
interest and Liquidated Damages, if any, payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made with
respect to the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds legally available therefor.
(b) Distributions on the Securities will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from November 15, 1999 and will be payable
semi-annually in arrears on May 15 and November 15 of each year, commencing
May 15, 2000 (each, a "Distribution Date"), except as otherwise described
below. Distributions will be computed on the basis a 360-day year of twelve
30-day months. As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the Indenture
to defer payments of interest by extending the interest payment period at any
time and from time to time on the Debentures for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such period (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures, PROVIDED THAT
no Extension Period shall end on a date other than an Interest Payment Date
for the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions (other than Liquidated Damages,
if any) will also be deferred. Notwithstanding such deferral, Distributions
will continue to accumulate with additional Distributions thereon (to the
extent permitted by applicable law but not at a rate greater than the rate at
which interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period,
PROVIDE THAT such extension does not cause such Extension Period, together
with all such previous and further extensions within such Extension Period,
to exceed 10 consecutive semi-annual periods, including the first semi-annual
period during such Extension Period, end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business on the first day of the month in which relevant the Distribution
Date occurs, which Distribution Dates correspond to the Interest Payment
Dates for the Debentures. Subject to any applicable laws and regulations and
the provisions of the Declaration, each such payment with respect to the
Capital Securities will be made as described under the heading "Description
of Capital Securities--Form, Denomination, Book-Entry Procedures and
Transfer" in the Offering Memorandum dated November 9, 1999 of the Debenture
Issuer and the Trust relating to the Securities and the Debentures. The
relevant record dates for the Common Securities shall be the same as the
record dates for the Capital Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution Date, as a result
of the Debenture Issuer having failed to make a payment under the Debentures,
will cease to be payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name
such Securities are registered on the special record date or other specified
date determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then
payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that if such next succeeding
Business Day falls in the next
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succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any dissolution of the Trust, the Trust shall be
liquidated by the Administrative Trustees as expeditiously as the
Administrative Trustees determine to be possible by distributing to the
Holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, a Like Amount (as defined below) of the
Debentures, unless such distribution is determined by the Property Trustee
not to be practicable, in which event such Holders will be entitled to
receive out of the assets of the Trust legally available for distribution to
Holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities
of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets legally available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust with respect to the Securities shall be paid on a Pro
Rata basis.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment of the Debentures (with premium, if any) in whole
or in part, at maturity or otherwise (either at the option of the Debenture
Issuer or pursuant to a Special Event, as described below), the proceeds from
such repayment shall be simultaneously applied by the Property Trustee
(subject to the Property Trustee having received written notice no later than
45 days prior to such repayment) to redeem a Like Amount of the Securities at
a redemption price equal to (i) in the case of the repayment of the
Debentures on the Maturity Date, the Maturity Redemption Price (as defined
below), (ii) in the case of the optional prepayment of the Debentures prior
to the Initial Optional Redemption Date and upon the occurrence and
continuation of a Special Event, the Special Event Redemption Price (as
defined below) and (iii) in the case of the optional prepayment of the
Debentures on or after the Initial Optional Redemption Date, the Optional
Redemption Price (as defined below). The Maturity Redemption Price, the
Special Event Redemption Price and the Optional Redemption Price are referred
to collectively as the "Redemption Price". Holders will be given not less
than 30 nor more than 60 days prior written notice of such redemption.
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(b) (i) The "Maturity Redemption Price" shall mean an amount equal to
100% of the principal of, plus accrued and unpaid interest (including
Compounded Interest and Additional Sums, if any, thereon to the date of
redemption) on, the Debentures as of the Maturity Date thereof.
(ii) The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to prepay the Debentures, in whole or
in part, at any time on or after [November 15, 2009] (the "Initial Optional
Redemption Date"), and, simultaneous with such prepayment, to cause a Like
Amount of the Securities to be redeemed by the Trust at the Optional
Redemption Price on a Pro Rata basis. "Optional Redemption Price" shall mean
an amount equal to the applicable redemption price set forth below plus,
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning [November 15],
of the years indicated below:
<TABLE>
<CAPTION>
Percentage of
Year Liquidation Amount
------------------- ------------------
<S> <C>
2009 104.938%
2010 104.444%
2011 103.950%
2012 103.457%
2013 102.963%
2014 102.469%
2015 101.975%
2016 101.481%
2017 100.988%
2018 100.494%
2019 and thereafter 100.000%
</TABLE>
(c) If at any time an Investment Company Event, a Regulatory Capital
Event or a Tax Event (each as defined below, and each a "Special Event")
occurs, the Debenture Issuer shall have the right (subject to the conditions
set forth in the Indenture) at any time prior to the Initial Optional
Redemption Date, to prepay the Debentures in whole, but not in part, within
the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such prepayment, to cause a Like Amount of
the Securities to be redeemed by the Trust at the Special Event Redemption
Price on a Pro Rata basis.
"Investment Company Event" shall mean the receipt by the Debenture
Issuer and the Trust of an opinion of independent securities counsel
experienced in such matters to the effect that as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
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laws or any regulations thereunder of the United States or any rules,
guidelines or policies of any applicable regulatory authority for the
Debenture Issuer or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on or
after the date of original issuance of the Securities, the Trust is, or
within 90 days of the date of such opinion will be, considered an Investment
Company that is required to be registered under the Investment Company Act.
"Regulatory Capital Event" shall mean the receipt by the Debenture
Issuer and the Trust of an opinion of independent bank regulatory counsel
experienced in such matters to the effect that as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any rules,
guidelines or policies of an applicable regulatory authority for the
Debenture Issuer or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on or
after the date of original issuance of the Securities, the Capital Securities
do not constitute, or within 90 days of the date of such opinion will not
constitute, Tier 1 Capital (or its then equivalent if the Sponsor were
subject to such capital requirement); PROVIDED, HOWEVER, that the
distribution of the Debentures in connection with the liquidation of the
Trust by the Debenture Issuer shall not in and of itself constitute a
Regulatory Capital Event.
"Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities following a Special Event, an amount in cash
equal to the greater of (i) 100% of the principal amount of the Securities or
(ii) the sum, as determined by a Quotation Agent (as defined in the
Indenture), of the present values of the remaining scheduled payments of
principal and interest on such Securities, discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined in the Indenture), plus, in
the case of (i) or (ii), any accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) to the date of such
redemption.
A "Tax Event" shall occur upon receipt by the Debenture Issuer and the
Trust of an opinion of independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws or any regulations thereunder
of the United States or any political subdivision or taxing authority thereof
or therein, or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which pronouncement or decision is announced on or
after the date of original issuance of the Securities, 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 Debentures, (ii) the interest
payable by the Debenture Issuer on the Debentures is not, or within 90 days
of the date of such opinion will not be, deductible by the Debenture Issuer,
in whole or in part, for 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.
(d) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Common Securities and the
Capital Securities shall be redeemed Pro Rata
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and the Capital Securities to be redeemed will be determined as described in
Section 4(f)(ii) below. Upon the entry of an order for the dissolution of the
Trust by a court of competent jurisdiction, the Debentures thereafter will be
subject to optional redemption, in whole, but not in part, on or after the
Initial Optional Redemption Date.
(e) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of
the Capital Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such
distribution, and (iii) any certificates representing Securities not held by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(f) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all
Securities for all semi-annual Distribution periods terminating on or before
the date of redemption.
(g) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(g)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders.
Each Redemption/Distribution Notice shall be addressed to the Holders at
the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the particular Securities to be redeemed shall be
selected on a Pro Rata basis (based upon Liquidation Amounts) not more
than 60 nor less than 30 days prior to the date fixed for redemption
from the outstanding Securities not previously called for redemption;
PROVIDED, HOWEVER, that with respect to Holders that would be required
to hold less than 100 but more than zero Securities as a result of such
redemption, the Trust shall redeem Securities of each such Holder so
that after such redemption such Holder shall hold either 100 Securities
or such Holder no longer holds any Securities, and shall use such method
(including, without limitation, by lot) as the Trust shall deem fair and
appropriate; PROVIDED, FURTHER, that any such redemption may be made on
the basis of the aggregate Liquidation Amount of
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Securities held by each Holder thereof and may be made by making such
adjustments as the Trust deems fair and appropriate in order that
fractional Securities shall not thereafter remain outstanding. With
respect to Capital Securities registered in the name of and held of
record by the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) or any nominee, the distribution of the proceeds
of such redemption will be made to the Clearing Agency and disbursed by
such Clearing Agency in accordance with the procedures applied by such
agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by
12:00 noon, New York City time, on the redemption date, PROVIDED THAT
the Debenture Issuer has paid the Property Trustee a sufficient amount
of cash in connection with the related redemption or maturity of the
Debentures by 10:00 a.m., New York City time, on the Maturity Date or
the date of redemption, as the case requires, the Property Trustee will
deposit irrevocably with the Clearing Agency or its nominee (or
successor Clearing Agency or its nominee) immediately available funds
sufficient to pay the applicable Redemption Price with respect to such
Capital Securities and will give the Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the relevant
Clearing Agency Participants, and (B) with respect to Capital Securities
issued in certificated form and Common Securities, PROVIDED THAT the
Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will irrevocably deposit with the
paying agent for the Capital Securities (if other than the Property
Trustee) funds sufficient to pay the applicable Redemption Price to the
Holders by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the redemption date, and
PROVIDED FURTHER, that any such payment shall become due only upon
surrender by the Holder of the related certificated Capital Securities.
If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the
close of business on the date of such deposit, or on the redemption date,
as applicable, Distributions will cease to accumulate on the Securities so
called for redemption and all rights of Holders so called for redemption
will cease, except the right of the Holders of such Securities to receive
the Redemption Price, but without interest on such Redemption Price, and
such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of
Holders at the close of business on a regular record date in respect of
a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required
to register or cause to be registered the transfer of (i) any Securities
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Securities for redemption
or (ii) any Securities selected for redemption, except the unredeemed portion
of any Security being redeemed. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay). If payment of the Redemption Price with respect to any
Securities is improperly withheld or refused and not paid either
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<PAGE>
by the Property Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will continue
to accumulate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by -the Property
Trustee on behalf of the Trust to (A) with respect to Capital Securities
issued in book-entry form, the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee), (B) with respect to Capital
Securities issued in certificated form, to the holders thereof, and (C)
with respect to the Common Securities, to the Holders thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws and banking
laws), the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.
5. VOTING RIGHTS - CAPITAL SECURITIES.
(a) Except as provided under Sections 5(b), 6(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities
will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the principal of the Debentures or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in Liquidation
Amount of all outstanding Capital Securities; PROVIDED, HOWEVER, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by
a vote of the Holders of the Capital Securities except by subsequent vote of
such Holders. The Property Trustee shall notify each Holder of Capital
Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that
the Trust will continue to be classified as a grantor trust for United States
federal income tax purposes after taking any such action into account.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or, in the case of redemption, on the redemption date), then
a Holder of Capital Securities may institute a proceeding directly against
the Debenture Issuer for enforcement of payment to such Holder of the
principal of or interest on a Like Amount of Debentures (a "Direct Action")
on or after the respective due date specified in the Debentures. In
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<PAGE>
connection with such Direct Action, the Common Securities Holder will be
subrogated to the rights of such Holder of Capital Securities to the extent
of any payment made by the Debenture Issuer to such Holder of Capital
Securities in such Direct Action. Except as provided in the second preceding
sentence, or except as set forth in the first sentence of Section 3.8(e) of
the Declaration, the Holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent The Property Trustee will cause a notice of
any meeting at which Holders of Capital Securities are entitled to vote to be
mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consent.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under Sections 6(b), 6(c), and 7 or as otherwise
required by law and the Declaration, the Holders of the Common Securities
will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the Holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at
such time by the Holders of a Majority in Liquidation Amount of the
outstanding Capital Securities. In no event will the Holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Sponsor as the Holder of the Common Securities. No resignation or removal of
a Trustee and no appointment of a successor trustee shall be effective until
the acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07
of the Indenture, (iii) exercise any right to rescind or annul a declaration
of acceleration of the maturity of the
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principal of the Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the Holders
of a Majority in Liquidation Amount of all outstanding Common Securities;
PROVIDED, HOWEVER, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of each Holder of
the Common Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities
except by subsequent vote of such Holders. The Property Trustee shall notify
each Holder of Common Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders
of the Common Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to
the effect that the Trust will continue to be classified as a grantor trust
for United States federal income tax purposes after taking any such action
into account.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Common Securities may institute a Direct Action directly against
the Debenture Issuer for enforcement of payment to such Holder of the
principal of or premium, if any, or interest on a Like Amount of Debentures
on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the rights of the Common Securities
Holder will be subordinated to the rights of Holders of Capital Securities in
respect of any payment from the Debenture Issuer in such Direct Action.
Except as provided in the second preceding sentence, the Holders of Common
Securities will not be able to exercise directly any other remedy available
to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Common Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought, and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. AMENDMENTS TO DECLARATION.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees without the consent of
the Holders to (i) cure any ambiguity, correct or
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supplement any provisions in the Declaration that may be inconsistent with
any other provisions, or make any other provisions with respect to matters or
questions arising under the Declaration which shall not be inconsistent with
the other provisions of the Declaration, (ii) modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Securities are outstanding
or to ensure that the Trust will not be required to register as an Investment
Company under the Investment Company Act or (iii) modify, eliminate or add
any provisions of the Declaration to such extent as shall be necessary to
enable the Trust or the Sponsor to conduct an Exchange Offer in the manner
contemplated by the Registration Rights Agreement; PROVIDED, HOWEVER, that in
each case, such action shall not adversely affect in any material respect the
interests of any Holder, and any such amendments of the Declaration shall
become effective when notice thereof is given to the Holders. The Declaration
may also be amended by the Trustees and the Sponsor with (i) the consent of
Holders representing a Majority in Liquidation Amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status as an Investment Company under the Investment
Company Act; PROVIDED, HOWEVER, that, without the consent of each Holder of
Trust Securities, the Declaration may not be amended to (i) change the amount
or timing of any Distribution on, or the payment required to be made in
respect of, the Trust Securities as of a specified date or (ii) restrict the
right of a Holder of Trust Securities to institute suit for the enforcement
of any such payment on or after such date
8. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean PRO RATA to each
Holder according to the aggregate liquidation amount of the Securities held
by such Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Capital Securities PRO RATA according to the aggregate liquidation amount of
Capital Securities held by such Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding and then, only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by such Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. RANKING.
The Capital Securities rank PARI PASSU with the Common Securities
and payment thereon shall be made Pro Rata with the Common Securities, except
that, if an Event of Default under the Declaration occurs and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and any other
payments to which they are entitled at such time.
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10. ACCEPTANCE OF CAPITAL SECURITIES GUARANTEE, COMMON SECURITIES
GUARANTEE, INDENTURE AND DEBENTURES.
Each Holder of Capital Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee, the Common Securities Guarantee, the Indenture and the Debentures,
as applicable, including the subordination provisions therein.
11. NO PREEMPTIVE RIGHTS.
Neither the issuance of Capital Securities, nor the
issuance of Common Securities is subject to preemptive or other similar
rights. The Holders shall have no preemptive or similar rights to subscribe
for any additional securities.
12. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee or the Common Securities Guarantee, as
applicable, and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal
place of business.
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING
AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR
ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE CLEARING AGENCY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
INTERWEST BANCORP, INC. (THE "CORPORATION") OR ANY "AFFILIATE" OF THE
CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF
THIS CAPITAL SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN
A1-1
<PAGE>
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF INTERWEST CAPITAL TRUST I (THE "TRUST") AND THE
CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO
CLAUSE (D) TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUST A LETTER FROM
THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM DATED NOVEMBER 9, 1999. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE
AND HOLDING OF CAPITAL SECURITIES IS NOT PROHIBITED BY SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER
(i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY
OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT
A1-2
<PAGE>
PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN
A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES) AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF
CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000
(100 CAPITAL SECURITIES) SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
BE BOUND BY THE REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 9, 1999, BY
AND AMONG THE TRUST, THE SPONSOR AND THE INITIAL PURCHASER NAMED THEREIN, AS
AMENDED FROM TIME TO TIME.
A1-3
<PAGE>
Certificate Number: [__________________] Aggregate Liquidation Amount:
$_____________
CUSIP Number: [________________]
Certificate Evidencing Capital Securities
of
InterWest Capital Trust I
9.875% Capital Securities, Series A
(liquidation amount $1,000 per Capital Security)
InterWest Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
[Cede & Co. (the "Holder") is the registered owner of $_________ in aggregate
liquidation amount of Capital Securities of the Trust](1) [_________ is the
registered owner of the aggregate liquidation amount of Capital Securities
of the Trust specified in Schedule A hereto](2) representing undivided
preferred beneficial interests in the assets of the Trust designated the
9.875% Capital Securities, Series A (liquidation amount $1,000 per Capital
Security) (the "Capital Securities"). The Capital Securities are transferable
on the books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities represented hereby
are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust dated as of November 15, 1999, as
the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture (including
any supplemental indenture) to a Holder without charge upon written request
to the Trust at its principal place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees, for United States federal
income tax purposes, to treat the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
- -------------------
(1) Insert in Global Capital Securities only.
(2) Insert in Definitive Capital Securities only.
A1-4
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this 15th
day of November, 1999.
INTERWEST CAPITAL TRUST I
By:
--------------------------------
Clark W. Donnell
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9.875% Capital Securities, Series A of InterWest
Capital Trust I referred to in the within-mentioned Declaration.
Dated:
------------------------, ---------
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Property Trustee
By:
-------------------------------
Authorized Signatory
A1-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions on each Capital Security will be payable at a fixed rate
per annum of 9.875% (the "Coupon Rate") of the liquidation amount of $ 1000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement and the Liquidated Damages Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement and the Liquidated
Damages Agreement) with respect to the Debentures. The term "Distributions," as
used herein, includes such cash distributions and any and all such interest and
Liquidated Damages, if any, payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds
legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from November 15, 1999 and will be
payable semi-annually in arrears, on May 15 and November 15 of each year,
commencing May 15, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. As
long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
semi-annual calendar periods, including the first such semi-annual period
during such extension period (each an "Extension Period"), PROVIDED THAT no
Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions (other than Liquidated Damages,
if any) will also be deferred. Notwithstanding such deferral, semi-annual
Distributions will continue to accumulate with interest thereon (to the
extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the termination of
any Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; PROVIDED THAT such
Extension Period, together with all such previous and further extensions
within such Extension Period, may not (i) exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such Extension Period,
(ii) end on a date other than an Interest Payment Date for the Debentures or
(iii) extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the
books and records of the Trust on the record date immediately preceding the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to receipt by the Sponsor of any and all required regulatory
approvals and to certain other conditions set forth in the Declaration and
the Indenture, the Property Trustee may, at the direction of the Sponsor, at
any time dissolve the Trust and after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, cause the Debentures to
be distributed to the
A1-6
<PAGE>
Holders of the Securities in liquidation of the Trust or, simultaneously with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the Declaration.
A1-7
<PAGE>
----------------
ASSIGNMENT
----------------
FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this Capital
Security Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
________________________________________________________________________ agent
to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
---------------------
Signature:____________________________________________________________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee:__________________________________________________________
- ------------------------
Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A1-8
<PAGE>
[INCLUDE THE FOLLOWING IF THE CAPITAL SECURITY BEARS A RESTRICTED SECURITIES
LEGEND]
In connection with any transfer of any of the Capital Securities evidenced by
this Certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without
transfer; or
(2) / / transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended; or
(3) / / transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act of 1933 that is acquiring the
Capital Securities for its own account, or for the account of
such an institutional "accredited investor," for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act of 1933, as amended; or
(4) / / transferred pursuant to another available exemption from
the registration requirements of the Securities Act of 1933,
as amended; or
(5) / / transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this Certificate in the name of any Person
other than the Holder hereof; PROVIDED, HOWEVER, that if box (3) or (4) is
checked, the Registrar may require, prior to registering any such transfer of
the Capital Securities, such legal opinions, certifications and other
information as the Trust has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, as amended, such as
the exemption provided by Rule 144 under such Act; PROVIDED, FURTHER, that (i)
if box (2) is checked, by acceptance of this Certificate, the transferee shall
be deemed to have certified that it is a "qualified institutional buyer" (as
defined in Rule 144A) ("QIB") acquiring the Capital Securities for its own
account or for the account of another QIB over which it exercises sole
investment discretion and that it is aware that the Holder is relying upon the
exemption from registration afforded by Rule 144A in respect of the Holder's
transfer of Capital Securities to it or (ii) if box (3) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated November 9, 1999; PROVIDED, FURTHER, that after the date that a
registration statement has been filed and so long as such Registration
Statement continues to be effective, only then may the Registrar permit
transfers for which box (5) has been checked.
----------------------------------------
Signature
A1-9
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
INTERWEST BANCORP, INC. (THE "CORPORATION") OR ANY "AFFILIATE" OF THE
CORPORATION WAS THE OWNER OF THIS COMMON SECURITY (OR ANY PREDECESSOR OF THIS
COMMON SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF INTERWEST CAPITAL TRUST I (THE "TRUST") AND THE
CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO
CLAUSE (D) TO REQUIRE THAT TRANSFEROR DELIVER TO THE TRUST A LETTER FROM THE
TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM
DATED NOVEMBER 9, 1999. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-1
<PAGE>
Certificate Evidencing Common Securities
of
InterWest Capital Trust I
9.875% Common Securities
(liquidation amount $1,000 per Common Security)
InterWest Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
InterWest Bancorp, Inc. (the "Holder") is the registered owner of 1,237
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 9.875% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). Subject to the
terms of the Declaration (as defined below), the Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of the Trust dated as of
November 15, 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration.
The Sponsor will provide a copy of the Declaration, the Common Securities
Guarantee and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
15th day of November, 1999.
INTERWEST CAPITAL TRUST I
By:
-----------------------------
Clark W. Donnell
Administrative Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions on each Common Security will be payable at a rate of
9.875% per annum (the "Coupon Rate") of the liquidation amount of $1000 per
Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any and all such interest and Liquidated Damages, if any,
payable unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds legally available
therefor.
Distributions on the Common Securities will be cumulative, will
accrue from the most recent date to which Distributions have been paid or, if
no Distributions have been paid, from November 15, 1999 and will be payable
semi-annually in arrears, on May 15 and November 15 of each year, commencing
May 15, 2000, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year of twelve 30-day months. As long as
no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), PROVIDED THAT no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, semi-annual Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded semi-annually during any such
Extension Period. Prior to the termination of any Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; PROVIDED THAT such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
(i) exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, (ii) end on a date other
than an Interest Payment Date for the Debentures or (iii) extend beyond the
Maturity Date of the Debentures. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on
the record date immediately preceding the end of the Extension Period. Upon
the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
Subject to the receipt by the Sponsor of any and all required
regulatory approvals and to certain other conditions set forth in the
Declaration and the Indenture, the Property Trustee may, at the direction of
the Sponsor, at any time dissolve the Trust and cause the Debentures to be
distributed to the Holders of the Securities in liquidation of the Trust or,
simultaneously with any redemption of the Debentures, cause a Like Amount of
the Securities to be redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
Under certain circumstances, the rights of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities, as provided in the Declaration.
A2-3
<PAGE>
Exhibit 4.6
---------------------------------------------
---------------------------------------------
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
INTERWEST BANCORP, INC.
Dated as of _________ ___, 2000
---------------------------------------------
---------------------------------------------
<PAGE>
PAGE
----
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ...........................................5
SECTION 2.2 Lists of Holders of Securities ...........................................5
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee....................................6
SECTION 2.4 Periodic Reports 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......................................6
SECTION 2.6 Waiver of Events of Default ...........................................6
SECTION 2.7 Notice of Events of Default ...........................................6
SECTION 2.8 Conflicting Interests ...........................................7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee .........................7
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee.................................9
SECTION 3.3 Not Responsible for Recitals or Issuance of Series A Capital Securities
Guarantee. ..........................................10
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility.....................................11
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities Guarantee Trustee..........11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee ..........................................12
SECTION 5.2 Waiver of Notice and Demand ..........................................12
SECTION 5.3 Obligations Not Affected ..........................................12
SECTION 5.4 Rights of Holders ..........................................13
SECTION 5.5 Guarantee of Payment ..........................................14
SECTION 5.6 Subrogation ..........................................14
SECTION 5.7 Independent Obligations ..........................................14
i
<PAGE>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions ..........................................14
SECTION 6.2 Ranking ..........................................15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination ..........................................15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation ..........................................16
SECTION 8.2 Compensation and Indemnification ..........................................16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns ..........................................17
SECTION 9.2 Amendments ..........................................17
SECTION 9.3 Notices ..........................................17
SECTION 9.4 Exchange Offer ..........................................18
SECTION 9.5 Benefit ..........................................18
SECTION 9.6 Governing Law ..........................................19
</TABLE>
ii
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture
Act of 1939, as Section of Guarantee
amended Agreement
--------------- ---------
<S> <C>
310(a) ...................................................................... 4.1(a)
310(b) ...................................................................... 2.8, 4.1(c)
310(c) ...................................................................... N/A
311(a) ...................................................................... 2.2(b)
311(b) ...................................................................... 2.2(b)
311 (c) ...................................................................... N/A
312(a) ...................................................................... 2.2(a)
312(b) ...................................................................... 2.2(b)
312 (c) ...................................................................... N/A
313 ...................................................................... 2.3
314(a) ...................................................................... 2.4
314(b) ...................................................................... N/A
314(c) ...................................................................... 2.5
314(d) ...................................................................... N/A
314(e) ...................................................................... 1.1, 2.5, 3.2
314(f) ...................................................................... 2.1, 3.2
315(a) ...................................................................... 3.1(d), 3.2(a)
315(b) ...................................................................... 2.7
315(c) ...................................................................... 3.1(c)
315(d) ...................................................................... 3.1(d), 3.2(a), 8.1
315 (e) ...................................................................... N/A
316(a) ...................................................................... 1.1, 2.6, 5.4
316(b) ...................................................................... 5.3, 5.4
316(c) ...................................................................... 9.2
317(a) ...................................................................... N/A
317(b) ...................................................................... N/A
318(a) ...................................................................... 2.1(a)
318(b) ...................................................................... 2.1(b)
318(c) ...................................................................... 2.1(b)
- -------------------------
</TABLE>
* This Cross-Reference Table does not constitute part of this Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
iii
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Series B
Capital Securities Guarantee"), dated as of _________ ___, 2000, is executed and
delivered by INTERWEST BANCORP, INC., a Washington corporation (the
"Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
trustee (the "Capital Securities Guarantee Trustee" or "Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Series B
Capital Securities (as defined herein) of INTERWEST CAPITAL TRUST I, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of November 15, 1999, by and among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
(i) has issued on the date hereof 40,000 capital securities, having an aggregate
liquidation amount of $40,000,000, such capital securities being designated the
9.875% Capital Securities, Series B (the "Series B Capital Securities"), in
exchange for a similar amount of its 9.875 % Capital Securities, Series A (the
"Series A Capital Securities") and (ii) in connection therewith, is executing
and delivering this Series B Capital Securities Guarantee (as defined in the
Declaration) for the benefit of Holders of the Series B Capital Securities (as
defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series B Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series B Capital Securities Guarantee, to pay the
Guarantee Payments (as defined herein) to the Holders of the Series B Capital
Securities, and the Guarantor agrees to make certain other payments on the terms
and conditions set forth herein.
WHEREAS, the Guarantor has also executed and delivered the Common
Securities Guarantee Agreement, dated as of November 15, 2000 (the "Common
Securities Guarantee"), for the benefit of the holders of the Common Securities
(as defined herein), the terms of which provide that if an Event of Default (as
defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set forth
in the Common Securities Guarantee, to the rights of Holders of Series B Capital
Securities and the Series B Capital Securities to receive Guarantee Payments
under the Series B Capital Securities Guarantee and this Series B Capital
Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the exchange by each Holder of
their Series A Capital Securities for Series B Capital Securities, which
exchange the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series B Capital Securities Guarantee for
the benefit of such Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Series B Capital Securities Guarantee, unless the context
otherwise requires:
(1) capitalized terms used in this Series B Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(2) terms defined in the Declaration as in effect at the date of
execution of this Series B Capital Securities Guarantee have the same meaning
when used in this Series B Capital Securities Guarantee unless otherwise
defined in this Series B Capital Securities Guarantee,
(3) a term defined anywhere in this Series B Capital Securities
Guarantee has the same meaning throughout;
(4) all references to "the Series B Capital Securities Guarantee" or
"this Series B Capital Securities Guarantee" are references to this Series B
Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(5) all references in this Series B Capital Securities Guarantee to
Articles and Sections are references to Articles and Sections of this Series
B Capital Securities Guarantee, unless otherwise specified;
(6) a term defined in the Trust Indenture Act has the same meaning
when used in this Series B Capital Securities Guarantee, unless otherwise
defined in this Series B Capital Securities Guarantee or unless the context
otherwise requires; and
(7) a reference to the singular includes the plural and vice versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in Wilmington, Delaware or New York, New York
are authorized or required by law or executive order to remain closed.
"CAPITAL SECURITIES GUARANTEE TRUSTEE" shall mean Wilmington Trust
Company, as Trustee under the Series B Capital Securities Guarantee, until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Series B Capital
Securities Guarantee and thereafter means each such Successor Capital Securities
Guarantee Trustee.
"COMMON SECURITIES" shall mean the securities representing common
undivided beneficial interests in the assets of the Issuer.
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<PAGE>
"CORPORATE TRUST OFFICE" shall mean the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.
"COVERED PERSON" shall mean any Holder or beneficial owner of Series
B Capital Securities.
"DEBENTURES" shall mean the series of subordinated debt securities
of the Guarantor designated the 9.875% Junior Subordinated Deferrable
Interest Debentures due November 15, 2029, Series B, held by the Property
Trustee (as defined in the Declaration) of the Issuer.
"EVENT OF DEFAULT" shall mean a default by the Guarantor on any of
its payment or other obligations under this Series B Capital Securities
Guarantee; PROVIDED, HOWEVER, that, except with respect to default in respect
of any Guarantee Payment, no default by the Guarantor hereunder shall
constitute an Event of Default unless the Guarantor shall have received
written notice of the default and shall not have cured such default within 60
days after receipt thereof.
"GUARANTEE PAYMENTS" shall mean the following payments or
distributions, without duplication, with respect to the Series B Capital
Securities, to the extent not paid or made by or on behalf of the Issuer: (i)
any accumulated and unpaid Distributions (as defined in the Declaration) that
are required to be paid on such Series B Capital Securities, to the extent
the Issuer has funds legally available therefor at such time, (ii) the
redemption price, including all accumulated and unpaid Distributions to the
date of redemption (the "Redemption Price"), to the extent the Issuer has
funds legally available therefor at such time, with respect to any Series B
Capital Securities called for redemption, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Issuer (other than
in connection with the distribution of Debentures to the Holders in exchange
for Series B Capital Securities or in connection with the redemption of the
Series B Capital Securities, in each case as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accumulated
and unpaid Distributions on the Series B Capital Securities to the date of
payment, to the extent the Issuer has funds legally available therefor at
such time, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders after satisfaction of liabilities to creditors of the
Issuer as required by applicable law (in either case, the "Liquidation
Distribution"). If an Event of Default has occurred and is continuing, no
Guarantee Payments under the Common Securities Guarantee with respect to the
Common Securities or any guarantee payment under the Common Securities
Guarantee or any Other Common Securities Guarantee shall be made until the
Holders of the Series B Capital Securities shall be paid in full the
Guarantee Payments to which they are entitled under this Series B Capital
Securities Guarantee.
"HOLDER" shall mean any holder, as registered on the books and
records of the Issuer, of any Series B Capital Securities; PROVIDED, HOWEVER,
that, in determining whether the holders of the requisite percentage of
Series B Capital Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Person actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee to
be an Affiliate of the Guarantor.
"INDEMNIFIED PERSON" shall mean the Capital Securities Guarantee
Trustee (including in its individual capacity), any Affiliate of the Capital
Securities Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Capital Securities Guarantee Trustee.
3
<PAGE>
"INDENTURE" shall mean the Indenture, dated as of November 15, 1999,
between InterWest Bancorp, Inc., as issuer of Debentures (the "Debenture
Issuer"), and Wilmington Trust Company, as trustee, pursuant to which the
Debentures are to be issued to the Property Trustee of the Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE SERIES B CAPITAL SECURITIES"
shall mean, except as provided by the Trust Indenture Act, a vote by
Holder(s) of the Series B Capital Securities, voting separately as a class,
of more than 50% of the aggregate liquidation amount (including the amount
that would be paid on redemption, liquidation or otherwise, plus accumulated
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Series B Capital Securities, excluding Series
B Capital Securities held by the Guarantor, the Issuer or any Affiliate
thereof.
"OFFICERS' CERTIFICATE" shall mean, with respect to any Person, a
certificate signed by the Chairman, the Chief Executive Officer, the
President, an Executive or Senior Vice President, a Vice President, the Chief
Financial Officer and the Secretary or an Assistant Secretary. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Series B Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenants or conditions and the definitions relating thereto;
(b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(c) a statement as to whether or not, in the opinion of each such
officer, such condition or covenant has been complied with.
"OTHER COMMON SECURITIES GUARANTEES" shall have the same meaning as
"Other Guarantees" in the Common Securities Guarantee.
"OTHER DEBENTURES" shall mean all junior subordinated debentures,
other than the Debentures and the Series A Debentures (as defined in the
Indenture), issued by the Guarantor, from time to time and sold to trusts
other than the Issuer to be established by the Guarantor (if any), in each
case similar to the Issuer.
"OTHER GUARANTEES" shall mean all guarantees, other than this Series
B Capital Securities Guarantee and the Series A Capital Securities Guarantee,
to be issued by the Guarantor with respect to capital securities (if any)
similar to the Series B Capital Securities, issued by trusts other than the
Issuer to be established by the Guarantor (if any), in each case similar to
the Issuer.
"PERSON" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of November 9, 1999, by and among the Guarantor, the
Issuer and the Initial Purchaser named therein, as such agreement may be
amended, modified or supplemented from time to time.
4
<PAGE>
"RESPONSIBLE OFFICER" shall mean, with respect to a Person, any
officer with direct responsibility for the administration of any matters
relating to this Series B Capital Securities Guarantee.
"SUCCESSOR CAPITAL SECURITIES GUARANTEE TRUSTEE" shall mean a
successor Capital Securities Guarantee Trustee possessing the qualifications
to act as Capital Securities Guarantee Trustee under Section 4.1.
"TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, as
amended.
"TRUST SECURITIES" shall mean the Common Securities and the Series A
Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 1.2 TRUST INDENTURE ACT; APPLICATION
(1) This Series B Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions.
(2) If and to the extent that any provision of this Series B Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed
by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control. If any provision of this Series B Capital Securities
Guarantee modifies or excludes any provision of the Trust Indenture Act that
may be so modified or excluded, the modified or excluded provision of the
Trust Indenture Act shall be deemed to apply to this Series B Capital
Securities Guarantee as so modified or excluded, as the case may be.
SECTION 1.3 LISTS OF HOLDERS OF SECURITIES
(1) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Series B Capital Securities) with a list, in such form as
the Capital Securities Guarantee Trustee may reasonably require, of the names
and addresses of the Holders of the Series B Capital Securities ("List of
Holders") as of such date, (i) within fourteen (14) days after each record
date for payment of Distributions (as defined in the Declaration), and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Capital Securities Guarantee Trustee;
PROVIDED, HOWEVER, that the Guarantor shall not be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Capital Securities Guarantee Trustee by
the Guarantor. The Capital Securities Guarantee Trustee may destroy any List
of Holders previously given to it upon receipt of a new List of Holders.
(2) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 31l(a), 31l(b) and Section 312(b) of the Trust
Indenture Act.
5
<PAGE>
SECTION 1.4 REPORTS BY THE CAPITAL SECURITIES GUARANTEE TRUSTEE
Within 60 days after the date hereof, and no later than the
anniversary date hereof in each succeeding year, the Capital Securities
Guarantee Trustee shall provide to the Holders of the Series B Capital
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the
Trust Indenture Act. The Capital Securities Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 1.5 PERIODIC REPORTS
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as are required by Section
314 (if any) and the compliance certificate required by Section 314 of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act. Delivery of such reports, information
and documents to the Capital Securities Guarantee Trustee is for
informational purposes only and the Capital Securities Guarantee Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Guarantor's compliance with any of its covenants hereunder (as
to which the Capital Securities Guarantee Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 1.6 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with the conditions precedent, if any,
provided for in this Series B Capital Securities Guarantee that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 1.7 WAIVER OF EVENTS OF DEFAULT
The Holders of a Majority in Liquidation Amount of the Series B
Capital Securities may, by vote, on behalf of the Holders of all of the
Series B Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Series B Capital Securities Guarantee,
but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 1.8 NOTICE OF EVENTS OF DEFAULT
(1) The Capital Securities Guarantee Trustee shall, within 10
Business Days after the occurrence of an Event of Default with respect to
this Series B Capital Securities Guarantee actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee, transmit by mail, first
class postage prepaid, to all Holders of the Series B Capital Securities,
notices of all such Events of Default, unless such Events of Default have
been cured before the giving of such notice; PROVIDED, HOWEVER, that, except
in the case of an Event of Default arising from the non-payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer
of the Capital Securities Guarantee Trustee in good
6
<PAGE>
faith determines that the withholding of such notice is in the interests of
the Holders of the Series B Capital Securities.
(2) The Capital Securities Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice, or a Responsible
Officer of the Capital Securities Guarantee Trustee charged with the
administration of the Declaration shall have obtained actual knowledge, of
such Event of Default.
SECTION 1.9 CONFLICTING INTERESTS
The Declaration shall be deemed to be specifically described in this
Series B Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 1.10 POWERS AND DUTIES OF THE CAPITAL SECURITIES GUARANTEE
TRUSTEE
(1) This Series B Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders of the
Series B Capital Securities, and the Capital Securities Guarantee Trustee
shall not transfer this Series B Capital Securities Guarantee to any Person
except a Holder of the Series B Capital Securities exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Securities
Guarantee Trustee on acceptance by such Successor Capital Securities
Guarantee Trustee of its appointment to act as Successor Capital Securities
Guarantee Trustee. The right, title and interest of the Capital Securities
Guarantee Trustee shall automatically vest in any Successor Capital
Securities Guarantee Trustee, and such vesting and succession of title shall
be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Capital Securities
Guarantee Trustee.
(2) If an Event of Default actually known to a Responsible Officer
of the Capital Securities Guarantee Trustee has occurred and is continuing,
the Capital Securities Guarantee Trustee shall enforce this Series B Capital
Securities Guarantee for the benefit of the Holders of the Series B Capital
Securities.
(3) The Capital Securities Guarantee Trustee, before the occurrence
of any Event of Default (of which, other than a default in respect of any
Guarantee Payment, a Responsible Officer of the Property Trustee has actual
knowledge) and after the curing of all such Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Series B Capital Securities Guarantee, and no implied covenants
or obligations shall be read into this Series B Capital Securities Guarantee
against the Capital Securities Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and
is actually known to a Responsible Officer of the Capital Securities
Guarantee Trustee, the Capital Securities Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Series B Capital
Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a
7
<PAGE>
prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(4) No provision of this Series B Capital Securities Guarantee shall
be construed to relieve the Capital Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(1) prior to the occurrence of any Event of Default (of which,
other than a default in respect of any Guarantee Payment, a Responsible
Officer of the Property Trustee has actual knowledge) and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Securities Guarantee
Trustee shall be determined solely by the express provisions of this
Series B Capital Securities Guarantee, and the Capital Securities
Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Series B Capital Securities Guarantee, and no implied covenants or
obligations shall be read into this Series B Capital Securities
Guarantee against the Capital Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Capital Securities Guarantee Trustee and
conforming to the requirements of this Series B Capital Securities
Guarantee; PROVIDED, HOWEVER, that in the case of any such certificates
or opinions that by any provision hereof are specifically required to
be furnished to the Capital Securities Guarantee Trustee, the Capital
Securities Guarantee Trustee shall be under a duty to examine the same
to determine whether or not on their face they conform to the
requirements of this Series B Capital Securities Guarantee;
(2) the Capital Securities Guarantee Trustee shall not be liable
for any errors of judgment made in good faith by a Responsible Officer
of the Capital Securities Guarantee Trustee, unless it shall be proved
that the Capital Securities Guarantee Trustee or such Responsible
Officer was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(3) the Capital Securities Guarantee Trustee shall not be liable
with respect to any actions taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Series B Capital Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Capital Securities Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee; and
(4) no provision of this Series B Capital Securities Guarantee
shall require the Capital Securities Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers, if the Capital Securities Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Series B Capital Securities Guarantee or indemnity, reasonably
8
<PAGE>
satisfactory to the Capital Securities Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 1.11 CERTAIN RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE
(1) Subject to the provisions of Section 3.1:
(1) the Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
(2) any direction or act of the Guarantor contemplated by this
Series B Capital Securities Guarantee may be sufficiently evidenced by
an Officers' Certificate;
(3) whenever, in the administration of this Series B Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate, which, upon receipt of
such request, shall be promptly delivered by the Guarantor;
(4) the Capital Securities Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument or other
document (or any rerecording, refiling or registration thereof);
(5) the Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion; and such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees; and the Capital
Securities Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Series B Capital
Securities Guarantee from any court of competent jurisdiction;
(6) the Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Series B Capital Securities Guarantee at the request or direction of
any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee, PROVIDED, HOWEVER, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Capital Securities Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Series B Capital
Securities Guarantee;
9
<PAGE>
(7) the Capital Securities Guarantee Trustee shall have no
obligation to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit;
(8) the Capital Securities Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Capital Securities Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such person
appointed with due care by it hereunder;
(9) any action taken by the Capital Securities Guarantee Trustee
or its agents hereunder shall bind the Holders of the Series B Capital
Securities, and the signature of the Capital Securities Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action; and no third party shall be required to
inquire as to the authority of the Capital Securities Guarantee Trustee
to so act or as to its compliance with any of the terms and provisions
of this Series B Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Securities Guarantee Trustee's or
its agent's taking such action;
(10) whenever in the administration of this Series B Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Series B Capital
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions; and
(11) the Capital Securities Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Series B Capital Securities Guarantee.
(2) No provision of this Series B Capital Securities Guarantee shall
be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power,
duty or obligation conferred or imposed on it in any jurisdiction in which it
shall be illegal, or in which the Capital Securities Guarantee Trustee shall
be unqualified or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Capital
Securities Guarantee Trustee shall be construed to be a duty.
SECTION 1.12 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SERIES A
CAPITAL SECURITIES GUARANTEE
The recitals contained in this Series B Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any
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responsibility for their correctness. The Capital Securities Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Series B Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 1.13 CAPITAL SECURITIES GUARANTEE TRUSTEE; ELIGIBILITY
(1) There shall at all times be a Capital Securities Guarantee
Trustee that shall
(1) not be an Affiliate of the Guarantor; and
(2) be a corporation or other Person organized and doing
business under the laws of the United States of America or any state
or territory thereof or of the District of Columbia, or a
corporation or other Person permitted by the Securities and Exchange
Commission to act as an indenture trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least fifty million U.S.
dollars ($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of Columbia authority; it
being understood that if such corporation or other Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii) and to the
extent permitted by the Trust Indenture Act, the combined capital
and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(2) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Securities
Guarantee Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).
(3) If the Capital Securities Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall
in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 1.14 APPOINTMENT, REMOVAL AND RESIGNATION OF CAPITAL
SECURITIES GUARANTEE TRUSTEE
(1) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(2) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee
and delivered to the Guarantor.
(3) The Capital Securities Guarantee Trustee shall hold office until
a Successor Capital Securities Guarantee Trustee shall have been appointed,
subject to Section 4.1, or until its removal or
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<PAGE>
resignation. The Capital Securities Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Capital Securities Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital
Securities Guarantee Trustee has been appointed, subject to Section 4.1, and
has accepted such appointment by instrument in writing executed by such
Successor Capital Securities Guarantee Trustee and delivered to the Guarantor
and the resigning Capital Securities Guarantee Trustee.
(4) If no Successor Capital Securities Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Capital
Securities Guarantee Trustee.
(5) No Capital Securities Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(6) Upon termination of this Series B Capital Securities Guarantee
or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Securities Guarantee Trustee all amounts due to the Capital Securities
Guarantee Trustee accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 1.15 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 1.16 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Series B
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 1.17 OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor
under this Series B Capital Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
<PAGE>
(1) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;
(2) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Series B Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Series B Capital Securities;
(3) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(4) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(5) any invalidity of, or defect or deficiency in, the Series B
Capital Securities;
(6) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(7) the consummation of the Exchange Offer (subject to Section 7.1
hereof); or
(8) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor;
it being the intent of this Section 5.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any
of the foregoing.
SECTION 1.18 RIGHTS OF HOLDERS
(1) The Holders of a Majority in Liquidation Amount of the Series B
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.
(2) If the Capital Securities Guarantee Trustee fails to enforce
this Series B Capital Securities Guarantee, any Holder of the Series B
Capital Securities may institute a legal proceeding directly against the
Guarantor to enforce the Capital Securities Guarantee Trustee's rights under
this Series B Capital Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Capital Securities Guarantee Trustee or
any other person or entity. The Guarantor waives any right or remedy to
require that any action be brought first against the Issuer or any other
person or entity before proceeding directly against the Guarantor.
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SECTION 1.19 GUARANTEE OF PAYMENT
This Series B Capital Securities Guarantee creates a
guarantee of payment and not of collection.
SECTION 1.20 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Series B Capital Securities against the Issuer in respect of
any amounts paid to such Holders by the Guarantor under this Series B Capital
Securities Guarantee; PROVIDED, HOWEVER, that the Guarantor shall not (except
to the extent required by mandatory provisions of law) be entitled to enforce
or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Series B Capital Securities Guarantee, if, at the time of
any such payment, any amounts are due and unpaid under this Series B Capital
Securities Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 1.21 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder
are independent of the obligations of the Issuer with respect to the Series B
Capital Securities, and that the Guarantor shall be liable as principal and
as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Series B Capital Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 1.22 LIMITATION OF TRANSACTIONS
So long as any Capital Securities remain outstanding, the Guarantor
shall not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Guarantor's capital stock, (ii) make any payment of principal of, or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Guarantor (including Other Debentures) that rank PARI PASSU with or
junior in right of payment to the Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Guarantor of the debt
securities of any subsidiary of the Guarantor (including Other Guarantees) if
such guarantee ranks PARI PASSU with or junior in right of payment to the
Debentures (other than (a) dividends or distributions in shares of, or
options, warrants, rights to subscribe for or purchase shares of, common
stock of the Guarantor, (b) any declaration of a dividend in connection with
the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under this Series B Capital
Securities Guarantee and the Series A Capital Securities Guarantee, (d) as a
result of a reclassification of the Guarantor's capital stock or the exchange
or the conversion of one class or series of the Guarantor's capital stock for
another class or series of the Guarantor's capital stock, (e) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock
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<PAGE>
related to the issuance of common stock or rights under any of the
Guarantor's benefit or compensation plans for its directors, officers or
employees or any of the Guarantor's dividend reinvestment plans) if at such
time (l) there shall have occurred any event of which the Guarantor has
actual knowledge that (A) is a Default or Event of Default (each as defined
in the Indenture) and (B) in respect of which the Guarantor shall not have
taken reasonable steps to cure, (2) if the Debentures are held by the
Property Trustee, the Guarantor shall be in default with respect to its
payment of any obligations under this Series B Capital Securities Guarantee
or (3) the Guarantor shall have given notice of its election of the exercise
of its right to commence an Extended Interest Payment Period as provided in
the Indenture and shall not have rescinded such notice, and such Extended
Interest Payment Period, or an extension thereof, shall have commenced and be
continuing.
SECTION 1.23 RANKING
This Series B Capital Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to Senior Indebtedness (as defined in the
Indenture), to the same extent and in the same manner that the Debentures are
subordinated to Senior Indebtedness pursuant to the Indenture, it being
understood that the terms of Article XV of the Indenture shall apply to the
obligations of the Guarantor under this Series B Capital Securities Guarantee
as if such Article XV were set forth herein in full, (ii) PARI PASSU with the
most senior preferred or preference stock now or hereafter issued by the
Guarantor and with the Series A Capital Securities Guarantee, any Other
Guarantee and, except to the extent set forth therein, the Common Securities
Guarantee, any Other Common Securities Guarantee, and any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 1.24 TERMINATION
This Series B Capital Securities Guarantee shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of all Series B Capital Securities, or (ii) dissolution, winding up or
liquidation of the Issuer, immediately following the full payment of the
amounts payable in accordance with the Declaration, or (iii) the distribution
of all of the Debentures to the Holders of the Trust Securities.
Notwithstanding the foregoing, this Series B Capital Securities Guarantee
will continue to be effective or will be reinstated, as the case may be, if
at any time any Holder of the Series B Capital Securities must restore
payment of any sums paid under the Series B Capital Securities or under this
Series B Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 1.25 EXCULPATION
(1) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason
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of any act or omission performed or omitted by such Indemnified Person in
good faith in accordance with this Series B Capital Securities Guarantee and
in a manner that such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Series B
Capital Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such
acts or omissions.
(2) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Series B Capital
Securities might properly be paid.
SECTION 1.26 COMPENSATION AND INDEMNIFICATION
The Guarantor agrees to pay to the Capital Securities
Guarantee Trustee such compensation for its services as shall be mutually
agreed upon by the Guarantor and the Capital Securities Guarantee Trustee.
The Guarantor shall reimburse the Capital Securities Guarantee Trustee upon
request for all reasonable out-of-pocket expenses incurred by it, including
the reasonable compensation and expenses of the Capital Securities Guarantee
Trustee's agents and counsel, except any expense as may be attributable to
the negligence or bad faith of the Capital Securities Guarantee Trustee.
The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, action, suit, claim or expense incurred without negligence
or bad faith on its part, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
provisions of this Section 8.2 shall survive the termination of this Series B
Capital Securities Guarantee and shall survive the resignation or removal of
the Capital Securities Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 1.27 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Series B
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit
of the Holders of the Series B Capital Securities then outstanding.
SECTION 1.28 AMENDMENTS
Except with respect to any changes that do not materially
adversely affect the rights of Holders of the Series B Capital Securities (in
which case no consent of such Holders will be
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<PAGE>
required), this Series B Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in Liquidation Amount of
the Series B Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders of the Trust Securities apply
to the giving of such approval. This Series B Capital Securities Guarantee
may not be amended, and no amendment hereof that affects the Capital
Securities Guarantee Trustee's rights, duties or immunities hereunder or
otherwise, shall be effective, unless such amendment is executed by the
Capital Securities Guarantee Trustee (which shall have no obligation to
execute any such amendment, but may do so in its sole discretion).
SECTION 1.29 NOTICES
All notices provided for in this Series B Capital
Securities Guarantee shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by first class
mail, as follows:
(1) If given to the Issuer, in care of the Administrative Trustee at
the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Capital Securities Guarantee Trustee and the
Holders of the Series B Capital Securities):
INTERWEST CAPITAL TRUST I
c/o Interwest Bancorp, Inc.
275 Southeast Pioneer Way
Oak Harbor, Washington 98277
Attention: Chief Financial Officer
Telephone: (360) 679-4181
Telecopier: (360) 675-8860
(2) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give
notice of to the Holders of the Series B Capital Securities):
WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(3) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Capital Securities Guarantee Trustee and the Holders of the Series B
Capital Securities):
INTERWEST BANCORP, INC.
275 Southeast Pioneer Way
Oak Harbor, Washington 98277
Attention: Chief Financial Officer
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<PAGE>
Telephone: (360) 679-4181
Telecopier: (360) 675-8860
(4) If given to any Holder of the Series B Capital Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 1.30 BENEFIT
This Series B Capital Securities Guarantee is solely for the benefit
of the Holders of the Series B Capital Securities and, subject to Section
3.1(a), is not separately transferable from the Series B Capital Securities.
SECTION 1.31 GOVERNING LAW
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.
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<PAGE>
This Series B Capital Securities Guarantee is executed as of the day
and year first above written.
INTERWEST BANCORP, INC.,
as Guarantor
By: ------------------------------------
Stephen M. Walden
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Capital Securities Guarantee Trustee
By: ------------------------------------
Name:
Title:
<PAGE>
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- ------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of November 9, 1999
by and among
INTERWEST BANCORP, INC,
INTERWEST CAPITAL TRUST I
and
SANDLER O'NEILL & PARTNERS, L.P.,
and
KEEFE, BRUYETTE & WOODS, INC.
as Initial Purchasers
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of November 9,1999 by and among INTERWEST BANCORP, INC, a
Washington corporation (the "COMPANY"), INTERWEST CAPITAL TRUST I, a business
trust formed under the laws of the state of Delaware (the "TRUST"), and SANDLER
O'NEILL & PARTNERS, L.P. ("SANDLER O'NEILL") and KEEFE, BRUYETTE & WOODS, INC.
("KEEFE BRUYETTE" and together with Sandler O'Neill, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated
November 9, 1999 (the "PURCHASE AGREEMENT"), by and among the Company, as issuer
of the 9.875% Junior Subordinated Deferrable Interest Debentures due November
15, 2029, Series A (the "SUBORDINATED DEBENTURES"), the Trust and the Initial
Purchasers, which provides for, among other things, the sale by the Trust to the
Initial Purchasers of 40,000 of the Trust's 9.875% Capital Securities, Series A,
liquidation amount $1,000 per Capital Security (the "CAPITAL SECURITIES"), the
proceeds of which will be used by the Trust, together with the proceeds from the
sale of the Trust's Common Securities to the Company, to purchase the
Subordinated Debentures. The Capital Securities, together with the Subordinated
Debentures and the Company's guarantee agreement in respect of the Capital
Securities (the "CAPITAL SECURITIES GUARANTEE"), are collectively referred to as
the "SECURITIES." In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company and the Trust have agreed to provide to the
Initial Purchasers and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"ADDITIONAL DISTRIBUTIONS" shall have the meaning set forth in Section
2(e) hereof.
"ADVICE" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"AFFILIATE" shall have the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"APPLICABLE PERIOD" shall have the meaning set forth in Section 3(u)
hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in New York, New York or Wilmington,
Delaware are authorized or required by law or executive order to remain
closed.
"CLOSING TIME" shall mean the Closing Time as defined in the
Purchase Agreement.
"COMPANY" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
<PAGE>
"DEBENTURES" shall collectively mean the Subordinated Debentures and
the Exchange Debentures.
"DECLARATION" or "DECLARATION OF TRUST" shall mean the Amended and
Restated Declaration of Trust of InterWest Capital Trust I, dated as of the
Closing Time, by the trustees named therein and the Company as sponsor.
"DEPOSITARY" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; PROVIDED, HOWEVER, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section 2(b)
hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXCHANGE OFFER" shall mean the offer by the Company and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like amount of Exchange Securities pursuant to
Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on SEC Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all exhibits
thereto and all documents incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2(a)
hereof.
"EXCHANGE SECURITIES" shall mean (i) with respect to the
Subordinated Debentures, the 9.875% Junior Subordinated Deferrable Interest
Debentures due November 15, 2029, Series B (the "EXCHANGE DEBENTURES")
containing terms substantially identical to the Subordinated Debentures
(except that they will not contain terms with respect to the transfer
restrictions under the Securities Act (other than requiring minimum transfers
thereof to be in blocks of $100,000 aggregate principal amount and multiples
of $1,000 in excess thereof) and will not provide for any Liquidated Damages
thereon), (ii) with respect to the Capital Securities, the Trust's 9.875%
Capital Securities, Series B, liquidation amount $1,000 per Capital Security
(the "EXCHANGE CAPITAL SECURITIES") containing terms substantially identical
to the Capital Securities (except they will not contain terms with respect to
transfer restrictions under the Securities Act (other than requiring minimum
transfers thereof to be in blocks of $100,000 aggregate liquidation amount
and multiples of $1,000 in excess thereof) and will not provide for any
increase in Additional Distributions thereon) and (iii) with respect to the
Capital Securities Guarantee, the Company's guarantee agreement in respect of
the Exchange Capital Securities (the "EXCHANGE CAPITAL SECURITIES GUARANTEE")
containing terms substantially identical to the Capital Securities Guarantee.
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"HOLDER" shall mean the Initial Purchasers, for so long as either owns
any Registrable Securities, and each of their respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"INDENTURE" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures, dated as of the Closing Time, between
the Company, as issuer, and Wilmington Trust Company, as trustee, as the same
may be amended from time to time in accordance with the terms thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble
to this Agreement.
"INSPECTORS" shall have the meaning set forth in Section 3(o) hereof.
"ISSUE DATE" shall mean November 15, 1999, the date of original
issuance of the Securities.
"LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2(e)
hereof.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
Section 3(u) hereof.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"PRIVATE EXCHANGE" shall have the meaning set forth in Section 2(a)
hereof.
"PRIVATE EXCHANGE SECURITIES" shall have the meaning set forth in
Section 2(a) hereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all documents incorporated by reference
therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the
preamble to this Agreement.
"RECORDS" shall have the meaning set forth in Section 3(o) hereof.
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"REGISTRABLE SECURITIES" shall mean the Securities and, if issued, the
Private Exchange Securities; PROVIDED, HOWEVER, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities or
Private Exchange Securities for the exchange or resale thereof, as the case may
be, shall have been declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may be, shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities or
Private Exchange Securities, as the case may be, shall have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act or are eligible to be sold without
restriction as contemplated by Rule 144(k), (iii) such Securities or Private
Exchange Securities, as the case may be, shall have ceased to be outstanding or
(iv) with respect to the Securities, such Securities shall have been exchanged
for Exchange Securities upon consummation of the Exchange Offer and are
thereafter freely tradeable by the holder thereof (other than an Affiliate of
the Company).
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of one counsel for all
underwriters or Holders as a group in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities) and compliance with
the rules of the NASD, (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and distributing
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the Company
and of the independent certified public accountants of the Company, including
the expenses of any "cold comfort" letters required by or incident to the
performance of and compliance with this Agreement, (vi) the reasonable fees and
expenses of the Trustees and their counsel and any exchange agent or custodian,
and (vii) the reasonable fees and expenses of any special experts retained by
the Company in connection with any Registration Statement.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.
"RULE 144(k) PERIOD" shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
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"SECURITIES" shall have the meaning set forth in the preamble to this
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"SHELF REGISTRATION "shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION EVENT" shall have the meaning set forth in Section
2(b) hereof.
"SHELF REGISTRATION EVENT DATE" shall have the meaning set forth in
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
"TIA" shall mean the Trust Indenture Act of 1939, as amended from time
to time.
"TRUSTEES" shall mean any and all trustees under the Declaration, the
Indenture, the Capital Securities Guarantee or the Exchange Capital Securities
Guarantee.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) EXCHANGE OFFER. Except as set forth in Section 2(b) below, the
Company and the Trust shall, for the benefit of the Holders, at the Company's
cost, use their best efforts to (i) cause to be filed with the SEC within 150
days after the Issue Date an Exchange Offer Registration Statement on an
appropriate form under the Securities Act relating to the Exchange Offer, (ii)
cause such Exchange Offer Registration Statement to be declared effective under
the Securities Act by the SEC not later than the date which is 180 days after
the Issue Date, and (iii) keep such Exchange Offer Registration Statement
effective for not less than 30 calendar days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
Holders. Promptly after the effectiveness of the Exchange Offer Registration
Statement, the Company and the Trust shall commence the Exchange Offer, it being
the objective of such Exchange Offer to enable each Holder eligible and electing
to exchange Registrable Securities for a like principal amount of Exchange
Debentures or a like liquidation amount of Exchange Capital Securities,
together with the Exchange Capital Securities Guarantee, as applicable
(provided that such Holder (w) is not an Affiliate of the Trust or the
Company, (x) is not a broker-dealer tendering Registrable Securities acquired
directly from the Trust or the Company, (y) acquires the Exchange Securities
in the ordinary course of such Holder's business and (z) has no arrangements
or understandings with any Person to participate in the Exchange Offer for
the purpose of distributing the Exchange Securities), to transfer such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and under state securities or blue sky
laws (other than requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of $100,000 and multiples
of $1,000 in excess thereof).
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In connection with the Exchange Offer, the Company and the Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"EXCHANGE PERIOD");
(iii) utilize the services of the Depositary for the Exchange Offer
with respect to Capital Securities represented by a global certificate;
(iv) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice to
Holders, a telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the amount of Securities delivered for exchange and a
statement that such Holder is withdrawing his election to have such Securities
exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
If either Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial placement, as soon as practicable upon receipt by the
Company and the Trust of a written request from such Initial Purchaser, the
Company and the Trust, as applicable, shall issue and deliver to such Initial
Purchaser in exchange (the "PRIVATE EXCHANGE") for the Securities held by such
Initial Purchaser a like liquidation amount of Exchange Capital Securities of
the Trust or, in the event the Trust is liquidated and Subordinated Debentures
are distributed, a like principal amount of the Exchange Debentures of the
Company, together with the Exchange Capital Securities Guarantee, in each case
that are identical (except that such securities may bear a customary legend with
respect to restrictions on transfer pursuant to the Securities Act)
to the Exchange Securities (the "PRIVATE EXCHANGE SECURITIES") and which are
issued pursuant to the Indenture or the Declaration (which provides that the
Exchange Securities will not be subject to the transfer restrictions set
forth in the Indenture or the Declaration, as applicable (other than
requiring minimum transfers in blocks having an aggregate principal
or liquidation amount, as the case may be, of $100,000 and multiples of $1,000
in excess thereof), and that the Exchange Securities, the Private Exchange
Securities and the Securities will vote and consent together on all matters
as one class and that none of the Exchange Securities, the Private Exchange
Securities or the Securities will have the right to vote or consent as a
separate class on any matter). The Private Exchange Securities shall be of
the same series as the Exchange Securities, and the Company and the Trust
will seek to
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cause the CUSIP Service Bureau to issue the same CUSIP numbers for the Private
Exchange Securities as for the Exchange Securities issued pursuant to the
Exchange Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Company and the Trust, as the
case requires, shall:
(i) accept for exchange all Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer or the
Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee
for cancellation all Securities or portions thereof so accepted for exchange
by the Company and the Trust; and
(iii) issue, and cause the applicable Trustee under the Indenture or
the Declaration, as applicable, to promptly authenticate and deliver to each
Holder, new Exchange Securities or Private Exchange Securities, as
applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation
amount of the Capital Securities as are surrendered by such Holder, and will
execute, and cause the applicable Trustee to execute, the Exchange Capital
Securities Guarantee.
Distributions on each Exchange Capital Security and interest
or distributions on each Exchange Debenture and Private Exchange Security
issued pursuant to the Exchange Offer and in the Private Exchange will
accumulate or accrue from the last date on which a distribution or interest
was paid on the Capital Security or the Subordinated Debenture surrendered in
exchange therefor or, if no distribution or interest has been paid on such
Capital Security or Subordinated Debenture, from the Issue Date. To the
extent not prohibited by any law or applicable interpretation of the staff of
the SEC, the Company and the Trust shall use their best efforts to complete
the Exchange Offer as provided above, and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer. The Exchange Offer shall not be
subject to any conditions other than as specified in this Agreement and those
conditions that are customary in similar exchange offers. Each Holder of
Registrable Securities who wishes to exchange such Registrable Securities for
Exchange Securities in the Exchange Offer will be required to make certain
customary representations in connection therewith, including, in the case of
any Holder of Capital Securities, representations that (i) it is not an
Affiliate of the Trust or the Company, (ii) it is not a broker-dealer
tendering Registrable Securities acquired directly from the Trust or Company,
(iii) the Exchange Securities to be received by it were acquired in the
ordinary course of its business and (iv) at the time of the Exchange Offer,
it has no arrangements or understandings with any Person to participate in
the distribution (within the meaning of the Securities Act) of the Exchange
Capital Securities. The Company and the Trust shall inform the Initial
Purchasers, after consultation with the applicable Trustees, of the names and
addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders in order to
facilitate the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
MUTATIS MUTANDIS, solely with respect to Registrable Securities that are
Private Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Company and the Trust shall have no further
obligation to
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register the Registrable Securities (other than Private Exchange Securities)
held by any Holder pursuant to Section 2(b) of this Agreement.
(b) SHELF REGISTRATION. In the event that (i) the Company or
the Trust reasonably determine, after conferring with counsel (which may be
in-house counsel), that the Exchange Offer Registration provided in Section
2(a) above is not available under applicable law and regulations and
currently prevailing interpretations of the staff of the SEC, (ii) the
Company shall determine in good faith that there is a reasonable likelihood
that, or a material uncertainty exists as to whether, consummation of the
Exchange Offer would result in (x) the Trust becoming subject to federal
income tax with respect to income received or accrued on the Debentures, (y)
the interest payable by the Company on the Debentures not being deductible by
the Company for United States federal income tax purposes or (z) the Trust
becoming subject to more than a DE MINIMIS amount of other taxes, duties or
governmental charges, (iii) the Exchange Offer Registration Statement is not
declared effective within 180 days of the Issue Date or (iv) upon the request
of either Initial Purchaser with respect to any Registrable Securities held
by it, if such Initial Purchaser is not permitted, in the reasonable opinion
of Thacher Proffitt & Wood, pursuant to applicable law or applicable
interpretations of the staff of the SEC, to participate in the Exchange Offer
and thereby receive securities that are freely tradeable without restriction
under the Securities Act and applicable blue sky or state securities laws
(any of the events specified in (i), (ii), (iii) or (iv) being a "SHELF
REGISTRATION EVENT," and the date of occurrence thereof, the "SHELF
REGISTRATION EVENT DATE"), then in addition to or in lieu of conducting the
Exchange Offer contemplated by Section 2(a), as the case may be, the Company
and the Trust shall, at their cost, use their best efforts to cause to be
filed as promptly as practicable after such Shelf Registration Event Date, as
the case may be, and, in any event, within 45 days after such Shelf
Registration Event Date (provided that in no event shall such filing date be
required to be earlier than 75 days after the Issue Date), a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, and shall use their best efforts to have such Shelf
Registration Statement declared effective by the SEC as soon as practicable.
No Holder of Registrable Securities shall be entitled to include any of its
Registrable Securities in any Shelf Registration pursuant to this Agreement
unless and until such Holder agrees in writing to be bound by all of the
provisions of this Agreement applicable to such Holder and furnishes to the
Company and the Trust in writing, within 15 days after receipt of a request
therefor, such information as the Company and the Trust may, after conferring
with counsel with regard to information relating to Holders that would be
required by the SEC to be included in such Shelf Registration Statement or
Prospectus included therein, reasonably request for inclusion in any Shelf
Registration Statement or Prospectus included therein. Each Holder as to
which any Shelf Registration is being effected agrees to furnish to the
Company and the Trust all information with respect to such Holder necessary
to make the information previously furnished to the Company by such Holder
not materially misleading.
The Company and the Trust agree to use their best efforts to
keep the Shelf Registration Statement continuously effective and usable for
resales for (a) the Rule 144(k) Period in the case of a Shelf Registration
Statement filed pursuant to Section 2(b)(i), (ii) or (iii) or (b) 180 days in
the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv)
(subject in each case to extension pursuant to the last paragraph of Section
3 hereof), or for such shorter period which will terminate when all of the
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be Registrable
Securities (the "EFFECTIVENESS PERIOD"). The Company and the Trust shall not
permit any securities other than Registrable Securities
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<PAGE>
to be included in the Shelf Registration. The Company and the Trust will, in
the event a Shelf Registration Statement is declared effective, provide to
each Holder a reasonable number of copies of the Prospectus which is a part
of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration has become effective and take certain other actions as are
required to permit certain unrestricted resales of the Registrable
Securities. The Company and the Trust further agree, if necessary, to
supplement or amend the Shelf Registration Statement, if required by the
rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the Securities Act
or by any other rules and regulations thereunder for shelf registrations, and
the Company and the Trust agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
(c) EXPENSES. The Company, as issuer of the Subordinated
Debentures, shall pay all Registration Expenses in connection with any
Registration Statement filed pursuant to Section 2(a) and/or 2(b) hereof and
will reimburse the Initial Purchasers for the reasonable fees and
disbursements of Thacher Proffitt & Wood, counsel for the Initial Purchasers,
incurred in connection with the Exchange Offer and, if applicable, the
Private Exchange, and either Thacher Proffitt & Wood or any other single
counsel designated in writing by the Majority Holders to act as counsel for
the Holders of the Registrable Securities in connection with a Shelf
Registration Statement, which other counsel shall be reasonably satisfactory
to the Company. Except as provided herein, each Holder shall pay all expenses
of its counsel, underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
PROVIDED, HOWEVER, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to such Exchange Offer
Registration Statement or Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Exchange Offer Registration
Statement or Shelf Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume. The Company and the Trust will be deemed not to have used their best
efforts to cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to remain,
effective during the requisite period if either of them voluntarily takes any
action that would result in any such Registration Statement not being
declared effective or that would result in the Holders of Registrable
Securities covered thereby not being able to exchange or offer and sell such
Registrable Securities during that period, unless such action is required by
applicable law.
(e) LIQUIDATED DAMAGES AND ADDITIONAL DISTRIBUTIONS. In the
event that:
(i) neither the Exchange Offer Registration Statement is filed
with the SEC on or prior to the 150th day after the Issue Date nor a Shelf
Registration Statement is filed with the SEC on or prior to the 45th day
after the Shelf Registration Event Date in respect of a Shelf Registration
Event attributable to any of the events set forth in Sections 2(b)(i), (ii)
and (iii) (provided that in no event shall such filing date be required to be
earlier than 75 days after the Issue Date), then commencing on the day after
the applicable required filing date, liquidated damages ("LIQUIDATED
DAMAGES") shall
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accrue on the principal amount of the Subordinated Debentures, and additional
distributions ("ADDITIONAL DISTRIBUTIONS") shall accumulate on the liquidation
amount of the Trust Securities (as such term is defined in the Declaration),
each at a rate of 25 basis points per annum; or
(ii) neither the Exchange Offer Registration Statement is declared
effective by the SEC on or prior to the 180th day after the Issue Date nor a
Shelf Registration Statement is declared effective by the SEC on or prior to
the later of (A) the 40th day after the date such Shelf Registration
Statement was required to be filed and (B) the 180th day after the Issue Date,
in respect of a Shelf Registration Event attributable to any of the events
set forth in Sections 2(b)(i), (ii) and (iii), then, commencing on the day
after the applicable required effectiveness date, Liquidated Damages shall
accrue on the principal amount of the Subordinated Debentures, and Additional
Distributions shall accumulate on the liquidation amount of the Trust
Securities, each at a rate of 25 basis points per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities
for all Capital Securities or the Company has not exchanged Exchange
Debentures for all Subordinated Debentures, in each case validly tendered
during the Exchange Period, or executed the Exchange Capital Securities
Guarantee in respect of the Exchange Capital Securities, in accordance with
the terms of the Exchange Offer on or prior to the 45th day after the date on
which the Exchange Offer Registration Statement was declared effective or (B)
if applicable, the Shelf Registration Statement in respect of a Shelf
Registration Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii) has been declared effective and such Shelf
Registration Statement ceases to be effective or usable for resales (whether
as a result of an event contemplated by Section 3(e) or otherwise) at any
time prior to the expiration of the Rule 144(k) Period (other than after such
time as all Securities have been disposed of thereunder or otherwise cease to
be Registered Securities), then Liquidated Damages shall accrue on the
principal amount of Subordinated Debentures, and Additional Distributions
shall accumulate on the liquidation amount of the Trust Securities, each at a
rate of 25 basis points per annum commencing on (x) the 46th day after such
effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective or usable for resales, in the
case of (B) above;
PROVIDED, HOWEVER, that neither the Liquidated Damages rate on the
Subordinated Debentures, nor the Additional Distribution rate on the
liquidation amount of the Trust Securities, may exceed in the aggregate 25
basis points per annum; PROVIDED, FURTHER, HOWEVER, that (1) upon the filing
of the Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of
the Exchange Offer Registration Statement or a Shelf Registration Statement
(in the case of clause (ii) above) or (3) upon the exchange of Exchange
Capital Securities and Exchange Debentures for all Capital Securities and
Subordinated Debentures validly tendered and execution of the Exchange
Capital Securities Guarantee (in the case of clause (iii)(A) above) or at
such time as the Shelf Registration Statement that had ceased to remain
effective or usable for resales again becomes effective and usable for
resales (in the case of clause (iii)(B) above), Liquidated Damages on the
principal amount of the Subordinated Debentures and Additional Distributions
on the liquidation amount of the Trust Securities as a result of such clause
(or the relevant subclause thereof) shall cease to accrue and accumulate, as
the case may be.
Any amounts of Liquidated Damages and Additional Distributions
due pursuant to Section 2(e)(i), (ii) or (iii) above will be payable in cash
on the next succeeding May 15 and
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November 15, as the case may be, to Holders on the relevant record dates for
the payment of interest and distributions pursuant to the Indenture and the
Declaration, respectively.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies
available to the Holders, the Company and the Trust acknowledge that any
failure by the Company or the Trust to comply with its obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable
injury to the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Trust's
obligations under Section 2(a) and Section 2(b) hereof.
(g) DISTRIBUTION OF SUBORDINATED DEBENTURES. Notwithstanding
any other provisions of this Agreement, in the event that Subordinated
Debentures are distributed to holders of Capital Securities in liquidation of
the Trust pursuant to the Declaration, (i) all references in this Section 2
and in Section 3 to Securities, Registrable Securities and Exchange
Securities shall not include the Capital Securities and Capital Securities
Guarantee or the Exchange Capital Securities and Exchange Capital Securities
Guarantee issued or to be issued in exchange therefor in the Exchange Offer
and (ii) all requirements for any action to be taken by the Trust in this
Section 2 and in Section 3 shall cease to apply and all requirements for any
action to be taken by the Company in this Section 2 and in Section 3 shall
apply to the Subordinated Debentures and Exchange Debentures issued or to be
issued in exchange therefor in the Exchange Offer.
3. REGISTRATION PROCEDURES. In connection with the obligations
of the Company and the Trust with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Company and the Trust shall
use their best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof within
the relevant time period specified in Section 2 hereof on the appropriate
form under the Securities Act, which form (i) shall be selected by the
Company and the Trust, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling Holders
thereof and, in the case of an Exchange Offer, be available for the exchange
of Registrable Securities and (iii) shall comply as to form in all material
respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith; and use their
best efforts to cause such Registration Statement to become effective and
remain effective (and, in the case of a Shelf Registration Statement, usable
for resales) in accordance with Section 2 hereof; PROVIDED, HOWEVER, that if
(1) such filing is pursuant to Section 2(b), or (2) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Trust shall furnish to and afford the Holders of
the Registrable Securities and each such Participating Broker-Dealer, as the
case may be, covered by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity (not to exceed seven
Business Days) to review copies of all such documents (including copies of
any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed. The Company and the Trust shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto
in respect of which the Holders must be afforded an opportunity to review
prior to the filing
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of such document if the Majority Holders or such Participating Broker-Dealer,
as the case may be, their counsel or the managing underwriters, if any, shall
reasonably object in a timely manner;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
to keep such Registration Statement effective for the Effectiveness Period or
the Applicable Period, as the case may be; and cause each Prospectus to be
supplemented, if so determined by the Company or the Trust or requested by
the SEC, by any required prospectus supplement and as so supplemented to be
filed pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act, and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder applicable
to it with respect to the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or the Applicable
Period, as the case may be, in accordance with the intended method or methods
of distribution by the selling Holders thereof described in this Agreement
(including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf Registration
Statement, at least three Business Days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being
filed and advising such Holder that the distribution of Registrable
Securities will be made in accordance with the method selected by the
Majority Holders; and (ii) furnish to each Holder of Registrable Securities
included in the Shelf Registration Statement and to each underwriter of an
underwritten offering of Registrable Securities, if any, without charge, as
many copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto, and such other documents as such Holder
or underwriter may reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities; and (iii) consent to the
use of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Shelf Registration
Statement in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto;
(d) in the case of a Shelf Registration, register or
qualify the Registrable Securities under all applicable state securities or
"blue sky" laws of such jurisdictions by the time the applicable Registration
Statement is declared effective by the SEC as any Holder of Registrable
Securities covered by a Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall reasonably request in
writing in advance of such date of effectiveness, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; PROVIDED,
HOWEVER, that the Company and the Trust shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d), (ii) file any general consent to service of process in any jurisdiction
where it would not otherwise be subject to such service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not then so
subject;
(e) (1) in the case of a Shelf Registration or (2) if
Participating Broker-Dealers from whom the Company or the Trust has received
prior written notice that they will be utilizing the Prospectus contained in
the Exchange Offer Registration Statement as provided in Section 3(u)
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hereof, are seeking to sell Exchange Securities and are required to deliver
Prospectuses, promptly notify each Holder of Registrable Securities, or such
Participating Broker-Dealers, as the case may be, their counsel and the
managing underwriters, if any, and promptly confirm such notice in writing
(i) when a Registration Statement has become effective and when any
post-effective amendments thereto become effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to a
Registration Statement or Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC
or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the qualification of the
Registrable Securities or the Exchange Securities to be offered or sold by
any Participating Broker-Dealer in any jurisdiction described in paragraph
3(d) hereof or the initiation of any proceedings for that purpose, (iv) in
the case of a Shelf Registration, if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and the
Trust contained in any purchase agreement, securities sales agreement or
other similar agreement cease to be true and correct in all material
respects, (v) of the happening of any event or the failure of any event to
occur or the discovery of any facts, during the Effectiveness Period, which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which causes such Registration
Statement or Prospectus to omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and (vi) of the reasonable determination of
the Company and the Trust that a post-effective amendment to the Registration
Statement would be appropriate;
(f) obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, at least one conformed copy of each
Registration Statement relating to such Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to be sold and not bearing any restrictive legends (other than with respect
to restrictions requiring minimum transfers in blocks having an aggregate
principal or liquidation amount, as the case may be, of $100,000 and
multiples of $1,000 in excess thereof) and in such denominations (consistent
with the provisions of the Indenture and the Declaration) and registered
in such names as the selling Holders or the underwriters may reasonably
request at least two Business Days prior to the closing of any sale of
Registrable Securities pursuant to such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange
Offer Registration, promptly after the occurrence of any event specified in
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, prepare a supplement
or post-effective amendment to such Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, such
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Prospectus will not include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and to
notify each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder hereby
agrees to suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable time
prior to the filing of any document which is to be incorporated by reference
into a Registration Statement or a Prospectus after the initial filing of a
Registration Statement, provide a reasonable number of copies of such
document to the managing underwriters (if any) representing the Holders of a
majority in aggregate principal or liquidation amount, as the case may be, of
the Registrable Securities being sold, and provide copies of such documents
to the Holders promptly following the filing of such documents, and make such
of the representatives of the Company and the Trust, as shall be reasonably
requested by such managing underwriters, available for discussion of such
document;
(k) obtain a CUSIP number for all Exchange Capital
Securities and the Capital Securities (and, if the Trust has made a
distribution of the Subordinated Debentures to the Holders of the Capital
Securities, the Subordinated Debentures or the Exchange Debentures), as the
case may be, not later than the effective date of a Registration Statement,
and provide the applicable Trustee with certificates for the Exchange
Securities or the Registrable Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(l) cause the Indenture, the Declaration, the Capital
Securities Guarantee (in the case of a Shelf Registration) and the Exchange
Capital Securities Guarantee (in the case of an Exchange Offer Registration)
to be qualified under the TIA, in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, and effect
such changes to such documents as may be required for them to be so qualified
in accordance with the terms of the TIA and execute, and cause the applicable
Trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
such documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions in
connection therewith as are reasonably requested by the Holders of at least
25% in aggregate principal or liquidation amount, as the case may be, of the
Registrable Securities in order to expedite or facilitate the registration or
the disposition or the Registrable Securities;
(n) in the case of a Shelf Registration, whether or not an
underwriting agreement is entered into and whether or not the registration is
an underwritten registration, if requested by (x) either Initial Purchaser,
in the case where such Initial Purchaser holds Securities acquired by it as
part of its initial placement and (y) Holders of at least 25% in aggregate
principal or liquidation amount, as the case may be, of the Registrable
Securities covered thereby: (i) make such representations and warranties to
Holders of such Registrable Securities and the underwriters (if any), with
respect to the business of the Trust, the Company and the subsidiaries of the
Company as then conducted and the Registration Statement, Prospectus and
documents, if any, incorporated
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or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Company and the Trust and updates thereof (which may be in the form of a
reliance letter) in form and substance reasonably satisfactory to the
managing underwriters (if any) and the Holders of a majority in aggregate
principal or liquidation amount, as the case may be, of the Registrable
Securities being sold, addressed to each selling Holder and the underwriters
(if any) covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested
by such underwriters (it being agreed that the matters to be covered by such
opinion may be subject to customary qualifications and exceptions); (iii)
obtain "cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriters from the independent
certified public accountants of the Company and the Trust (and, if necessary,
any other independent certified public accountants of any business acquired
by the Company and the Trust for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings and such other matters as
reasonably requested by such underwriters in accordance with Statement on
Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal or liquidation amount, as the case may be, of Registrable
Securities covered by such Registration Statement and the managing
underwriters) customary for such agreements with respect to all parties to be
indemnified pursuant to said Section (including, without limitation, such
underwriters and selling Holders); and in the case of an underwritten
registration, the above requirements shall be satisfied at each closing under
the related underwriting agreement or as and to the extent required
thereunder;
(o) if (l) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, make reasonably available
for inspection by any selling Holder of Registrable Securities or
Participating Broker-Dealer, as applicable, who certifies to the Company and
the Trust that it has a current intention to sell Registrable Securities
pursuant to the Shelf Registration, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney, accountant
or other agent retained by any such selling Holder, Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"INSPECTORS"), at the offices where normally kept, during the Company's
normal business hours, all financial and other records, pertinent corporate
documents and properties of the Trust, the Company and its subsidiaries
(collectively, the "RECORDS") as shall be reasonably necessary to enable them
to exercise any applicable due diligence responsibilities, and cause the
officers, directors and employees of the Trust, the Company and its
subsidiaries to supply all relevant information in each case reasonably
requested by any such Inspector in connection with such Registration
Statement; records and information which the Company and the Trust determine,
in good faith, to be confidential and any Records and information which it
notifies the Inspectors are confidential shall not be disclosed to any
Inspector except where (i) the disclosure of such Records or information is
necessary to avoid or correct a material misstatement or omission in such
Registration Statement, (ii) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court of competent
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<PAGE>
jurisdiction or is necessary in connection with any action, suit or
proceeding or (iii) such Records or information previously has been made
generally available to the public; each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer will be required to
agree in writing that Records and information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Trust or the
Company unless and until such is made generally available to the public
through no fault of an Inspector or a selling Holder; and each selling Holder
of such Registrable Securities and each such Participating Broker-Dealer will
be required to further agree in writing that it will, upon learning that
disclosure of such Records or information is sought in a court of competent
jurisdiction, or in connection with any action, suit or proceeding, give
notice to the Company and allow the Company at its expense to undertake
appropriate action to prevent disclosure of the Records and information
deemed confidential;
(p) comply with all applicable rules and regulations of
the SEC so long as any provision of this Agreement shall be applicable and
make generally available to its securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods,
provided that the obligations under this paragraph (p) shall be satisfied by
the timely filing of quarterly and annual reports on Forms 10-Q and 10-K
under the Exchange Act;
(q) upon consummation of an Exchange Offer or a Private
Exchange, if requested by a Trustee, obtain an opinion of counsel to the
Company addressed to the Trustee for the benefit of all Holders of
Registrable Securities participating in the Exchange Offer or the Private
Exchange, as the case may be, substantially to the effect that (i) each of
the Company and the Trust, as the case requires, has duly authorized,
executed and delivered the Exchange Securities and Private Exchange
Securities, and (ii) each of the Exchange Securities or the Private Exchange
Securities, as the case may be, constitutes a validly issued, fully paid and
nonassessable undivided beneficial ownership interest in the assets of the
Trust (in the case of an Exchange Capital Security) or a legal, valid and
binding obligation of the Company, enforceable against the Company, in
accordance with its respective terms (in the case of an Exchange Debenture
and the Exchange Capital Securities Guarantee), as the case may be (in each
case, with customary exceptions);
(r) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to the
Company or the Trust, as applicable (or to such other Person as directed by
the Company or the Trust, respectively), in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the
Company or the Trust, as applicable, shall mark, or cause to be marked, on
such Registrable Securities delivered by such Holders that such Registrable
Securities are being canceled in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be; it being understood that in
no event shall such Registrable Securities be marked as paid or otherwise
satisfied;
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<PAGE>
(s) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the NASD;
(t) take all other steps necessary to effect the registration
of the Registrable Securities covered by a Registration Statement
contemplated hereby;
(u) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," which section shall be reasonably acceptable
to the Initial Purchasers or another representative of the Participating
Broker-Dealers, and which shall contain a summary statement of the positions
taken or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that holds Registrable Securities
acquired for its own account as a result of market-making activities or other
trading activities (a "PARTICIPATING BROKER-DEALER") and that will be the
beneficial owner (as defined in Rule l3d-3 under the Exchange Act) of
Exchange Securities to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly disseminated by
the staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers or such other representative, represent
the prevailing views of the staff of the SEC, including a statement that any
such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has delivered to the
Company the notice referred to in Section 3(e), without charge, as many
copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary Prospectus, and any amendment or
supplement thereto, as such Participating Broker-Dealer may reasonably
request (each of the Company and the Trust hereby consents to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto by any Person subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement thereto),
(iii) use their best efforts to keep the Exchange Offer Registration
Statement effective and to amend and supplement the Prospectus contained
therein in order to permit such Prospectus to be lawfully delivered by all
Persons subject to the prospectus delivery requirements of the Securities Act
for such period of time as such Persons must comply with such requirements
under the Securities Act and applicable rules and regulations in order to
resell the Exchange Securities; PROVIDED, HOWEVER, that such period shall not
be required to exceed 90 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "APPLICABLE PERIOD"), and (iv)
include in the transmittal letter or similar documentation to be executed by
an exchange offeree in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account
as a result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with
any resale of Exchange Securities received in respect
of such Registrable Securities pursuant to the Exchange
Offer";
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<PAGE>
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act; and (B) in the case of any Exchange Offer Registration
Statement, the Company and the Trust agree to deliver to the Initial
Purchasers or to another representative of the Participating Broker-Dealers,
if requested by the Initial Purchasers or such other representative of
Participating Broker-Dealers, on behalf of the Participating Broker-Dealers
upon consummation of the Exchange Offer (i) an opinion of counsel in form and
substance reasonably satisfactory to the Initial Purchasers or such other
representative of the Participating Broker-Dealers, covering the matters
customarily covered in opinions requested in connection with Exchange Offer
Registration Statements and such other matters as may be reasonably requested
(it being agreed that the matters to be covered by such opinion may be
subject to customary qualifications and exceptions) and (ii) an officers'
certificate containing certifications substantially similar to those set
forth in Section 5(f) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public offering of debt
securities.
The Company or the Trust may require each seller of
Registrable Securities as to which any registration is being effected to
furnish to the Company or the Trust, as applicable, such information
regarding such seller as may be required by the staff of the SEC to be
included in a Registration Statement. The Company or the Trust may exclude
from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. The Company shall have no obligation to register,
under the Securities Act the Registrable Securities of a seller who so fails
to furnish such information.
In the case of a Shelf Registration Statement, or if
Participating Broker-Dealers who have notified the Company and the Trust that
they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in this Section 3(u) hereof, are seeking
to sell Exchange Securities and are required to deliver Prospectuses, each
Holder agrees that, upon receipt of any notice from the Company or the Trust
of the occurrence of any event specified in Section 3(e)(ii), 3(e)(iii),
3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(i) hereof or until it is advised in
writing (the "ADVICE") by the Company and the Trust that the use of the
applicable Prospectus may be resumed, and, if so directed by the Company and
the Trust, such Holder will deliver to the Company or the Trust (at the
Company's or the Trust's expense, as the case requires) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or
Exchange Securities, as the case may be, current at the time of receipt of
such notice. If the Company or the Trust shall give any such notice to
suspend the disposition of Registrable Securities or Exchange Securities, as
the case may be, pursuant to a Registration Statement, the Company and the
Trust shall use their best efforts to file and have declared effective (if an
amendment) as soon as practicable after the resolution of the related matters
an amendment or supplement to the Registration Statement and shall extend the
period during which such Registration Statement is required to be maintained
effective and usable for resales pursuant to this Agreement by the number of
days in the period from and including the date of the giving of such notice
to and including the date when the Company and the Trust shall have made
available to the Holders (x) copies of the supplemented or amended Prospectus
necessary to resume such dispositions or (y) the Advice.
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4. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with
any Registration Statement, the Company and the Trust shall, jointly and
severally, indemnify and hold harmless each Initial Purchaser, each Holder,
each underwriter who participates in an offering of the Registrable
Securities, each Participating Broker-Dealer, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
partners, directors, officers, employees and agents as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
(or any amendment or supplement thereto), covering Registrable Securities or
Exchange Securities, as applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission in the Registration Statement; provided
that (subject to Section 4(d) hereof) any such settlement is effected with
the prior written consent of the Company and the Trust; and
(iii) against any and all expenses whatsoever, as incurred
(including the fees and disbursements of counsel, except to the extent
otherwise expressly provided in Section 4(c) hereof), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under subparagraph (i) or (ii) of this
Section 4(a);
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished in writing to the Company or
the Trust by either Initial Purchaser or such Holder, underwriter or
Participating Broker-Dealer for use in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(b) Each Initial Purchaser and each Holder, underwriter or
Participating Broker-Dealer agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors and officers (including each
officer of the Company and the Trust who signed the Registration Statement),
the Trust, each of the Trustees and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any and all loss, liability, claim, damage and
expense whatsoever described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company or the Trust by such Holder, underwriter or
Participating Broker-Dealer, as the case maybe, expressly for use in such
Registration Statement (or any amendment thereto), or any such Prospectus (or
any amendment or supplement
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thereto); PROVIDED, HOWEVER, that in the case of a Shelf Registration
Statement, no such Holder shall be liable for any claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have under this Section 4 to the extent that
it is not materially prejudiced by such failure as a result thereof, and in
any event shall not relieve it from liability which it may have otherwise on
account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 4(a) or (b) above, counsel to the indemnified parties
shall be selected by such parties. An indemnifying party may participate at
its own expense in the defense of such action; PROVIDED, HOWEVER, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event
shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to local counsel), separate from their own
counsel, for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether
or not the indemnified parties are actual or potential parties thereto),
unless such settlement, compromise or consent (i) includes an unconditional
written release of each indemnified party from all liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have validly
requested an indemnifying party to reimburse the indemnified party for
reasonable fees and expenses of counsel pursuant to Section 4(a), such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 4(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unenforceable by an indemnified party
although applicable in accordance with its terms, the Company, the Trust and
the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, the Trust and the Holders, as incurred; PROVIDED,
HOWEVER, that no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any Person that was not guilty of such fraudulent misrepresentation. As
between the Company, the Trust, and the Holders, such parties shall
contribute to such aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect the relative fault of the
Company and Trust, on
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the one hand, and the Holders, on the other hand, with respect to the
statements or omissions which resulted in such loss, liability, claim, damage
or expense, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault of the Company and the Trust, on
the one hand, and of the Holders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Trust, on
the one hand, or by or on behalf of the Holders, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Trust and the
Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 4 were to be determined by
pro rata allocation or by any other method of allocation that does not take
into account the relevant equitable considerations. For purposes of this
Section 4, each Affiliate of a Holder, and each partner, director, officer,
employee and Person, if any, who controls a Holder or such Affiliate within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such Holder, and each
director of the Company, each Trustee of the Trust and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as each of the Company or the Trust.
5. PARTICIPATION IN AN UNDERWRITTEN REGISTRATION. No Holder
may participate in an underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis provided
in the underwriting arrangement approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents reasonably required under the terms of
such underwriting arrangements.
6. SELECTION OF UNDERWRITERS. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire to do so
may sell the Securities covered by such Shelf Registration in an underwritten
offering, subject to the provisions of Section 3(m) hereof. In any such
underwritten offering, the underwriter or underwriters and manager or
managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal or liquidation amount, as applicable, of
the Registrable Securities included in such offering; PROVIDED, HOWEVER, that
such underwriters and managers must be reasonably satisfactory to the Company
and the Trust.
7. MISCELLANEOUS.
(a) RULE 144 AND RULE 144A. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, the Company will file the
reports required to be filed by it under the Securities Act and Section 13(a)
or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC
thereunder; PROVIDED, HOWEVER, that if the Company ceases to be so required
to file such reports, it will, upon the request of any Holder of Registrable
Securities (a) make publicly available such information as is necessary to
permit sales of its securities pursuant to Rule 144 under the Securities Act,
(b) deliver such information to a prospective purchaser as is necessary to
permit sales of its securities pursuant to Rule 144A under the Securities Act
and (c) take such further action that is reasonable in the circumstances, in
each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, (ii) Rule 144A
under the Securities Act, as such rule may be amended
21
<PAGE>
from time to time, or (iii) any similar rules or regulations hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it
has complied with such requirements.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the Trust
has entered into, nor will the Company or the Trust on or after the date of
this Agreement enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
which otherwise conflicts with the provisions hereof. The rights granted to
the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's or the
Trust's other issued and outstanding securities under any such agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company and the Trust have obtained the
written consent of Holders of at least a majority in aggregate principal or
liquidation amount of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or departure; PROVIDED that no
amendment, modification or supplement or waiver or consent to the departure
with respect to the provisions of Section 4 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities. Notwithstanding the foregoing
sentence, (i) this Agreement may be amended, without the consent of any
Holder of Registrable Securities, by written agreement signed by the Company,
the Trust and the Initial Purchasers, to cure any ambiguity, correct or
supplement any provision of this Agreement that may be inconsistent with any
other provision of this Agreement or to make any other provisions with
respect to matters or questions arising under this Agreement which shall not
be inconsistent with other provisions of this Agreement, (ii) this Agreement
may be amended, modified or supplemented, and waivers and consents to
departures from the provisions hereof may be given, by written agreement
signed by the Company, the Trust and the Initial Purchasers to the extent
that any such amendment, modification, supplement, waiver or consent is, in
their reasonable judgment, necessary or appropriate to comply with applicable
law (including any interpretation of the Staff of the SEC) or any change
therein and (iii) to the extent any provision of this Agreement relates to an
Initial Purchaser, such provision may be amended, modified or supplemented,
and waivers or consents to departures from such provisions may be given, by
written agreement signed by such Initial Purchaser, the Company and the
Trust. Each Holder of Registrable Securities shall be bound by any amendment
or waiver effected pursuant to this Section 7(c), whether or not any notice,
writing or marking indicating such amendment or waiver appears on such
security or is delivered to such Holder.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to
each Initial Purchaser, the address set forth in the Purchase Agreement; and
(ii) if to the Company or the Trust, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 7(d).
22
<PAGE>
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED, HOWEVER, that nothing
herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Purchase Agreement, the Declaration or the Indenture. If any transferee of
any Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
(f) THIRD PARTY BENEFICIARIES. Each Holder and any Participating
Broker-Dealer shall be third party beneficiaries of the agreements made
hereunder among the Initial Purchasers, the Company and the Trust, and each
Initial Purchaser shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of Holders hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES
ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF SUCH
SUIT, ACTION OR PROCEEDING BROUGHT
23
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IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability
of any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) SECURITIES HELD BY THE COMPANY, THE TRUST OR ITS AFFILIATES.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company, the Trust or any Affiliates shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
24
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
INTERWEST BANCORP, INC.
By: /s/ Stephen M. Walden
--------------------------------------
Stephen M. Walden
President and Chief Executive Officer
INTERWEST CAPITAL TRUST I
By: INTERWEST BANCORP, INC,
as Sponsor
By: /s/ H. Glenn Mouw
---------------------------------------
H. Glenn Mouw
Executive Vice President
and Chief Financial Officer
Confirmed and accepted as of
the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: SANDLER O'NEILL & PARTNERS CORP.,
the sole general partner
By:
-------------------------------------
Catherine A. Lawton
Vice President
KEEFE, BRUYETTE & WOODS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
INTERWEST BANCORP, INC.
By:
---------------------------------------
Stephen M. Walden
President and Chief Executive Officer
INTERWEST CAPITAL TRUST I
By: INTERWEST BANCORP, INC,
as Sponsor
By:
---------------------------------------
H. Glenn Mouw
Executive Vice President
and Chief Financial Officer
Confirmed and accepted as of
the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: SANDLER O'NEILL & PARTNERS CORP.,
the sole general partner
By: /s/ Catherine A. Lawton
-------------------------------------
Catherine A. Lawton
Vice President
KEEFE, BRUYETTE & WOODS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
INTERWEST BANCORP, INC.
By:
---------------------------------------
Stephen M. Walden
President and Chief Executive Officer
INTERWEST CAPITAL TRUST I
By: INTERWEST BANCORP, INC,
as Sponsor
By:
---------------------------------------
H. Glenn Mouw
Executive Vice President
and Chief Financial Officer
Confirmed and accepted as of
the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: SANDLER O'NEILL & PARTNERS CORP.,
the sole general partner
By:
-------------------------------------
Catherine A. Lawton
Vice President
KEEFE, BRUYETTE & WOODS, INC.
By: /s/ Joseph A. Lenihan
-------------------------------------
Name: Joseph A. Lenihan
Title: Executive Vice President
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of InterWest
Bancorp, Inc. for the registration of $40,000,000 aggregate liquidation
amount of its 9.875% Capital Securities, Series B and to the incorporation by
reference therein of our report dated November 8, 1999, except for Note 24 as
to which the date is November 16, 1999, with respect to the consolidated
financial statements of InterWest Bancorp, Inc. included in its Annual Report
(Form 10-K) for the year ended September 30, 1999, filed with the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
February 10, 2000
