AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 2002
REGISTRATION NO. 333-81980
333-81980-1
333-81980-2
333-81980-3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<Table>
BANKNORTH GROUP, INC. MAINE 01-0437984
BANKNORTH CAPITAL TRUST II DELAWARE APPLIED FOR
BANKNORTH CAPITAL TRUST III DELAWARE APPLIED FOR
BANKNORTH CAPITAL TRUST IV DELAWARE APPLIED FOR
- -------------------------------- -------------------------------- --------------------------------
(Exact name of registrant (State or other jurisdiction (I.R.S. Employer
as specified in its charter) or incorporation or Identification No.)
organization)
</Table>
<Table>
WILLIAM J. RYAN
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
BANKNORTH GROUP, INC.
P.O. BOX 9540 P.O. BOX 9540
TWO PORTLAND SQUARE TWO PORTLAND SQUARE
PORTLAND, MAINE 04112-9540 PORTLAND, MAINE 04112-9540
(207) 761-8500 (207) 761-8500
- ------------------------------------------------- -------------------------------------------------
(Address, including zip code, and telephone (Name, address and telephone number, including
number, including area code, of registrants' area code, of agent for service)
principal executive offices)
</Table>
COPY TO:
<Table>
GERARD L. HAWKINS, ESQ. MICHAEL T. KOHLER, ESQ.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P. SIDLEY AUSTIN BROWN & WOOD LLP
734 15TH STREET, N.W. 875 THIRD AVENUE
WASHINGTON, D.C. 20005 NEW YORK, NEW YORK
(202) 347-0300 (212) 906-2000
</Table>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the box. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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EXPLANATORY NOTE
This registration statement contains two forms of prospectuses that we
intend to use to offer the following securities:
- our debt securities (both senior and subordinated), preferred stock,
depository shares, common stock and warrants; and
- capital securities of Banknorth Capital Trusts II, III and IV, severally,
our junior subordinated debt securities and our guarantees of the capital
securities issued severally by Banknorth Capital Trusts II, III and IV.
Each time we offer securities, we will provide you with one of these
prospectuses that will contain a general description of the offering and a
prospectus supplement that will contain specific information about the terms of
that offering.
The complete prospectus for the offering of our debt securities (both
senior and subordinated), preferred stock, depositary shares, common stock and
warrants follows immediately after this explanatory note, which is then
immediately followed by the complete prospectus for the offering of the capital
securities of Banknorth Capital Trusts II, III and IV, severally, our junior
subordinated debt securities and guarantees of the capital securities issued
severally by Banknorth Capital Trusts II, III and IV.
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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2002
PROSPECTUS
$1,000,000,000
BANKNORTH GROUP, INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
---------------------
The securities will be our equity securities or our unsecured obligations
and will not be savings accounts, deposits or other obligations of any bank or
non-bank subsidiary of ours and are not insured by the Federal Deposit Insurance
Corporation, the Bank Insurance Fund or any other government agency.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus may not be used to sell securities unless accompanied by
the applicable prospectus supplement.
The date of this prospectus is , 2002.
You should rely only on the information incorporated by reference or
provided in this prospectus. Neither we nor the underwriters have authorized
anyone else to provide you with different information. Neither we nor the
underwriters are making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
---------------------
TABLE OF CONTENTS
PROSPECTUS
<Table>
<Caption>
PAGE
----
About this Prospectus....................................... 3
Where You Can Find More Information......................... 3
Forward-Looking Statements.................................. 4
Banknorth Group, Inc. ...................................... 5
Use of Proceeds............................................. 6
Ratios of Earnings to Fixed Charges......................... 6
Supervision and Regulation.................................. 6
Description of Debt Securities.............................. 9
Description of Preferred Stock.............................. 16
Description of Depositary Shares............................ 19
Description of Common Stock................................. 21
Description of Warrants..................................... 24
Foreign Currency Risks...................................... 27
Book-entry Issuance......................................... 28
Plan of Distribution........................................ 30
Validity of Securities...................................... 31
Experts..................................................... 31
Glossary.................................................... 31
</Table>
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we, along with the
trusts, Banknorth Capital Trust II, Banknorth Capital Trust III and Banknorth
Capital Trust IV, filed with the SEC using a shelf registration process. Under
this shelf process, we may sell:
- debt securities;
- preferred stock;
- depositary shares;
- common stock; and
- warrants;
and the trusts may sell:
- capital securities (representing undivided beneficial interests in the
trusts) to the public; and
- common securities to us in one or more offerings.
The trusts will use the proceeds from the sales of the securities to buy a
series of our junior subordinated debt securities with terms that correspond to
the capital securities.
This prospectus provides you with a general description of the debt
securities, preferred stock, depositary shares, common stock and warrants. The
description of the capital securities, the junior subordinated debt securities
and our guarantee relating to the capital securities will be included in a
separate prospectus in this registration statement. Each time we sell debt
securities, preferred stock, depositary shares, common stock and warrants, we
will provide an applicable prospectus supplement that will contain specific
information about the terms of that offering. The applicable prospectus
supplement may also add, update or change information in this prospectus. You
should read this prospectus and the applicable prospectus supplement together
with the additional information described under the heading "Where You Can Find
More Information."
The registration statement that contains this prospectus (including the
exhibits to the registration statement) has additional information about us and
the securities offered under this prospectus. That registration statement can be
read at the SEC web site or at the SEC offices mentioned under the heading
"Where You Can Find More Information."
The words "Banknorth," "we," "our" and "us" refer to Banknorth Group, Inc.
and its subsidiaries, unless otherwise stated. We have also defined terms in the
glossary section at the back of this prospectus.
Unless otherwise indicated, currency amounts in this prospectus and in any
applicable prospectus supplement are stated in U.S. dollars.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities
Act of 1933 that registers the offer and sale of the securities offered by this
prospectus. The registration statement, including the accompanying exhibits
included or incorporated by reference therein, contains additional relevant
information about us. The rules and regulations of the SEC allow us to omit
certain information included in the registration statement from this prospectus.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
3
The SEC allows us to incorporate by reference the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the following documents listed below and any future filings made with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, until the termination of the offering of the securities offered hereby:
- Annual Report on Form 10-K for the year ended December 31, 2000;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001;
- Current Reports on Form 8-K filed on January 24, 2001, June 11, 2001 (as
amended on June 13, 2001 and on July 25, 2001), November 1, 2001 and
January 22, 2002; and
- the description of our common stock and our stock purchase rights
contained under the heading "Description of Banknorth Common Stock" in
the prospectus contained in our Registration Statement on Form S-4 (No.
333-66288) filed with the SEC on July 30, 2001.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Banknorth Group, Inc.
P.O. Box 9540
Two Portland Square
Portland, Maine 04112-9540
Attn: Investor Relations Department
(207) 761-8500
FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the information
incorporated by reference in this prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are
based on our management's beliefs and assumptions and on information currently
available to our management. Forward-looking statements include information
concerning our possible or assumed future results of operations and statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. Factors that could cause actual results to differ
from these forward-looking statements include, but are not limited to, the
following, as well as those discussed elsewhere in this prospectus, any
accompanying prospectus supplement and in the documents incorporated by
reference herein:
- our investments in our businesses and in our Internet development could
require additional incremental spending, and might not produce expected
deposit and loan growth and anticipated contributions to our earnings;
- general economic or industry conditions could be less favorable than
expected, resulting in a deterioration in credit quality, a change in the
allowance for loan and lease losses or a reduced demand for credit or
fee-based products and services;
- changes in the domestic interest rate environment could reduce net
interest income and could increase credit losses;
4
- the conditions of the securities markets could change, which could
adversely affect, among other things, the value or credit quality of our
assets, the availability and terms of funding necessary to meet our
liquidity needs and our ability to originate loans and leases;
- changes in the extensive laws, regulations and policies governing
financial holding companies and their subsidiaries could alter our
business environment or affect our operations;
- the potential need to adapt to industry changes in information technology
systems, on which we are highly dependent, could present operational
issues or require significant capital spending;
- competitive pressures could intensify and affect our profitability,
including as a result of continued industry consolidation, the increased
availability of financial services from non-banks, technological
developments such as the Internet or bank regulatory reform; and
- acquisitions may result in large one-time charges to income, may not
produce revenue enhancements or cost savings at levels or within time
frames originally anticipated and may result in unforeseen integration
difficulties.
You should not put undue reliance on any forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update them in light of new information or future
events except to the extent required by Federal securities laws.
BANKNORTH GROUP, INC.
We conduct business from our headquarters in Portland, Maine and, as of
December 31, 2001, 308 banking offices located in Maine, New Hampshire,
Massachusetts, Vermont, New York and Connecticut. At December 31, 2001, we had
consolidated assets of $21.1 billion and consolidated stockholders' equity of
$1.8 billion. Based on total assets at December 31, 2001, we are one of the 40
largest commercial banking organizations in the United States.
We offer a broad range of commercial, consumer banking and trust and
investment advisory services and products through Banknorth, NA, which was
formed on January 1, 2002 upon the consolidation of all nine of our banking
subsidiaries into a single national bank. Through subsidiaries of Banknorth, NA,
we also are engaged in insurance brokerage, equipment leasing and financial
planning activities.
Our profitability and market share have been enhanced in recent years
through internal growth and acquisitions of both financial and nonfinancial
institutions. We continually evaluate acquisition opportunities and frequently
conduct due diligence in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases, negotiations frequently take place
and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore, some dilution of our book value and net income per
common share may occur in connection with any future transactions. Moreover,
acquisitions commonly result in significant one-time charges against earnings,
although cost-savings, especially incident to in-market acquisitions, frequently
are anticipated.
We are a Maine corporation which is subject to extensive regulation and
supervision under federal and state banking laws. For additional information in
this regard, see "Supervision and Regulation," commencing on page 6.
Our executive offices are located at Two Portland Square, Portland, Maine
04112-9540, and our telephone number is (207) 761-8500.
Additional information about us and our subsidiaries can be obtained from
the documents incorporated by reference herein. See "Where You Can Find More
Information," commencing on page 3.
5
USE OF PROCEEDS
Unless otherwise specified in an applicable prospectus supplement, we will
use the net proceeds we receive from the sale of the securities offered by this
prospectus and the accompanying prospectus supplement for general corporate
purposes, including working capital, capital expenditures, investments in or
advances to existing or future indebtedness, repayment of maturing obligations,
replacement of outstanding indebtedness and repurchase of outstanding stock.
Pending such use, we may temporarily invest the proceeds or use them to reduce
short-term indebtedness.
The applicable prospectus supplement provides more details on the use of
proceeds of any specific offering.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods shown. For purposes of computing the ratios, earnings
represent income before income taxes and change in accounting principle, plus
fixed charges. Fixed charges include all interest expense and the proportion
deemed representative of the interest factor of rent expense. These ratios are
presented both including and excluding interest on deposits.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999 1998 1997
----- ----- ----- ----- -----
RATIO OF EARNINGS TO FIXED CHARGES:
Including interest on deposits....................... 1.63x 1.39x 1.48x 1.38x 1.44x
Excluding interest on deposits....................... 2.63x 1.90x 2.20x 2.29x 2.68x
</Table>
SUPERVISION AND REGULATION
GENERAL
Banknorth currently is registered as a bank holding company and a financial
holding company under the Bank Holding Company Act of 1956, as amended. As such,
we are subject to regulation, supervision and examination by the Federal Reserve
Board. We also are registered as a Maine financial institution holding company
under Maine law and as such are subject to regulation and examination by the
Superintendent of Banking of the State of Maine. Banknorth, NA is a national
bank subject to regulation, supervision and examination by the OCC, its
chartering authority, and by the FDIC, which insures Banknorth, NA's deposits to
the maximum extent permitted by law. The following discussion summarizes certain
aspects of those federal banking laws and regulations that affect us and our
subsidiaries.
FINANCIAL MODERNIZATION
Effective March 11, 2000, the Gramm-Leach-Bliley Act permits bank holding
companies to become financial holding companies and thereby affiliate with
securities firms and insurance companies and engage in other activities that are
financial in nature and which are not authorized for bank holding companies. A
bank holding company may become a financial holding company if each of its
subsidiary banks is well capitalized under the FDICIA prompt corrective action
provisions, is well managed and has at least a satisfactory rating under the
Community Reinvestment Act by filing a declaration with the Federal Reserve
Board that the bank holding company seeks to become a financial holding company.
No regulatory approval is required for a financial holding company to acquire a
company, other than a bank or savings association, engaged in activities that
are financial in nature or incidental to activities that are financial in
nature, as determined by the Federal Reserve Board.
The Gramm-Leach-Bliley Act defines "financial in nature" to include
securities underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities; and activities that the Federal Reserve Board has determined to be
6
closely related to banking. A national bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory Community Reinvestment Act rating. Subsidiary banks of a financial
holding company or national banks with financial subsidiaries must continue to
be well capitalized and well managed in order to continue to engage in
activities that are financial in nature without regulatory actions or
restrictions, which could include divestiture of the financial in nature
subsidiary or subsidiaries. In addition, a financial holding company or a bank
may not acquire a company that is engaged in activities that are financial in
nature unless each of the subsidiary banks of the financial holding company or
the bank has a Community Reinvestment Act rating of satisfactory or better.
BANK ACQUISITIONS
Pursuant to the Bank Holding Company Act, we are required to obtain the
prior approval of the Federal Reserve Board before acquiring more than 5% of any
class of voting stock of any bank that is not already majority owned by us.
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Interstate Banking and Branching Act"), a bank holding company became
able to acquire banks in states other than its home state beginning September
29, 1995, without regard to the permissibility of such acquisitions under state
law, but subject to any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company, prior to or following the proposed
acquisition, controls no more than 10% of the total amount of deposits of
insured depository institutions in the United States and less than 30% of such
deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, subject to certain restrictions, thereby creating interstate
branches. Pursuant to the Interstate Banking and Branching Act, a bank also may
open new branches in a state in which it does not already have banking
operations if the state enacts a law permitting such de novo branching.
CAPITAL AND OPERATIONAL REQUIREMENTS
The Federal Reserve Board, the OCC and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to U.S. banking
organizations. In addition, those regulatory agencies may from time to time
require that a banking organization maintain capital above the minimum levels,
whether because of its financial condition or actual or anticipated growth. The
Federal Reserve Board risk-based guidelines define a three-tier capital
framework. "Tier 1 capital" generally consists of common and qualifying
preferred stockholders' equity, less certain intangibles and other adjustments.
"Tier 2 capital" and "Tier 3 capital" generally consist of subordinated and
other qualifying debt, preferred stock that does not qualify as Tier 1 capital
and the allowance for credit losses up to 1.25% of risk-weighted assets.
The sum of Tier 1, Tier 2 and Tier 3 capital, less investments in
unconsolidated subsidiaries, represents qualifying "total capital," at least 50%
of which must consist of Tier 1 capital. Risk-based capital ratios are
calculated by dividing Tier 1 capital and total capital by risk-weighted assets.
Assets and off-balance sheet exposures are assigned to one of four categories of
risk weights, based primarily on relative credit risk. The minimum Tier 1
risk-based capital ratio is 4% and the minimum total risk-based capital ratio is
8%. At December 31, 2001, Banknorth's Tier 1 risk-based capital and total
risk-based capital ratios under these guidelines were in excess of 9.5% and
12.0%, respectively.
The "leverage ratio" requirement is determined by dividing Tier 1 capital
by adjusted average total assets. Although the stated minimum ratio is 3%, most
banking organizations are required to maintain ratios of at least 100 to 200
basis points above 3%. At December 31, 2001, Banknorth's leverage ratio was
7.14%.
Federal bank regulatory agencies require banking organizations that engage
in significant trading activity to calculate a capital charge for market risk.
Significant trading activity means trading activity of at least 10% of total
assets or $1 billion, whichever is smaller, calculated on a consolidated basis
for bank
7
holding companies. Federal bank regulators may apply the market risk measure to
other banks and bank holding companies as the agency deems necessary or
appropriate for safe and sound banking practices. Each agency may exclude
organizations that it supervises that otherwise meet the criteria under certain
circumstances. The market risk charge will be included in the calculation of an
organization's risk-based capital ratios.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective U.S. federal regulatory agencies
to implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became undercapitalized or
the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness related generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various federal bank regulatory agencies have adopted substantially
similar regulations that define the five capital categories identified by
FDICIA, using the total risk-based capital, Tier 1 risk-based capital and
leverage capital ratios as the relevant capital measures. Such regulations
establish various degrees of corrective action to be taken when an institution
is considered undercapitalized. Under the regulations, a "well capitalized"
institution must have a Tier 1 capital ratio of at least 6%, a total capital
ratio of at least 10% and a leverage ratio of at least 5% and not be subject to
a capital directive order. An "adequately capitalized" institution must have a
Tier 1 capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines,
Banknorth, NA is considered "well capitalized."
The Federal bank regulatory agencies also have adopted regulations which
mandate that regulators take into consideration concentrations of credit risk
and risks from non-traditional activities, as well as an institution's ability
to manage those risks, when determining the adequacy of an institution's
capital. That evaluation will be made as part of the institution's regular
safety and soundness examination. Banking agencies also have adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance sheet position) in the
determination of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. The banking agencies
do not intend to establish an explicit risk-based capital charge for interest
rate risk but will continue to assess capital adequacy for interest rate risk
under a risk assessment approach based on a combination of quantitative and
qualitative factors and have provided guidance on prudent interest rate risk
management practices.
DISTRIBUTIONS
We derive funds for cash distributions to our stockholders primarily from
dividends received from banking subsidiaries. Banknorth, NA is subject to
various general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain capital above regulatory minimums.
The appropriate U.S. federal regulatory authority is authorized to determine
under certain circumstances relating to the financial condition of the bank or
bank/financial holding company that the payment of dividends would be an unsafe
or unsound practice and to prohibit payment thereof.
8
In addition to the foregoing, the ability of us and Banknorth, NA to pay
dividends may be affected by the various minimum capital requirements and the
capital and non-capital standards established under FDICIA, as described above.
The right of us and our stockholders and creditors to participate in any
distribution of the assets or earnings of our subsidiaries is further subject to
the prior claims of creditors of such subsidiaries.
"SOURCE OF STRENGTH" POLICY
According to Federal Reserve Board policy, bank/financial holding companies
are expected to act as a source of financial strength to each subsidiary bank
and to commit resources to support each such subsidiary. This support may be
required at times when a bank/financial holding company may not be able to
provide such support. Similarly, under the cross-guarantee provisions of the
Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by
the FDIC - either as a result of default of a banking or thrift subsidiary of a
bank/financial holding company such as Banknorth or related to FDIC assistance
provided to a subsidiary in danger of default - the other banking subsidiaries
of such bank/financial holding company may be assessed for the FDIC's loss,
subject to certain exceptions.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities (other than the junior subordinated debt securities) that are offered
by this prospectus. The applicable prospectus supplement will describe the
specific terms of the series of debt securities offered under that applicable
prospectus supplement and any general terms outlined in this section that will
not apply to those debt securities.
The senior debt securities and the subordinated debt securities will be
issued under indentures to be entered into between us and the indenture trustee.
The indentures will be qualified under the Trust Indenture Act. The forms of the
indentures have been filed as exhibits to the registration statement of which
this prospectus is a part.
This section summarizes the material terms and provisions of the indentures
and the debt securities. Because this is only a summary, it does not contain all
the details found in the full text of the indentures and the debt securities. If
you would like additional information, you should read the forms of indentures
and the forms of debt securities.
GENERAL
We can issue the debt securities from time to time in one or more series.
Our board of directors will determine by a resolution, the terms of each series
of debt securities as provided in an officers' certificate or a supplemental
indenture. The applicable prospectus supplement will describe the specific terms
of the debt securities offered.
Because we are a holding company, our rights and the rights of our
creditors, including the holders of the debt securities offered in this
prospectus, to participate in the assets of any subsidiary during its
liquidation or reorganization, will be subject to the prior claims of the
subsidiary's creditors, unless we are ourselves a creditor with recognized
claims against the subsidiary. Any capital loans that we make to our bank
subsidiary would be subordinate in right of payment to deposits and to other
indebtedness of the subsidiary. Claims from creditors (other than us), on the
subsidiaries, may include long-term and medium-term debt and substantial
obligations related to deposit liabilities, federal funds purchased, securities
sold under repurchase agreements, and other short-term borrowings.
The indentures will not limit the aggregate principal amount of debt
securities that we may issue under them, nor the amount of other debt that we
may issue.
The debt securities will be unsecured and those issued under the senior
indenture will rank equally with all of our other unsecured and unsubordinated
indebtedness. The subordinated notes will be subordinated as described under the
section "Subordination of Subordinated Notes."
9
Unless the applicable prospectus supplement indicates otherwise, we will
issue the debt securities of any series only in denominations of $1,000 or
multiples of $1,000. We may issue these debt securities in the form of one or
more global securities, as described below under the section "Global
Securities."
There will be no service charge for any transfer or exchange of the debt
securities but we may require you to pay a sum sufficient to cover any tax or
other governmental charge due in connection with a transfer or exchange of the
debt securities, and we may require you to furnish appropriate endorsements and
transfer documents.
We may issue debt securities as original issue discount securities to be
sold at a substantial discount below their principal amount. If a debt security
is an original issue discount security, that means that an amount less than the
principal amount of the debt security will be due and payable if there is a
declaration of acceleration of the maturity of the debt security under the
indentures. The applicable prospectus supplement will describe the U.S. federal
income tax consequences and other special factors applicable to any debt
securities which should be considered before purchasing any original issue
discount securities.
Unless the applicable prospectus supplement indicates otherwise, we will
pay the principal of and any premium and interest on the debt securities, and
you can register the transfer of the debt securities at the principal corporate
trust office of the applicable trustee. In addition, unless the applicable
prospectus supplement indicates otherwise, we have the option to pay interest by
check mailed to registered holders of the debt securities at their registered
addresses.
The applicable prospectus supplement will describe the terms of the offered
debt securities, including some or all of the following:
- the title of the offered debt securities;
- whether the offered debt securities are senior or subordinated;
- any limit on the aggregate principal amount of the offered debt
securities;
- the price(s) (expressed as a percentage of the aggregate principal
amount) at which the offered debt securities will be issued;
- the date(s) on which the offered debt securities will mature and any
rights of extension;
- the annual rate(s), if any (which may be fixed or variable), at which the
offered debt securities will bear interest, if any, or the formula by
which this rate(s) will be determined, and the date from which this
interest will accrue;
- the dates on which the interest on the offered debt securities will be
payable and the regular related record dates;
- any mandatory or optional sinking fund or analogous provisions;
- the period(s), if any, within which and the price(s) at which the offered
debt securities may be redeemed, under any redemption provisions, at our
or your option, and other detailed terms of the optional redemption
provision;
- the currency, including euro, for the payment of principal and any
premium and interest payable on the offered debt securities, if other
than in United States dollars;
- the place(s) where the principal and any premium and interest on the
offered debt securities will be payable;
- any other event(s) of default related to the offered debt securities in
addition to or in lieu of those described under the section "events of
default;"
- the denominations in which any offered debt securities will be issuable,
if other than denominations of $1,000 or any amount in excess of it which
is an integral multiple of $1,000;
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- whether we may issue debt securities in whole or in part in the form of
one or more global securities and, if so, the identity of the depositary
for these global securities and the circumstances under which you may
exchange these global securities for securities registered in the name of
a person other than the depositary or its nominee, and transferred to a
person other than the depositary or its nominee; and
- any other terms of the offered debt securities consistent with the
provisions of the indentures.
The terms on which any offered debt securities may be convertible into or
exchangeable for other securities of Banknorth or another party will be set
forth in the prospectus supplement relating to those offered debt securities.
The terms will include provisions as to whether conversion or exchange is
mandatory, at the option of the holder or at our option. The terms may include
provisions under which the number of other securities to be received by the
holders of a series of debt securities may be adjusted.
GLOBAL SECURITIES
We can issue the debt securities of a series in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the applicable prospectus supplement. Unless the
applicable prospectus supplement indicates otherwise, we will issue these global
securities in registered form. The applicable prospectus supplement will
describe the specific terms of the depositary arrangements relating to a series
of debt securities.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of (or premium, if any) or interest on the
subordinated debt securities will be subordinate in right of payment to the
prior payment in full of all of our senior indebtedness. In some cases of
insolvency, payment of principal of (or premium, if any) and interest on the
subordinated debt securities will also be subordinated in right of payment to
the prior payment in full of all general obligations. A holder of subordinated
debt securities cannot demand or receive payment on the subordinated debt
securities unless all amounts of principal of, any premium, and interest due on
all of our senior indebtedness have been paid in full or duly provided for and,
at the time of this payment or immediately after this payment is effective:
- no event of default exists permitting the holders of the senior
indebtedness to accelerate the maturity of the senior indebtedness; or
- any event which, with notice or lapse of time or both, would become an
event of default.
If our assets are paid or distributed in connection with a dissolution,
winding-up, liquidation or reorganization, the holders of our senior
indebtedness will be entitled to receive payment in full of principal, and any
premium and interest under the terms of the senior indebtedness before any
payment is made on the subordinated debt securities. If:
- after giving effect to the subordination provisions in favor of the
holders of the senior indebtedness, and
- after paying or distributing assets to creditors,
any amount of cash, property or securities remains, and if, at that time,
creditors of general obligations have not received full payment on all amounts
due or to become due on these general obligations, this excess will first be
applied to pay in full all general obligations, before paying or distributing on
the subordinated debt securities.
The subordinated indenture defines senior indebtedness as the principal of
(or premium, if any) and interest on:
- all of our indebtedness for money borrowed, whether outstanding on the
date of execution of the subordinated indenture, or created, assumed or
incurred after that date (including any senior debt
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securities under the senior indenture). Indebtedness does not include
indebtedness that is expressly stated to rank junior or equal in right of
payment to the subordinated debt securities;
- any deferrals, renewals or extensions of senior indebtedness.
The subordinated indenture defines general obligations as all of our
obligations to pay claims of general creditors, other than:
- obligations on senior indebtedness; and
- obligations on subordinated debt securities and our indebtedness for
money borrowed ranking equally or subordinate to the subordinated debt
securities. If however, the Board of Governors of the Federal Reserve
System (or other competent regulatory agency or authority) promulgates
any rule or issues any interpretation that defines general creditor(s)
the main purpose of which is to establish a criteria for determining
whether the subordinated debt of a bank holding company is to be included
in its capital, then the term general obligations will mean obligations
to general creditors as described in that rule or interpretation.
The term claim when used in the previous definition has the meaning stated
in section 101(5) of the Bankruptcy Code.
The term indebtedness for money borrowed means any obligation of ours or
any obligation guaranteed by us to repay money borrowed, whether or not
evidenced by bonds, debt securities, notes or other written instruments, and any
deferred obligation to pay the purchase price of property or assets.
Due to the subordination described above, if we experience bankruptcy,
insolvency or reorganization, the holders of senior indebtedness can receive
more, ratably, and holders of the subordinated debt securities can receive less,
ratably, than our creditors who are not holders of senior indebtedness or of the
subordinated debt securities. This subordination will not prevent any event of
default on the subordinated debt securities from occurring. Unless the
applicable prospectus supplement(s) indicates otherwise, the subordinated
indenture does not provide any right to accelerate the payment of the principal
of the subordinated debt securities if payment of the principal or interest, or
performance of any agreement in the subordinated debt securities or subordinated
indenture is in default. See "Events of Default" below.
The subordination provisions of the subordinated indenture described in
this prospectus are included for the benefit of holders of senior indebtedness
and are not intended for creditors of general obligations. The trustee and we
can amend the subordinated indenture to reduce or eliminate the rights of
creditors of general obligations without their consent or the consent of the
holders of subordinated debt securities. The provisions of the subordinated
indenture stating that the subordinated debt securities will be subordinated in
favor of creditors of general obligations will be immediately and automatically
terminated if any of the following arises:
- the Federal Reserve Board (or other competent regulatory agency or
authority) promulgates any rule or regulation, or issues any
interpretation that:
- permits us to include the subordinated debt securities in our capital if
the debt securities were subordinated in right of payment to senior
indebtedness without regard to any of our other obligations;
- eliminates the requirement that subordinated debt of a bank holding
company must be subordinated in right of payment to its "general
creditors" to be included in capital; or
- causes the subordinated debt securities to be excluded from capital,
without regard to the subordination provisions described above; or
- any event results in us no longer being subject to the capital
requirements of bank regulatory authorities.
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RESTRICTIVE COVENANTS
Subject to the provisions described under the section "Consolidation,
Merger and Sale of Assets," the senior indenture prohibits:
- the issue, sale or other disposition of shares of or securities
convertible into, or options, warrants or rights to subscribe for or
purchase shares of, voting stock of a principal subsidiary bank;
- the merger or consolidation of a principal subsidiary bank with or into
any other corporation; or
- the sale or other disposition of all or substantially all of the assets
of a principal subsidiary bank
if, after giving effect to the transaction and issuing the maximum number of
shares of voting stock that can be issued after the conversion or exercise of
the convertible securities, options, warrants or rights, we would own, directly
or indirectly, 80% or less of the shares of voting stock of the principal
subsidiary bank or of the successor bank which acquires the assets.
In the senior indenture, we also agreed that we will not create, assume,
incur or cause to exist any pledge, encumbrance or lien, as security for
indebtedness for money borrowed on:
- any shares of or securities convertible into voting stock of a principal
subsidiary bank that we own directly or indirectly; or
- options, warrants or rights to subscribe for or purchase shares of,
voting stock of a principal subsidiary bank that we own directly or
indirectly,
without providing that the senior debt securities of all series will be equally
secured if, after treating the pledge, encumbrance or lien as a transfer to the
secured party, and after giving effect to the issuance of the maximum number of
shares of voting stock issuable after conversion or exercise of the convertible
securities, options, warrants or rights, we would own, directly or indirectly
80% or less of the shares of voting stock of the principal subsidiary bank.
The indentures define the term principal subsidiary bank as Banknorth, NA.
Unless the applicable prospectus supplement indicates otherwise, the
subordinated indenture does not contain either of the restrictive covenants
stated above, nor does it contain any other provision which restricts us from:
- incurring or becoming liable on any secured or unsecured senior
indebtedness or general obligations; or
- paying dividends or making other distributions on our capital stock; or
- purchasing or redeeming our capital stock; or
- creating any liens on our property for any purpose.
Unless the applicable prospectus supplement indicates otherwise, neither
indenture contains covenants specifically designed to protect holders from a
highly leveraged transaction in which we are involved.
EVENTS OF DEFAULT
Unless otherwise provided in any supplemental indenture or officers'
certificate relating to a specific series of debt securities, the only events
defined in the senior indenture as events of default for any series of senior
debt securities, are:
- our failure to pay any interest on any senior debt securities of a series
when due, which failure continues for 30 days;
- our failure to pay any principal of or premium on any senior debt
securities of a series when due;
- our failure to make any sinking fund payment, when due, for any senior
debt securities of a series;
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- our failure to perform any other covenant in the senior indenture (other
than a covenant included in the senior indenture solely for the benefit
of a series of senior debt securities other than that series), which
failure continues for 60 days after written notice;
- default in the payment of indebtedness for money borrowed under any
indenture or instrument under which we have or a principal subsidiary
bank has outstanding indebtedness in an amount in excess of $5,000,000
which has become due and has not been paid, or whose maturity has been
accelerated and the default has not been cured or acceleration annulled
within 60 days after written notice;
- some events of bankruptcy, insolvency or reorganization which involve us
or a principal subsidiary bank; and
- any other event of default related to the senior debt securities of that
series.
Unless otherwise provided, the only events defined in the subordinated
indenture as events of default for any series of subordinated debt securities
are:
- some events of bankruptcy, insolvency or reorganization that involve us;
- some events involving the receivership, conservatorship or liquidation of
a principal subsidiary bank; and
- any other event of default provided for the subordinated debt securities
of that series.
If an event of default occurs and is continuing on any series of debt
securities outstanding under either indenture, then either the applicable
trustee or the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series may declare the principal amount (or,
if any of the debt securities of that series are original issue discount debt
securities, the lesser portion of the principal amount of those debt securities)
of all of the debt securities of that series to be due and payable immediately,
by notice as provided in the applicable indenture. At any time after a
declaration of acceleration has been made on the debt securities of any series,
but before the applicable trustee has obtained a judgment for payment, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of that series may, under some circumstances, rescind and annul this
acceleration.
Subject to provisions in each indenture relating to the duties of the
trustee during a default, no trustee will be under any obligation to exercise
any of its rights or powers under the applicable indenture at the request or
direction of any of the holders of any series of debt securities then
outstanding under that indenture, unless the holders offer to the trustee
reasonable indemnity. The holders of a majority in aggregate principal amount of
the outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable trustee, or exercising any trust or power conferred on the
trustee.
We must furnish to each trustee, annually, a statement regarding our
performance on some of our obligations under the applicable indenture and any
default in our performance.
MODIFICATION AND WAIVER
Except as otherwise specifically provided in the applicable indenture,
modifications and amendments of an indenture generally will be permitted only
with the consent of the holders of at least a majority in aggregate principal
amount of the outstanding debt securities of each series affected by the
modification or amendment. However, none of the following modifications are
effective against any holder without the consent of the holders of each
outstanding debt security affected by the modification or amendment:
- changing the stated maturity of the principal of or any installment of
principal or interest on any debt security;
- reducing the principal amount of, or premium or interest on any debt
security;
14
- changing any of our obligations to pay additional amounts;
- reducing the amount of principal of an original issue discount debt
security that would be due and payable at declaration of acceleration of
its maturity;
- changing the place for payment where, or coin or currency in which, any
principal of, or premium or interest on, any debt security is payable;
- impairing the right to take legal action to enforce any payment of or
related to any debt security;
- reducing the percentage in principal amount of outstanding debt
securities of any series required to modify, amend, or waive compliance
with some provisions of the indenture or to waive some defaults;
- modifying the subordination provisions of the subordinated indenture in a
manner adverse to the holders; or
- modifying any of the above provisions.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of each series can waive, as far as that series is
concerned, our compliance with some restrictive provisions of the applicable
indenture.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of each series may waive any past default under the
applicable indenture, except:
- a default in the payment of principal of, or premium, or interest on any
senior debt security; or
- a default in a covenant or provision of the applicable indenture that
cannot be modified or amended without the consent of the holder of each
outstanding debt security of the series affected.
Each indenture provides that, in determining whether holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver, or whether
a quorum is present at a meeting of holders of debt securities:
- the principal amount of an original issue discount debt security
considered to be outstanding will be the amount of the principal of that
original issue discount debt security that would be due and payable as of
the date that the principal is determined at declaration of acceleration
of the maturity of that original issue discount debt security; and
- the principal amount of a debt security denominated in a foreign currency
or currency unit that is deemed to be outstanding will be the U.S. dollar
equivalent, determined on the date of original issuance for that debt
security, of the principal amount (or, in the case of an original issue
discount debt security, the U.S. dollar equivalent, determined on the
date of original issuance for that debt security, of the amount
determined as provided in the bullet point above).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Without the consent of the holders of any outstanding debt securities, we
cannot consolidate with or merge into another corporation, partnership or trust,
or convey, transfer or lease substantially all of our properties and our assets,
to a corporation, partnership or trust organized or validly existing under the
laws of any domestic jurisdiction unless:
- the successor entity assumes our obligations on the debt securities and
under the indentures;
- immediately after the transaction, we would not be in default under the
indentures and no event which, after notice or the lapse of time, would
become an event of default under the indentures, shall have occurred and
be continuing; and
- other conditions are met.
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DESCRIPTION OF PREFERRED STOCK
This section describes the general terms and provisions of the preferred
stock offered by this prospectus, other than pricing and related terms disclosed
for a particular issuance in an applicable prospectus supplement. You should
read the particular terms of any series of preferred stock we offer in any
prospectus supplement relating to such series, together with the more detailed
provisions of our articles of incorporation and the statement of resolutions
with respect to shares relating to each particular series of preferred stock,
which will be filed as an exhibit to a document incorporated by reference in the
registration statement of which this prospectus forms a part. The prospectus
supplement also will state whether any of the terms summarized below do not
apply to the series of preferred stock being offered.
GENERAL
Our articles of incorporation provide that our board of directors can
issue, without stockholder action, a maximum of 5,000,000 shares of preferred
stock, of which no shares were outstanding at December 31, 2001. This amount
includes shares issued or reserved for issuance, in one or more series and with
those terms, times and consideration as the board of directors determines. Our
board of directors can determine the following:
- the number of shares and their designation or title;
- the voting rights, if any, of the preferred stock being offered;
- rights as to dividends;
- whether and on what terms the shares are redeemable;
- the rights of holders on our dissolution, or distribution of our assets;
- whether and on what terms the shares shall have a purchase, retirement or
sinking fund;
- whether and on what terms the shares are convertible; and
- any other powers, preferences and relative, participating, optional or
other special rights, and any qualifications, limitations or restrictions
of the series.
Prior to the issuance of any series of preferred stock, our board of
directors will adopt resolutions creating and designating the series as a series
of preferred stock and the resolutions will be filed in a statement with respect
to shares as an amendment to our articles of incorporation.
The preferred stock will have the dividend, liquidation, redemption and
voting rights stated in this section unless the applicable prospectus supplement
indicates otherwise. You should read the applicable prospectus supplement
relating to the particular series of the preferred stock being offered for
specific terms, including:
- the title, stated value and liquidation preferences of the preferred
stock and the number of shares offered;
- the initial public offering price at which the preferred stock will be
issued;
- the dividend rate(s) (or method of calculation), the dividend periods,
the dates on which dividends shall be payable and whether these dividends
will be cumulative or noncumulative and, if cumulative, the dates at
which the dividends shall begin to cumulate;
- any redemption or sinking fund provisions;
- whether we have elected to offer depositary shares as described under the
section "Description of Depositary Shares;" and
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
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When we issue shares of preferred stock, the series will be fully paid and
nonassessable, meaning, the full purchase price of the outstanding shares of
preferred stock will have been paid and the holders of the shares will not be
assessed any additional monies for the shares. Unless the applicable prospectus
supplement indicates otherwise, each series of the preferred stock will rank
equally with any outstanding shares of our preferred stock and each other series
of the preferred stock. Unless the applicable prospectus supplement states
otherwise, the preferred stock will have no preemptive rights to subscribe for
any additional securities which are issued by us, meaning, the holders of shares
of preferred stock will have no right to buy any portion of the issued
securities.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
DIVIDENDS
The holders of the preferred stock of each series will be entitled to
receive cash dividends out of funds legally available, when, as and if, declared
by the board of directors or a duly authorized committee of the board of
directors, at the rates and on the dates stated in the applicable prospectus
supplement. These rates may be fixed, or variable, or both. If the dividend rate
is variable, the applicable prospectus supplement will describe the formula used
to determine the dividend rate for each dividend period. We will pay dividends
to the holders of record as they appear on our stock books on the record dates
determined by our board of directors or authorized committee. Unless the
applicable prospectus supplement indicates otherwise, dividends on any series of
preferred stock will be cumulative.
Our board of directors will not declare and pay a dividend on any of our
stock ranking as to dividends, equal with or junior to the preferred stock
unless full dividends on the preferred stock have been declared and paid (or
declared and sufficient money was set aside for payment).
Until dividends are paid in full or declared and set aside for payment on
any series of preferred stock and ranking equal with the preferred stock as to
dividends:
- we will declare all dividends pro rata among the preferred stock of each
series, so that the amount of dividends declared per share on each series
will have the same relationship to each other that accrued dividends per
share on each series of preferred stock and other preferred stock bear to
each other;
- other than the pro rata dividends, we will not declare or pay or set
aside for payment dividends, or declare or make any other distribution on
any security ranking junior to or equal with the preferred stock offered
under this prospectus as to dividends or at liquidation (except dividends
or distributions paid for in shares of, or options, warrants or rights to
subscribe or purchase shares of securities ranking junior to or equal
with the preferred stock as to dividends and at liquidation); and
- we will not redeem, purchase or otherwise acquire for any consideration
(or any monies be paid to or set aside in a sinking fund) any securities
ranking junior to or equal with the preferred stock as to dividends or at
liquidation (except by conversion into or exchange for our stock which
ranks junior to the preferred stock as to dividends and at liquidation).
We will not pay interest, or money in lieu of interest, for any dividend
payment(s) on any series of the preferred stock that are in arrears.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights,
except:
- as otherwise stated in the applicable prospectus supplement;
- as otherwise stated in the statement with respect to shares establishing
such series; or
- as required by applicable law.
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Under interpretations adopted by the Federal Reserve Board, if the holders
of any series of preferred stock become entitled to vote for the election of
directors, that series may then be considered a class of voting securities. A
holder of 25% or more of a series, or a holder of 5% or more of a series if it
otherwise exercises a controlling influence over us, may then be subject to
regulation as a bank holding company under the Bank Holding Company Act. In
addition, at the time that the series are deemed a class of voting securities,
any other bank holding company may be required to obtain the prior approval of
the Federal Reserve Board in order to acquire 5% or more of that series, and any
person other than a bank holding company may be required to obtain the prior
approval of the Federal Reserve Board to acquire 10% or more of that series.
REDEMPTION
A series of the preferred stock may be redeemable, in whole or in part, at
our option, and may be subject to mandatory redemption under a sinking fund or
otherwise as described in the applicable prospectus supplement. The preferred
stock that we redeem will be restored to the status of authorized but unissued
shares of preferred stock which we may issue in the future.
If a series of preferred stock is subject to mandatory redemption, the
applicable prospectus supplement will specify the number of shares that we will
redeem in each year and the redemption price per share together with an amount
equal to all accrued and unpaid dividends on those shares to the redemption
date. The applicable prospectus supplement will state whether the redemption
price can be paid in cash or other property. If the redemption price is to be
paid only from the net proceeds of issuing our capital stock, the terms of the
series of preferred stock may provide that, if the capital stock has not been
issued or if the net proceeds are not sufficient to pay the full redemption
price then due, the shares relating to series of the preferred stock shall
automatically and mandatorily be converted into shares of our capital stock
under the conversion provisions of the applicable prospectus supplement.
If fewer than all of the outstanding shares of any series of the preferred
stock are to be redeemed, the redemption will be made in a manner that our board
of directors decides is equitable.
Unless we default in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of such shares will terminate except
for the right to receive the redemption price.
CONVERSION AND EXCHANGE
If any series of offered preferred stock is convertible into or
exchangeable for any other class or series of our capital stock, the applicable
prospectus supplement relating to that series will include the terms and
conditions governing the conversions and exchanges.
RIGHTS AT LIQUIDATION
If we voluntarily or involuntarily liquidate, dissolve or wind up our
business, the holders of shares of each series of preferred stock and any other
securities that have rights equal to that series of preferred stock under these
circumstances, will be entitled to receive out of our assets that are available
for distribution to stockholders:
- liquidation distributions in the amount stated in the applicable
prospectus supplement; and
- all accrued and unpaid dividends (whether or not earned or declared),
before any distribution to holders of common stock or of any securities
ranking junior to the series of preferred stock.
Neither the sale of all or any part of our property and business, nor our
merger into or consolidation with any other corporation, nor the merger or
consolidation of any other corporation with or into us, will be deemed to be a
dissolution, liquidation or winding up.
If our assets are insufficient to pay all amounts to which holders of
preferred stock are entitled, we will make no distribution on the preferred
stock or on any other securities ranking equal to the preferred
18
stock unless we make a pro rata distribution to those holders. After we pay the
full amount of the liquidation distribution to which the holders are entitled,
the holders will have no right or claim to any of our remaining assets.
DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms and provisions of the depository
shares offered by this prospectus. The applicable prospectus supplement will
describe the specific terms of any issuance of depository shares. You should
read the particular terms of any depositary shares we offer in any prospectus
supplement, together with the more detailed form of depositary agreement,
including the form of depository receipt, relating thereto, which will be filed
as an exhibit to a document incorporated by reference in the registration
statement of which this prospectus forms a part. The prospectus supplement also
will state whether any of the terms summarized below do not apply to the
depository shares being offered.
GENERAL
We may offer fractional, rather than full shares of preferred stock. If we
exercise this option, we will provide for the issuance by a depositary to the
public of depositary receipts evidencing depositary shares, each of which will
represent a fractional interest (to be stated in the applicable prospectus
supplement relating to a particular series of the preferred stock) in a share of
a particular series of the preferred stock.
We will deposit the shares of any series of the preferred stock underlying
the depositary shares under a separate deposit agreement between us and a bank
or trust company selected by us, known as a Depositary, having its principal
office in the United States, and having a combined capital and surplus of at
least $50 million. The applicable prospectus supplement will provide the name
and address of the Depositary. Subject to the terms of the deposit agreement,
each owner of a depositary share will have a fractional interest in all the
rights and preferences of the preferred stock underlying the depositary share.
These rights include any dividend, voting, redemption, conversion and
liquidation rights.
While the final depositary receipts are being prepared, we may order the
Depositary, in writing, to issue temporary depositary receipts substantially
identical to the final depositary receipts although not in final form. This will
entitle the holders to all the rights relating to the final depositary receipts.
Final depositary receipts will be prepared without unreasonable delay, and the
holders of the temporary depositary receipts can exchange them for the final
depositary receipts at our expense.
WITHDRAWAL OF PREFERRED STOCK
If you surrender depositary receipts at the principal corporate trust
office of the Depositary (unless the related depositary shares have previously
been called for redemption), you are entitled to receive at that office, should
you so request, the number of shares of preferred stock and any money or other
property represented by the depositary shares. We will not issue partial shares
of preferred stock. If you deliver a number of depositary receipts evidencing a
number of depositary shares that represent more than a whole number of
depositary shares of preferred stock to be withdrawn, the Depositary will issue
you a new depositary receipt evidencing the excess number of depositary shares
at the same time that the preferred stock is withdrawn. Holders of preferred
stock will no longer be entitled to deposit these shares under the deposit
agreement or to receive depositary shares in exchange for those withdrawn shares
of preferred stock. We cannot assure you that a market will exist for the
withdrawn preferred stock.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received for the preferred stock (less any taxes required to be
withheld) to the record holders of depositary shares representing the preferred
stock in proportion to the number of depositary shares that the holders own on
the relevant record date. The Depositary will distribute only the amount that
can be distributed without attributing to
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any holder of depositary shares a fraction of one cent. The balance not
distributed will be added to and treated as part of the next sum that the
Depositary receives for distribution to record holders of depositary shares.
If there is a distribution other than in cash, the Depositary will
distribute property to the record holders of depositary shares that are entitled
to it, unless the Depositary determines that it is not feasible to make this
distribution. If this occurs, the Depositary may, with our approval, sell the
property and distribute the net proceeds from the sale to the holders of
depositary shares.
The deposit agreement will also contain provisions relating to the manner
in which any subscription or similar rights that we offer to holders of the
preferred stock will be made available to holders of depositary shares.
CONVERSION AND EXCHANGE
Unless the applicable prospectus supplement indicates otherwise, the series
of preferred stock underlying the depositary shares will not be convertible or
exchangeable into any other class or series of our capital stock.
REDEMPTION OF DEPOSITED PREFERRED STOCK
If a series of preferred stock underlying the depositary shares is subject
to redemption, we will redeem the depositary shares from the redemption proceeds
received by the Depositary, in whole or in part, on the series of preferred
stock held by the Depositary. The redemption price per depositary share will
bear the same relationship to the redemption price per share of preferred stock
that the depositary share bears to the underlying preferred stock. When we
redeem preferred stock held by the Depositary, the Depositary will redeem as of
the same redemption date, the number of depositary shares representing the
preferred stock redeemed. If less than all the depositary shares are to be
redeemed, the redemption will be made in a manner that our board of directors
decides is equitable.
From and after the date fixed for redemption, the depositary shares called
for redemption will no longer be outstanding. When the depositary shares are no
longer outstanding, all rights of the holders of depositary shares will cease,
except the right to receive money or property that the holders of the depositary
shares were entitled to receive on redemption. The payments will be made when
holders surrender their depositary receipts to the Depositary.
VOTING OF DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the Depositary will mail the information contained
in the notice to the record holders of the depositary shares relating to the
preferred stock. Each record holder of the depositary shares on the record date
(which will be the same date as the record date for the preferred stock) will be
entitled to instruct the Depositary on how the preferred stock underlying the
holder's depositary shares should be voted. The Depositary will try, if
practicable, to vote the number of shares of preferred stock underlying the
depositary shares according to the instructions received, and we will take all
action that the Depositary may consider necessary to enable the Depositary to do
so. The Depositary will not vote any preferred stock if it does not receive
specific instructions from the holders of depositary shares relating to the
preferred stock.
TAXATION
Owners of depositary shares will be treated for U.S. federal income tax
purposes as if they were owners of the preferred stock represented by the
depositary shares. Accordingly, for U.S. federal income tax purposes, they will
have the income and deductions to which they would have been entitled if they
were holders of the preferred stock. In addition:
- no gain or loss will be recognized for federal income tax purposes when
preferred stock is withdrawn in exchange for depositary shares as
provided in the deposit agreement;
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- the tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, at the exchange, be the same as the aggregate tax
basis of the depositary shares exchanged; and
- the holding period for the preferred stock in the hands of an exchanging
owner of depositary shares who held the depositary shares as a capital
asset at the time of the exchange, will include the period during which
the person owned the depositary shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
Unless otherwise provided in the applicable prospectus supplement or
required by law, the form of depositary receipt evidencing the depositary shares
and any provision of the deposit agreement may be amended at any time by an
agreement between us and the Depositary. A deposit agreement may be terminated
by either the Depositary or us only if:
- all outstanding depositary shares relating to the deposit agreement have
been redeemed; or
- there has been a final distribution on the preferred stock of the
relevant series in connection with our liquidation, dissolution or
winding up and the distribution has been distributed to the holders of
the related depositary receipts evidencing the depositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the Depositary associated with the initial deposit and any redemption of the
preferred stock. Holders of depositary shares will pay transfer and other taxes
and governmental charges, and any other charges that are stated to be their
responsibility in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering notice to us. We also
may remove the Depositary at any time. Resignations or removals will be
effective when a successor Depositary is appointed, and when the successor
accepts the appointment.
MISCELLANEOUS
The Depositary will forward to the holders of depositary shares all reports
and communications that it receives from us, and that we are required to furnish
to the holders of the preferred stock.
Neither the Depositary nor us will be liable if the Depositary is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. Our obligations and that of the
Depositary under the deposit agreement will be limited to performance in good
faith of the duties described in the deposit agreement. Neither the Depositary
nor us will be obligated to prosecute or defend any legal proceeding connected
with any depositary shares or preferred stock unless satisfactory indemnity is
furnished to the Depositary and us. The Depositary and us may rely on written
advice of counsel or accountants, or information provided by persons presenting
preferred stock for deposit, holders of depositary shares or other persons
believed to be competent and on documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
GENERAL
Banknorth is authorized to issue up to 400,000,000 shares of common stock,
par value $.01 per share. As of December 31, 2001, there were 151,220,600 shares
of Banknorth common stock issued and outstanding. Our common stock is listed on
the Nasdaq National Market under the symbol "BKNG."
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VOTING AND OTHER RIGHTS
Each share of our common stock is entitled to one vote per share, and, in
general, a majority of votes cast with respect to a matter will be sufficient to
authorize action upon routine matters. Directors are elected by a plurality of
the votes cast, and stockholders do not have the right to cumulate their votes
in the election of directors. For that reason, holders of a majority of the
shares of common stock of Banknorth entitled to vote in any election of
directors may elect all of the directors standing for election. In general,
however, a merger or dissolution of Banknorth, or the sale of all or
substantially all of its assets, must be approved by the affirmative vote of the
holders of a majority of the voting power of the outstanding voting shares and
the affirmative vote of the holders of a majority of the outstanding shares of
each class entitled to vote on the matter as a class.
NO PREEMPTIVE OR CONVERSION RIGHTS
Holders of our common stock are not entitled to any preemptive rights,
redemption privileges, sinking fund privileges or conversion rights.
FULLY PAID AND NONASSESSABLE
When we issue shares of our common stock, the shares will be fully paid and
nonassessable, meaning, the full purchase price of the shares will have been
paid and the holders of the shares will not be assessed any additional monies
for the shares.
ASSETS UPON DISSOLUTION
In the event of liquidation, holders of Banknorth common stock would be
entitled to receive proportionately any assets legally available for
distribution to our stockholders with respect to shares held by them, subject to
any prior rights of any preferred stock of Banknorth then outstanding.
DISTRIBUTIONS
Holders of our common stock are entitled to receive the dividends or
distributions that our board of directors may declare out of funds legally
available for these payments. The payment of distributions by us is subject to
the restrictions of Maine law applicable to the declaration of distributions by
a corporation. Except as otherwise provided under Maine law, a corporation
generally may declare and pay a dividend in cash or property only out of the
unreserved and unrestricted earned surplus of the corporation, or out of the
unreserved and unrestricted net earnings of the current fiscal year and the next
preceding fiscal year taken as a single period. The payment of distributions to
holders of common stock would be subject to any prior rights of outstanding
preferred stock.
As a bank/financial holding company, our ability to pay distributions is
affected by the ability of our bank subsidiary to pay dividends. The ability of
our bank subsidiary, as well as us, to pay dividends in the future currently is,
and could be further, influenced by bank regulatory requirements and capital
guidelines.
RESTRICTIONS ON OWNERSHIP
The Bank Holding Company Act generally would prohibit any company that is
not engaged in banking activities and activities that are permissible for a bank
holding company or a financial holding company from acquiring control of
Banknorth. Control is generally defined as ownership of 25% or more of the
voting stock or other exercise of a controlling influence. In addition, any
existing bank holding company would require the prior approval of the Federal
Reserve Board before acquiring 5% or more of the voting stock of Banknorth. In
addition, the Change in Bank Control Act of 1978, as amended, prohibits a person
or group of persons from acquiring "control" of a bank holding company unless
the Federal Reserve Board has been notified and has not objected to the
transaction. Under a rebuttable presumption established by the Federal Reserve
Board, the acquisition of 10% or more of a class of voting stock of a bank
holding company with a class of securities registered under Section 12 of the
Exchange
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Act, such as Banknorth, would, under the circumstances set forth in the
presumption, constitute acquisition of control of the bank holding company.
BANKNORTH DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN
Pursuant to our Dividend Reinvestment and Purchase Plan, or "DRIP," we
provide eligible stockholders with a method of investing cash dividends and
optional cash payments at 100% of the then current market price in additional
shares of our common stock without payment of any brokerage commission or
service charge. The DRIP includes some dollar limitations on participation.
Stockholders who are eligible to elect dividend reinvestment may choose to
participate in the DRIP with respect to some of their shares and not to
participate with respect to others. If stockholders choose not to participate in
the DRIP with respect to some or all of their shares, any dividends payable on
those shares will be paid in cash and will not be reinvested in our common
stock.
STOCKHOLDER RIGHTS PLAN
Banknorth is party to an amended and restated rights agreement, dated as of
July 25, 2000, with American Stock Transfer & Trust Company, as rights agent.
Pursuant to the rights agreement, each share of our common stock has attached to
it one preferred stock purchase right. Each right entitles the registered holder
to purchase from Banknorth a unit consisting of one-hundredth of a share of
Series A Junior Participating Preferred Stock, par value $.01 per share, of
Banknorth at a purchase price of $80, subject to adjustment.
The rights will not separate from our common stock, be distributed and
become exercisable until a date (the "distribution date") which will occur upon
the earlier of:
- 10 days following a public announcement that a person or group of
affiliated or associated persons, other than employee benefit plans of
Banknorth (an "acquiring person"), has acquired beneficial ownership of
15% or more of the outstanding shares of our common stock (the "stock
acquisition date"); or
- 10 business days (or such later date as may be determined by action of
the Banknorth board of directors prior to such time as any person becomes
an acquiring person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer that would result in
a person or group beneficially owning 15% or more of the outstanding
shares of our common stock.
Until a distribution date, the rights will be evidenced by the Banknorth
common stock certificates and will be transferred with and only with such
Banknorth common stock certificates, and the surrender for transfer of any
certificates for Banknorth common stock outstanding also will constitute the
transfer of the rights associated with the Banknorth common stock represented by
such certificate. The rights are not exercisable until a distribution date and
will expire at the close of business on September 25, 2009, unless earlier
redeemed by us, as described below.
Unless the rights are earlier redeemed or expire in accordance with their
terms, in the event that any person or group of affiliated or associated
persons, other than employee benefit plans of Banknorth, acquires beneficial
ownership of 15% or more of the outstanding shares of our common stock, each
holder of a right, other than rights beneficially owned by an acquiring person
(which will thereafter be null and void), will thereafter have the right to
receive upon exercise that number of shares of Banknorth common stock having a
market value of two times the exercise price of the right. In addition, unless
the rights are earlier redeemed or expire in accordance with their terms, in the
event that Banknorth is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group acquires beneficial ownership of 15% or more of the
outstanding shares of Banknorth common stock, each holder of a right, other than
rights beneficially owned by an acquiring person (which will be null and void),
will thereafter have the right to receive that number of
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shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
right.
At any time after a person becomes an acquiring person, we may exchange all
or part of the rights (other than rights which previously have been voided as
set forth above) for shares of our common stock at an exchange ratio of one
share per right, as such may be appropriately adjusted to reflect any stock
split or similar transaction.
At any time until 10 days following the stock acquisition date, we may
redeem the rights in whole, but not in part, at a price of $.01 per right.
Immediately upon the action of the Banknorth board of directors ordering
redemption of the rights, the rights will terminate and the only right of the
holders of rights will be to receive the redemption price.
The rights may have certain anti-takeover effects. The rights would cause
substantial dilution to a person or group that acquires 15% or more of the
outstanding shares of our common stock if a triggering event thereafter occurs
without the rights having been redeemed. However, the rights should not
interfere with any merger or other business combination approved by the
Banknorth board of directors because the rights are redeemable under certain
circumstances.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of common stock, preferred stock and
debt securities. Warrants may be issued separately or together with common
stock, preferred stock or debt securities offered by any prospectus supplement
and may be attached to or separate from such common stock, preferred stock or
debt securities. Each series of warrants will be issued under a separate warrant
agreement to be entered into between us and a bank or trust corporation, as
warrant agent, all as set forth in the prospectus supplement relating to the
particular issue of offered warrants. The warrant agent will act solely as our
agent in connection with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of warrants or
beneficial owners of warrants. Copies of the forms of warrant agreements,
including the forms of warrant certificates representing the warrants, are or
will be filed as exhibits to a document incorporated by reference in the
registration statement of which this prospectus forms a part.
This section describes the general terms and provisions of the warrants
offered hereby. The applicable prospectus supplement will describe the specific
terms of any issuance of warrants. You should read the particular terms of any
warrants we offer in any prospectus supplement, together with the more detailed
form of warrant agreement and the form of warrant certificate. The prospectus
supplement also will state whether any of the terms summarized below do not
apply to the warrants being offered.
GENERAL
The applicable prospectus supplement will describe the terms of the
warrants, including, in the case of warrants for the purchase of debt
securities, the following where applicable:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the debt securities purchasable upon
exercise of the warrants;
- the designation and terms of the securities with which the warrants are
issued and the number of warrants issued with each of these securities;
- the date after which the warrants and any securities issued with the
warrants will be separately transferable;
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- the principal amount of debt securities purchasable upon exercise of a
warrant and the purchase price;
- the dates on which the right to exercise the warrants begins and expires;
- the minimum or maximum amount of the warrants that may be exercised at
any one time;
- whether the warrants represented by the warrant certificate or debt
securities that may be issued upon exercise of the warrants will be
issued in registered or bearer form;
- information with respect to any book-entry procedures;
- the currency, currencies or currency units in which the offering price,
if any, and the exercise price are payable;
- a discussion of certain United States federal income tax considerations;
- any antidilution provisions of the warrants;
- any redemption or call provisions applicable to the warrants; and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
In the case of warrants for the purchase of common stock or preferred
stock, the applicable prospectus supplement will describe the terms of such
warrants, including the following where applicable:
- the title of the warrants;
- the offering price of the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the common stock or preferred stock that is
purchasable upon exercise of the warrants;
- the designation and terms of the securities with which the warrants are
issued and the number of such warrants issued with each security;
- the date after which the warrants and any securities issued with the
warrants will be separately transferable;
- the number of shares of common stock or preferred stock purchasable upon
exercise of a warrant and the purchase price;
- the dates on which the right to exercise the warrants begins and expires;
- the minimum or maximum amount of the warrants which may be exercised at
any one time;
- the currency, currencies or currency units in which the offering price,
if any, and the exercise price are payable;
- a discussion of certain United States federal income tax considerations;
- any antidilution provisions of the warrants;
- any redemption or call provisions applicable to the warrants; and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
Warrant certificates may be exchanged for new warrant certificates of
different denominations, may be presented for registration of transfer, and may
be exercised at the corporate trust office of the warrant agent or any other
office indicated in the applicable prospectus supplement. Prior to the exercise
of any warrant to purchase debt securities, holders of such warrants will not
have any of the rights of holders of
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the debt securities purchasable upon such exercise, including the right to
receive payments of principal of, premium, if any, or interest, if any, on the
debt securities purchasable upon such exercise or to enforce covenants in the
applicable indenture. Prior to the exercise of any warrants to purchase
preferred stock or common stock, holders of such warrants will not have any
rights of holders of the preferred stock or common stock purchasable upon such
exercise, including the right to receive payments of dividends, if any, on the
preferred stock or common stock purchasable upon such exercise or to exercise
any applicable right to vote.
EXERCISE OF WARRANTS
Each warrant will entitle the holder thereof to purchase such principal
amount of debt securities or shares of common stock or preferred stock, as the
case may be, at such exercise price as shall in each case be set forth in, or
calculable from, the prospectus supplement relating to the offered warrants.
After the close of business on the expiration date of the warrants (or such
later date to which such expiration date may be extended by us), unexercised
warrants will become void.
Warrants may be exercised by delivering to the warrant agent payment as
provided in the applicable prospectus supplement of the amount required to
purchase the debt securities, preferred stock or common stock, as the case may
be, purchasable upon such exercise together with certain information set forth
on the reverse side of the warrant certificate. Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt, within five business days, of the warrant certificate evidencing such
warrants. Upon receipt of such payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus supplement, we will,
as soon as practicable, issue and deliver the debt securities, preferred stock
or common stock, as the case may be, purchasable upon such exercise. If fewer
than all of the warrants represented by the warrant certificate are exercised, a
new warrant certificate will be issued for the remaining amount of warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENTS
The warrant agreements may be amended or supplemented without the consent
of the holders of the warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the warrants and that do not adversely
affect the interests of the holders of the warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable prospectus supplement, the
exercise price of, and the number of shares of common stock covered by, a common
stock warrant are subject to adjustment in certain events, including:
- the issuance of common stock as a dividend or distribution on the common
stock;
- subdivisions and combinations of the common stock;
- the issuance to all holders of common stock of capital stock rights
entitling them to subscribe for or purchase common stock within 45 days
after the date fixed for the determination of the stockholders entitled
to receive such capital stock rights, at less than the current market
price; and
- the distribution to all holders of common stock of evidences of our
indebtedness or assets (excluding certain cash dividends and
distributions described below) or rights or warrants (excluding those
referred to above).
We may, in lieu of making any adjustment in the exercise price of, and the
number of shares of common stock covered by, a common stock warrant, make proper
provision so that each holder of such common stock warrant who exercises such
common stock warrant (or any portion thereof):
- before the record date for such distribution of separate certificates,
shall be entitled to receive upon such exercise shares of common stock
issued with capital stock rights; and
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- after such record date and prior to the expiration, redemption or
termination of such capital stock rights, shall be entitled to receive
upon such exercise, in addition to the shares of common stock issuable
upon such exercise, the same number of such capital stock rights as would
a holder of the number of shares of common stock that such common stock
warrants so exercised would have entitled the holder thereof to acquire
in accordance with the terms and provisions applicable to the capital
stock rights if such common stock warrant was exercised immediately prior
to the record date for such distribution.
Common stock owned by or held for our account or any of our majority owned
subsidiaries shall not be deemed outstanding for the purpose of any adjustment.
No adjustment in the exercise price of, and the number of shares of common
stock covered by, a common stock warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions of cash dividends or
distributions to the extent paid from retained earnings. No adjustment will be
required unless such adjustment would require a change of at least 1% in the
exercise price then in effect; provided that any such adjustment not so made
will be carried forward and taken into account in any subsequent adjustment; and
provided further than any such adjustment not so made shall be made no later
than three years after the occurrence of the event requiring such adjustment to
be made or carried forward. Except as stated above, the exercise price of, and
the number of shares of common stock covered by, a common stock warrant will not
be adjusted for the issuance of common stock or any securities convertible into
or exchangeable for common stock, or securities carrying the right to purchase
any of the foregoing.
In the case of a reclassification or change of the common stock, a
consolidation or merger involving us or sale or conveyance to another
corporation of our property and assets as an entirety or substantially as an
entirety, in each case as a result of which holders of our common stock shall be
entitled to receive stock, securities, other property or assets (including cash)
with respect to or in exchange for such common stock, the holders of the common
stock warrants then outstanding will be entitled thereafter to convert such
common stock warrants into the kind and amount of shares of stock and other
securities or property which they would have received upon such
reclassification, change, consolidation, merger, sale or conveyance had such
common stock warrants been exercised immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance.
FOREIGN CURRENCY RISKS
GENERAL
We can denominate the securities of a series in, and the principal of, and
any interest or premium on, these securities can be payable in, any foreign
currencies that we may designate at the time of offering. The applicable
prospectus supplement will describe the material risks relating to a particular
series of foreign currency securities.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in foreign currency securities entails significant risks that
are not associated with a similar investment in a security denominated in U.S.
dollars. These risks include, without limitation:
- the possibility of significant changes in the rate of exchange between
the United States dollar and the currency or currency unit specified in
the applicable prospectus supplement; and
- the possibility of the imposition or modification of foreign exchange
controls by either the United States or foreign governments.
These risks generally depend on economic and political events over which we
have no control. In recent years, rates of exchange between the U.S. dollar and
some foreign currencies have been highly volatile and this volatility can be
expected in the future. Fluctuations in any particular exchange rate that
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have occurred in the past do not necessarily indicate fluctuations in the rate
that may occur during the term of any foreign currency security.
Depreciation of the specified currency applicable to a foreign currency
security against the United States dollar would result in a decrease in:
- the U.S. dollar-equivalent yield of the security (or the debt security
purchasable at the time of exercise of any warrant);
- the U.S. dollar-equivalent value of the principal repayable at maturity
of the security (or the debt security purchasable at the time of exercise
of a warrant); and
- the U.S. dollar-equivalent market value of the security.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or before the maturity of a foreign
currency security (or the maturity of the debt security issuable at the time of
exercise of a warrant). Even if there are no exchange controls, it is possible
that the specified currency for any particular foreign currency security will
not be available at the maturity of the debt security (or the maturity of the
debt security issuable at the time of exercise of a warrant) due to
circumstances beyond our control.
JUDGMENTS
If an action based on foreign currency securities was commenced in a court
of the United States, it is likely that the court would grant judgment relating
to those securities only in U.S. dollars. It is not clear, however, whether, in
granting this judgment, the rate of conversion into U.S. dollars would be
determined with reference to the date of default, the date the judgment is
rendered, or some other date. Under current New York law, a state court in the
State of New York that gives a judgment on a foreign currency security would be
required to give the judgment in the specified currency in which the foreign
currency security is denominated, and this judgment would be converted into U.S.
dollars at the exchange rate prevailing on the date of entry of the judgment.
Holders of foreign currency securities would bear the risk of exchange rate
fluctuations between the time the amount of the judgment is calculated and the
time that the applicable trustee converts U.S. dollars to the specified currency
for payment of the judgment.
LIMITED FACILITIES FOR CONVERSION
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks
generally do not offer non-U.S. dollar denominated checking or savings account
facilities in the United States. Accordingly, payments on foreign currency
securities will, unless otherwise specified in the applicable prospectus
supplement, be made from an account with a bank located in the country issuing
the specified currency or, for foreign currency securities denominated in euro,
Brussels.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the debt securities,
unless otherwise stated in the applicable prospectus supplement. We will issue
the debt securities only as fully-registered securities registered in the name
of Cede & Co. (DTC's nominee). We will issue and deposit with DTC one or more
fully-registered global certificates for the debt securities representing in the
aggregate, the total number of the debt securities.
DTC is a limited purpose trust company organized under the New York Banking
Law, a banking organization under the meaning of the New York Banking Law, a
member of the Federal Reserve System, a clearing corporation under the meaning
of the New York Uniform Commercial Code, and a clearing agency registered under
the provisions of Section 17A of the Exchange Act. DTC holds securities that its
participants deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, like transfers and pledges, in
deposited securities through electronic computerized book-entry
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changes in the participants' accounts, eliminating in this manner the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations. DTC is owned by a number of its Direct Participants and
by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Others like securities brokers
and dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly also have
access to the DTC system. The rules applicable to DTC and its participants are
on file with the SEC.
Purchases of debt securities within the DTC system must be made by or
through Direct Participants, who will receive a credit for the debt securities
on DTC's records. The ownership interest of each actual purchaser of each debt
security is in turn to be recorded on the Direct and Indirect Participants'
records. DTC will not send written confirmation to Beneficial Owners of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased debt securities. Transfers of ownership interests in the debt
securities are to be accomplished by entries made on the books of participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in debt securities, unless
the book-entry system for the debt securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the debt
securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts the debt securities are credited, which may or may not be the
Beneficial Owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners,
subject to any statutory or regulatory requirements as is in effect from time to
time, will be governed by arrangements among them.
We will send redemption notices to Cede & Co. as the registered holder of
the debt securities. If less than all of the debt securities are redeemed, DTC's
current practice is to determine by lot the amount of the interest of each
Direct Participant to be redeemed.
Although voting on the debt securities is limited to the holders of record
of the debt securities, in those instances in which a vote is required, neither
DTC nor Cede & Co. will itself consent or vote on debt securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to the relevant trustee as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to Direct Participants for whose accounts the debt
securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
The relevant trustee will make distribution payments on the debt securities
to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the payment date. Standing instructions and customary practices will govern
payments from participants to Beneficial Owners. Subject to any statutory or
regulatory requirements, participants, and not DTC, the relevant trustee, trust
or us, will be responsible for the payment. The relevant trustee is responsible
for payment of distributions to DTC. Direct and Indirect Participants are
responsible for the disbursement of the payments to the Beneficial Owners.
DTC may discontinue providing its services as securities depositary on any
of the debt securities at any time by giving reasonable notice to the relevant
trustee and to us. If a successor securities depositary is not obtained, final
debt securities certificates must be printed and delivered. We may, at our
option, decide to discontinue the use of the system of book-entry transfers
through DTC (or a successor depositary). After an event of default, the holders
of an aggregate principal amount of debt securities may
29
discontinue the system of book-entry transfers through DTC. In this case, final
certificates for the debt securities will be printed and delivered.
We have obtained the information in this section about DTC and DTC's
book-entry system from sources that we believe to be accurate, and we assume no
responsibility for the accuracy of the information. We have no responsibility
for the performance by DTC or its participants of their respective obligations
as described in this prospectus or under the rules and procedures governing
their respective operations.
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters or dealers;
- directly to one or more purchasers; or
- through agents.
The applicable prospectus supplement will include the names of
underwriters, dealers or agents retained. The applicable prospectus supplement
will also include the purchase price of the securities, our proceeds from the
sale, any underwriting discounts or commissions and other items constituting
underwriters' compensation, and any securities exchanges on which the securities
are listed.
The underwriters will acquire the securities for their own account. They
may resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the
securities will be subject to some conditions. The underwriters will be
obligated to purchase all the securities offered if any of the securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to time.
Underwriters, dealers, and agents that participate in the distribution of
the securities may be underwriters as defined in the Securities Act, and any
discounts or commissions received by them from us and any profit on the resale
of the securities by them may be treated as underwriting discounts and
commissions under the Securities Act.
We may have agreements with the underwriters, dealers, and agents to
indemnify them against some civil liabilities, including liabilities under the
Securities Act, or to contribute to payments which the underwriters, dealers or
agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our subsidiaries in the ordinary course of their
businesses.
We may authorize underwriters, dealers and agents to solicit offers by some
specified institutions to purchase securities from us at the public offering
price stated in the applicable prospectus supplement under delayed delivery
contracts providing for payment and delivery on a specified date in the future.
These contracts will be subject only to those conditions included in the
applicable prospectus supplement, and the applicable prospectus supplement will
state the commission payable for solicitation of these contracts.
Unless the applicable prospectus supplement states otherwise, all
securities, except for common stock, will be new issues of securities with no
established trading market. Any underwriters who purchase securities from us for
public offering and sale may make a market in those securities, but these
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot assure you that the liquidity of
the trading market for any securities will be liquid.
The dealers/underwriters do not intend to make sales of the securities to
accounts over which they exercise discretionary authority without obtaining the
prior written approval of the account holder.
30
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable prospectus supplement, Elias,
Matz, Tiernan & Herrick L.L.P., Washington, D.C., will act as our legal counsel
and will pass upon the validity of any securities offered by this prospectus and
any prospectus supplement. Unless otherwise indicated in the applicable
prospectus supplement, Sidley Austin Brown & Wood LLP, New York, New York, will
act as legal counsel for any underwriters.
EXPERTS
The consolidated financial statements of Banknorth as of December 31, 2000
and 1999 and for each of the years in the three-year period ended December 31,
2000, incorporated by reference herein from Banknorth's annual report on Form
10-K for the year ended December 31, 2000, have been so incorporated in reliance
upon the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
GLOSSARY
Below are abbreviated definitions of capitalized terms used in this
prospectus and in the applicable prospectus supplement. The applicable
prospectus supplement may contain a more complete definition of some of the
terms defined here and reference should be made to the applicable prospectus
supplement for a more complete definition of these terms.
"Beneficial owner" refers to the ownership interest of each actual
purchaser of each debt security.
"Company" refers to Banknorth Group, Inc. and its subsidiaries, unless
otherwise stated.
"Depositary" refers to a bank or trust company selected by us, having its
principal office in the United States, and having a combined capital and surplus
of at least $50 million, and where we will deposit the shares of any series of
the preferred stock underlying the depositary shares under a separate deposit
agreement between us and that bank or trust company.
"Direct Participants" refers to securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations who, with the New
York Stock Exchange, Inc., the American Stock Exchange Inc., and the National
Association of Securities Dealers, Inc., own DTC. Purchases of debt securities
within the DTC system must be made by or through Direct Participants who will
receive a credit for the debt securities on DTC's records.
"Indirect Participants" refers to others, like securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly, and who
also have access to the DTC system.
"Omnibus Proxy" refers to the omnibus proxy that DTC would mail under its
usual procedures to the relevant trustee as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
Direct Participants for whose accounts the debt securities are credited on the
record date.
31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$1,000,000,000
BANKNORTH GROUP, INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
-------------------------
PROSPECTUS
-------------------------
, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2002
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY , 2002)
5,000,000 SECURITIES
BANKNORTH CAPITAL TRUST II
% Trust Preferred Securities
Fully and unconditionally guaranteed by
BANKNORTH GROUP, INC.
---------------
The % Trust Preferred Securities, each with $25 liquidation amount,
are referred to in this prospectus supplement as the "capital securities." A
brief description of the capital securities can be found under "Summary" in this
prospectus supplement.
The Trust will apply to have the capital securities listed on the New York
Stock Exchange under the symbol " ." Trading of the capital securities
is expected to commence within 30 days after the capital securities are first
issued.
YOU SHOULD CAREFULLY CONSIDER THE INFORMATION UNDER "RISK FACTORS"
BEGINNING ON PAGE S-6 IN DETERMINING WHETHER TO INVEST IN THE SECURITIES OFFERED
HEREBY.
---------------
The capital securities and the related junior subordinated debentures and
guarantee are not deposits or other obligations of a bank. They are not insured
by the FDIC or any other government agency.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
<Table>
<Caption>
PER CAPITAL
SECURITY TOTAL
----------- ------------
Public offering price...................................... $25.00 $125,000,000
Underwriting commission to be paid by Banknorth Group,
Inc...................................................... $ $
Proceeds (before expenses) to Banknorth Capital Trust II... $25.00 $125,000,000
</Table>
Any accrued distributions on the capital securities from February , 2002
will be added to the public offering price.
The underwriters also may purchase up to an additional 750,000 capital
securities at the public offering price, less the underwriting commission,
within 30 days from the date of this prospectus supplement to cover
over-allotments.
The underwriters expect to deliver the capital securities in book-entry
form only through The Depository Trust Company on or about February , 2002.
---------------
Joint Book-Running Managers
KEEFE, BRUYETTE & WOODS, INC. LEHMAN BROTHERS
A.G. EDWARDS & SONS, INC. MERRILL LYNCH & CO. PRUDENTIAL SECURITIES UBS
WARBURG
SANDLER O'NEILL & PARTNERS, L.P. STIFEL NICOLAUS U.S. BANCORP PIPER JAFFRAY
February , 2002
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<Table>
<Caption>
PAGE
----
Summary..................................................... S- 1
Risk Factors................................................ S- 6
Banknorth Group, Inc........................................ S-10
Banknorth Capital Trust II.................................. S-10
Use of Proceeds............................................. S-11
Accounting Treatment........................................ S-11
Capitalization.............................................. S-12
Selected Consolidated Financial Data........................ S-13
Certain Terms of the Capital Securities..................... S-15
Certain Terms of the Junior Subordinated Debentures......... S-20
Relationship among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee................. S-23
United States Federal Income Tax Consequences............... S-24
ERISA Considerations........................................ S-30
Underwriting................................................ S-33
Legal Opinions.............................................. S-35
Experts..................................................... S-35
PROSPECTUS
About this Prospectus....................................... 3
Where You Can Find More Information......................... 4
Forward-Looking Statements.................................. 5
Banknorth Group, Inc........................................ 6
The Trusts.................................................. 7
Ratios of Earnings to Fixed Charges......................... 8
Supervision and Regulation.................................. 8
Description of Junior Subordinated Debt Securities.......... 11
Description of Capital Securities........................... 21
Description of the Guarantee................................ 30
Relationship among the Capital Securities, the corresponding
Junior Subordinated Debt Securities and the Guarantees.... 32
Book-Entry Issuance......................................... 33
Plan of Distribution........................................ 35
Validity of Securities...................................... 36
Experts..................................................... 36
Glossary.................................................... 37
</Table>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. This
prospectus supplement and the prospectus may be used only for the purpose for
which they have been prepared. No one is authorized to give information other
than that contained in this prospectus supplement and the prospectus and in the
documents referred to in this prospectus supplement and the prospectus and which
are made available to the public. We have
(i)
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it.
We are not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information appearing in this prospectus supplement,
the prospectus or any document incorporated by reference is accurate as of any
date other than the date of the applicable document. Our business, financial
condition, results of operations and prospects may have changed since that date.
This prospectus supplement and the accompanying prospectus do not constitute an
offer, or an invitation on our behalf or on behalf of the underwriters, to
subscribe for and purchase, any of the capital securities, and may not be used
for or in connection with an offer or solicitation by anyone, in any
jurisdiction in which such an offer or solicitation is not authorized or to any
person to whom it is unlawful to make such an offer or solicitation.
(ii)
SUMMARY
The following information should be read together with the information
contained in other parts of this prospectus supplement and in the accompanying
prospectus. It may not contain all the information that is important to you. You
should carefully read this entire prospectus supplement and the accompanying
prospectus to understand fully the terms of the capital securities and the
related guarantee and junior subordinated debentures, as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the capital securities. You should pay special attention to
"Risk Factors," commencing on page S-6 of this prospectus supplement, to
determine whether an investment in the capital securities is appropriate for
you.
BANKNORTH GROUP, INC.
Banknorth is a Maine corporation that is registered as a bank holding
company and a financial holding company under the Bank Holding Company Act of
1956. We offer a broad range of commercial and consumer banking and trust and
investment advisory services and products through Banknorth, NA, which was
formed on January 1, 2002 upon the consolidation of all nine of Banknorth's
banking subsidiaries into a single national bank. Through subsidiaries of
Banknorth, NA, we also are engaged in insurance brokerage and equipment leasing
activities. At December 31, 2001, we had consolidated total assets of $21.1
billion and stockholders' equity of $1.8 billion. Based on total assets at
December 31, 2001, we are one of the 40 largest commercial banking organizations
in the United States. Our principal executive offices are located at Two
Portland Square, Portland, Maine 04112-9540, and our telephone number is (207)
761-8500.
Unless the context otherwise requires, the words "Banknorth," "we," "our"
and "us" herein refer to Banknorth Group, Inc. and its consolidated
subsidiaries.
BANKNORTH CAPITAL TRUST II
Banknorth Capital Trust II is a business trust created under Delaware law
by the trustees and us. The Trust was established solely for the following
purposes:
- issuing the capital securities, which represent undivided beneficial
ownership interests in the Trust's assets;
- issuing the common securities to us in a total liquidation amount equal
to at least 3% of the Trust's total capital;
- using the proceeds from these issuances to purchase our junior
subordinated debentures;
- maintaining the Trust's status as a grantor trust for federal income tax
purposes; and
- engaging in other activities that are directly related to the activities
described above, such as registering the transfer of the capital
securities.
Because the Trust was established only for the purposes listed above, the
junior subordinated debentures will be the Trust's sole assets. Payments on the
junior subordinated debentures will be the Trust's sole source of income. The
Trust will issue only one series of capital securities.
THE OFFERING
Title...................... Banknorth Capital Trust II % Trust Preferred
Securities.
Securities Offered......... 5,000,000 capital securities in denominations $25
each with an aggregate liquidation amount of
$125,000,000. Each capital security will represent
an undivided beneficial ownership interest in
assets of Banknorth Capital Trust II. Each capital
will entitle its holder to receive quarterly
distributions as described below.
Banknorth Capital Trust
II......................... The issuer of the capital securities is Banknorth
Capital Trust II, a Delaware business trust. We
created the Trust for the sole purpose of issuing
the capital and common securities and using the
proceeds from these issuances to purchase our
% junior subordinated debentures due 2032 and
engaging in the other transactions described below.
The Trust has five trustees. The administrative
trustees are officers of Banknorth. The Bank of New
York will act as the property trustee and The Bank
of New York (Delaware) will act as the Delaware
trustee of the Trust.
The Trust will hold the junior subordinated
debentures that it receives from us in exchange for
the proceeds from its issuance of the capital
securities and common securities. We will pay
interest on the junior subordinated debentures at
the same rate and at the same times as the Trust
makes payments on the capital securities. The Trust
will use the payments it receives on the junior
subordinated debentures to make the corresponding
payments on the capital securities. We will
guarantee payments made on the capital securities
to the extent described below. Both the junior
subordinated debentures and guarantee will be
subordinated to the holders of our existing and
future senior debt.
Distributions.............. If you purchase the capital securities, as an
undivided beneficial owner in the junior
subordinated debentures, you will be entitled to
receive cumulative cash distributions at an annual
rate of %. Interest on the junior subordinated
debentures will accrue, and as a result
distributions on the capital securities will
accumulate, from the date of issuance, and will be
paid quarterly in arrears on January 1, April 1,
July 1 and October 1 of each year, beginning April
1, 2002, unless they are deferred as described
below.
Distribution Deferral...... We can, on one or more occasions, defer the
quarterly interest payments on the junior
subordinated debentures for up to 20 consecutive
quarterly periods. In other words, we may declare
at our discretion up to a five-year interest
payment moratorium on the junior subordinated
debentures and may choose to do that on more than
one occasion. A deferral of interest payments
cannot extend, however, beyond the maturity date of
the junior subordinated debentures, nor can we
begin a new interest deferral period until we have
paid all accrued interest on the junior
subordinated debentures from the previous interest
deferral period.
If we defer interest payments on the junior
subordinated debentures, the Trust also will defer
distributions on the capital securities.
S-2
Any deferred interest on the junior subordinated
debentures will accrue additional interest at an
annual rate of %, and, as a result, any
deferred distributions will accumulate additional
amounts at an annual rate of %, compounded
quarterly. Once we pay all deferred interest
payments on the junior subordinated debentures,
with accrued interest, we can again defer interest
payments on the junior subordinated debentures as
described above, but not beyond the maturity date
of the junior subordinated debentures.
During any period in which we defer interest
payments on the junior subordinated debentures, we
will not and our subsidiaries will not do any of
the following, with certain limited exceptions:
- declare or pay any dividends or distributions, or
redeem, purchase, acquire, or make a liquidation
payment on, any of our capital stock;
- make any payment of principal or interest or
premium, if any, on or repay, repurchase or
redeem any of our debt securities (including
other junior subordinated debentures) that rank
equally with or junior in interest to the junior
subordinated debentures; or
- make any guarantee payments on any guarantee of
debt securities of any of our subsidiaries
(including under other guarantees of junior
subordinated debentures) if the guarantee ranks
equally with or junior in interest to the junior
subordinated debentures.
If we defer payments of interest on the junior
subordinated debentures, the junior subordinated
debentures will be treated at that time as being
issued with original issue discount for United
States federal income tax purposes. This means you
would be required to accrue interest income in an
amount equal to the deferred distributions on your
capital securities even though you would not be
receiving any cash distributions on your capital
securities. These amounts would be included in your
gross income for United States federal income tax
purposes. For more information, see "United States
Federal Income Tax Consequences," commencing on
page S-24 of this prospectus supplement.
Redemption................. The Trust will redeem all of the outstanding
capital securities when the junior subordinated
debentures are repaid at maturity. The junior
subordinated debentures are scheduled to mature on
, 2032.
In addition, if we redeem any junior subordinated
debentures before their maturity, the Trust will
use the cash it receives on the redemption of the
junior subordinated debentures to redeem, on a
proportionate basis, the capital securities and the
common securities. We can redeem the junior
subordinated debentures before their maturity at
100% of their principal amount plus accrued and
unpaid interest in whole or in part on one or more
occasions any time on or after April 1, 2007, or in
whole at any time if certain changes occur in tax
or investment company laws and regulations or in
the treatment of the capital securities for bank
regulatory purposes. These circumstances are more
fully described below under "Certain Terms of the
Capital Securities -- Redemption" on page S-16 of
this prospectus supplement.
S-3
We will not redeem the junior subordinated
debentures unless we obtain the prior approval of
the Board of Governors of the Federal Reserve
System to do so, if then required under the Federal
Reserve Board's capital rules.
Liquidation Preference..... Upon any dissolution, winding-up or liquidation of
the Trust, the holders of the capital securities
will be entitled to receive, out of assets held by
the Trust, subject to the rights of any creditors
of the Trust, distributions in cash or other
immediately available funds in an amount equal to
the aggregate of the stated liquidation amount of
the capital securities plus accumulated and unpaid
distributions thereon to the date of payment (a
"liquidation distribution"), unless, in connection
with a dissolution of the Trust and distribution of
the junior subordinated debentures described below
under "-- Dissolution of the Trust and
Distributions of the Junior Subordinated
Debentures," junior subordinated debentures in an
aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate
of, and accumulated and unpaid interest equal to
accrued and unpaid distributions on, such capital
securities are distributed to the holders of the
capital securities. The Trust will be able to make
a distribution of cash upon any dissolution,
winding-up or dissolution only if we redeem the
junior subordinated debentures.
The Guarantee.............. We will fully and unconditionally guarantee the
payments of all amounts due on the capital
securities to the extent the Trust has funds
available for payment of such distributions.
We also are obligated to pay the expenses and
obligations of the Trust (other than the Trust's
obligations to make payments on the capital
securities and common securities, which are covered
only by the guarantee).
The guarantee does not cover payments when the
Trust does not have sufficient funds to make
payments on the capital securities. In other words,
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, and the guarantee will not obligate us
to make those payments on the Trust's behalf. In
addition, our obligations under the guarantee are
subordinate to our obligations to other creditors
to the same extent as the junior subordinated
debentures. For more information, see "Description
of the Guarantee," commencing on page 30 of the
accompanying prospectus.
Dissolution of the Trust
and Distributions of the
Junior Subordinated
Debentures............... We can dissolve the Trust at any time and, after
satisfaction of the creditors of the Trust,
distribute the junior subordinated debentures to
holders of the capital securities and the common
securities on a proportionate basis, subject to
obtaining the prior approval of the Federal Reserve
Board to do so, if then required under the Federal
Reserve Board's capital rules, and an opinion of an
independent counsel that the distribution of the
junior subordinated debentures will not be taxable
to the holders of the capital securities for United
States federal income tax purposes.
S-4
Use of Proceeds............ The Trust will invest all of the proceeds from the
sale of the capital securities and the common
securities in our junior subordinated debentures.
The net proceeds from the offering of the capital
securities are estimated to be $ , or
$ if the underwriters exercise their
over-allotment option in full. We intend to use all
of the proceeds from the sale of the capital
securities for general corporate purposes. We
expect the capital securities to qualify as Tier 1
capital under the capital guidelines of the Federal
Reserve Board. For additional information, see "Use
of Proceeds" on page S-11 of this prospectus
supplement.
Listing.................... The Trust will apply to have the capital securities
listed on the New York Stock Exchange. Trading is
expected to commence within 30 days after the
capital securities are first issued. You should be
aware that the listing of the capital securities
will not necessarily ensure that an active trading
market will be available for the capital securities
or that you will be able to sell your capital
securities at the price you originally paid for
them.
If the Trust distributes the junior subordinated
debentures, we will use our best efforts to list
them on the New York Stock Exchange or wherever the
capital securities are then listed.
Form of the Capital
Securities................. The capital securities will be represented by one
or more global securities that will be deposited
with and registered in the name of The Depository
Trust Company, New York, New York. This means that
you will not receive a certificate for your capital
securities and the capital securities will not be
registered in your name. For more details, see
"Book-Entry Issuance," commencing on page 33 of the
accompanying prospectus.
S-5
RISK FACTORS
Your investment in the capital securities will involve certain risks. You
should carefully consider the following discussion of risks, and the other
information included or incorporated by reference in this document, before
deciding whether an investment in the capital securities is suitable for you.
Because the Trust will rely on the payments it receives on the junior
subordinated debentures to fund all payments on the capital securities, and
because the Trust may distribute the junior subordinated debentures in exchange
for the capital securities, you are making an investment regarding the junior
subordinated debentures as well as the capital securities. You should carefully
review the information in the document about the capital securities, the
guarantee and the junior subordinated debentures.
HOLDERS OF OUR SENIOR INDEBTEDNESS WILL GET PAID BEFORE YOU WILL GET PAID UNDER
THE GUARANTEE.
Our obligations to you under the junior subordinated debentures and the
guarantee will be junior in right of payment to all of our existing and future
senior debt. This means that we cannot make any payments to you on the junior
subordinated debentures or the guarantee if we are in default on any of our
senior debt. Therefore, in the event of our bankruptcy, liquidation or
dissolution, our assets must be used to pay off our senior obligations in full
before any payments may be made on the junior subordinated debentures or the
guarantee.
As of December 31, 2001, we had outstanding senior debt of approximately
$1.1 million. None of the indenture pursuant to which the junior subordinated
debentures will be issued, the guarantee and the agreement governing the Trust
limit our ability to incur additional senior debt.
For more information, see "Certain Terms of the Junior Subordinated
Debentures -- Ranking" on page S-21 of this prospectus supplement and
"Description of the Guarantee -- Status of the Guarantees" on page 30 of the
accompanying prospectus.
OUR RESULTS OF OPERATIONS DEPEND UPON THE RESULTS OF OPERATIONS OF OUR
SUBSIDIARIES.
We are a holding company that conducts substantially all of our operations
through our bank and other subsidiaries. As a result, our ability to make
payments on the junior subordinated debentures and the guarantee will depend
primarily upon the receipt of dividends and other distributions from our
subsidiaries.
There are various regulatory restrictions on the ability of our banking
subsidiary to pay dividends or make other payments to us. At December 31, 2001,
our banking subsidiary could pay a total of approximately $186 million in
dividends to us without prior regulatory approval.
In addition, our right to participate in any distribution of assets of any
of our subsidiaries upon the subsidiary's liquidation or otherwise, and thus
your ability as a holder of the capital securities to benefit indirectly from
such distribution, will be subject to the prior claims of creditors of that
subsidiary, except to the extent that any of our claims as a creditor of such
subsidiary may be recognized. As a result, the capital securities will
effectively be subordinated to all existing and future liabilities and
obligations of our subsidiaries. Therefore, holders of the capital securities
should look only to our assets for payments on the capital securities. Further,
the junior subordinated debentures and the guarantee also will be effectively
subordinated to all existing and future obligations of our subsidiaries.
At December 31, 2001, our subsidiaries had outstanding debt and other
liabilities, including deposits, of approximately $19.0 billion.
IF WE DO NOT MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES, THE TRUST WILL
NOT BE ABLE TO PAY DISTRIBUTIONS AND OTHER PAYMENTS ON THE CAPITAL SECURITIES
AND THE GUARANTEE WILL NOT APPLY.
The Trust's ability to make timely distribution and redemption payments on
the capital securities is completely dependent upon our making timely payments
on the junior subordinated debentures. If we default on the junior subordinated
debentures, the Trust will lack funds for the payments on the capital
securities. If this happens, holders of capital securities will not be able to
rely upon the guarantee for
S-6
payment of such amounts because the guarantee only guarantees that we will make
distribution and redemption payments on the capital securities if the Trust has
the funds to do so itself but does not. Instead, you or the property trustee may
proceed directly against us for payment of any amounts due on the capital
securities.
For more information, see "Certain Terms of the Capital Securities -- Trust
Enforcement Events" on page S-19 of this prospectus supplement.
DISTRIBUTIONS ON THE CAPITAL SECURITIES COULD BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH.
As long as the junior subordinated debentures are not in default, we can,
on one or more occasions, defer interest payments on the junior subordinated
debentures for up to 20 consecutive quarterly periods, but not beyond the
maturity date of the junior subordinated debentures. Because interest payments
on the junior subordinated debentures fund the distributions on the capital
securities, each such deferral would result in a corresponding deferral of
distributions on the capital securities.
We do not intend to defer interest payments on the junior subordinated
debentures. However, if we do so in the future, the capital securities may trade
at a price that does not reflect fully the value of the accrued but unpaid
distributions. Even if we do not do so, our right to defer interest payments on
the junior subordinated debentures could mean that the market price for the
capital securities may be more volatile than that of other securities without
interest deferral rights.
If we defer interest payments on the junior subordinated debentures, you
will be required to accrue interest for United States federal income tax
purposes in respect of your proportionate share of the accrued but unpaid
interest on the junior subordinated debentures held by the Trust, even if you
normally report income when received. As a result, you will be required to
include the accrued interest in your gross income for United States federal
income tax purposes prior to your receiving any cash distribution. If you sell
your capital securities prior to the record date for the first distribution
after a deferral period, you will never receive the cash from us related to the
accrued interest that you reported for tax purposes. You should consult with
your own tax advisor regarding the tax consequences of an investment in the
capital securities.
For more information regarding the tax consequences of purchasing the
capital securities, see "United States Federal Income Tax Consequences --
Interest Income and Original Issue Discount" and "-- Sales of Capital Securities
or Redemption of Junior Subordinated Debentures" on pages S-26 and S-28,
respectively, of this prospectus supplement.
THE CAPITAL SECURITIES MAY BE REDEEMED PRIOR TO MATURITY; YOU MAY BE TAXED ON
THE PROCEEDS AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR A
HIGHER RATE OF RETURN.
The junior subordinated debentures (and therefore the capital securities)
may be redeemed in whole or in part on one or more occasions any time on or
after April 1, 2007 or in whole upon the occurrence of certain special events
relating to changes in: tax law, including without limitation changes which
would disallow deductions on our junior subordinated debentures; the Investment
Company Act of 1940; or the treatment of the capital securities for bank
regulatory capital purposes. Any such redemption would be subject to receipt of
any necessary Federal Reserve Board approval. Recently, proposed legislation was
introduced in the U.S. House of Representatives which would disallow deductions
for U.S. income tax purposes on certain debt instruments issued after its date
of enactment. We currently intend to issue the capital securities and the
related junior subordinated debentures prior to the enactment of any such
legislation, which if enacted in its current form otherwise possibly could be
deemed to cover the capital securities and the related junior subordinated
debentures under certain circumstances. We cannot provide you with any
assurance, however, that legislation will not be enacted which would disallow
deductions on securities such as the junior subordinated debentures and thus
create a tax event which permits us to redeem the junior subordinated debentures
and the capital securities. For additional information, see
S-7
"United States Federal Income Tax Consequences -- Possible Tax Law Changes" on
page S-26 of this prospectus supplement.
The redemption price for the junior subordinated debentures would be equal
to 100% of the principal amount plus accrued and unpaid interest. If such a
redemption happens, the Trust must use the redemption price it receives to
redeem on a proportionate basis capital securities and common securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
junior subordinated debentures redeemed.
The redemption of the capital securities would be a taxable event to you
for United States federal income tax purposes.
In addition, you may not be able to reinvest the money that you receive in
the redemption at a rate that is equal to or higher than the rate of return on
the capital securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES MAY DEPRESS TRADING PRICES TO A
PRICE BELOW THE PRICE THAT YOU PAID FOR THE CAPITAL SECURITIES.
We have the right to dissolve the Trust at any time if the dissolution and
any distribution of the junior subordinated debentures would not be taxable to
the holders of the capital securities. If we dissolve the Trust, the Trust will
be liquidated by distribution of the junior subordinated debentures to holders
of the capital securities and the common securities after satisfaction of
liabilities to creditors of the Trust.
Your investment in the capital securities may decrease in value if the
junior subordinated debentures are distributed to you upon a liquidation of the
Trust. We cannot predict the liquidity of the market price or market prices, if
any, 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.
FEDERAL BANKING AUTHORITIES MAY RESTRICT THE ABILITY OF THE TRUST TO MAKE
DISTRIBUTIONS ON OR REDEEM THE CAPITAL SECURITIES.
Federal banking authorities will have the right to examine the Trust and
its activities because the Trust is our subsidiary. Under certain circumstances,
including any determination that our relationship to the Trust would result in
an unsafe and unsound banking practice, these banking authorities have the
authority to issue orders which could restrict the ability of the Trust to make
distributions on or to redeem the capital securities.
WE GENERALLY WILL CONTROL THE TRUST BECAUSE YOUR VOTING RIGHTS ARE VERY LIMITED.
You will only have limited voting rights. In particular, you may not elect
and remove any trustees, except when there is a default under the junior
subordinated debentures. If such a default occurs, a majority in liquidation
amount of the holders of the capital securities would be entitled to remove or
appoint the property trustee and the Delaware trustee.
For more information, see "Banknorth Capital Trust II" on page S-10 of this
prospectus supplement.
ENFORCEMENT OF CERTAIN RIGHTS BY OR ON YOUR BEHALF IS LIMITED.
The Bank of New York will act as the guarantee trustee under the capital
securities guarantee. Its ability to take action on your behalf as guarantee
trustee is limited. This is because our capital securities guarantee guarantees
distributions on the capital securities only to the extent the Trust receives
payments on the debentures and, upon liquidation of the Trust, other assets to
which holders of the capital securities are entitled. Holders of capital
securities will be able to exercise directly remedies available to the holders
of the debentures or to assert any other rights in respect of the debentures
only in limited circumstances.
S-8
See "Certain Terms of the Capital Securities -- Trust Enforcement Events" on
page S-19 of this prospectus supplement.
THE CAPITAL SECURITIES ARE NOT INSURED.
Neither the Federal Deposit Insurance Corporation nor any other government
agency has insured the capital securities or any other of the other securities
offered hereby.
HOLDERS OF CAPITAL SECURITIES WILL NOT BE PROTECTED FROM POTENTIAL
HIGHLY-LEVERAGED TRANSACTIONS INVOLVING BANKNORTH.
The indenture relating to the junior subordinated debentures provides that
Banknorth may merge or consolidate with, or sell all or substantially all of its
assets to, another person or entity so long as the successor person or entity
expressly assumes Banknorth's obligations under the indenture, there is no event
of default under the indenture and certain other conditions are met. The
indenture provisions do not afford holders of the junior subordinated debentures
protection in the event of a highly-leveraged or other transaction involving
Banknorth that may adversely affect holders of the junior subordinated
debentures.
THERE IS NO CURRENT PUBLIC MARKET FOR THE CAPITAL SECURITIES AND THEIR MARKET
PRICE MAY DECLINE AFTER YOU INVEST.
Prior to this offering, there has been no public market for the capital
securities. The Trust will apply to have the capital securities listed on the
New York Stock Exchange. Trading of the capital securities on the New York Stock
Exchange is expected to commence within a 30-day period after the initial
delivery of the capital securities. In order to meet one of the requirements for
listing on the New York Stock Exchange, the underwriters have undertaken to sell
capital securities to a minimum of 400 beneficial holders. We cannot assure you
that the capital securities will be listed on the New York Stock Exchange or, if
listed, that the capital securities will continue to be approved for listing on
the New York Stock Exchange. In addition, a listing does not guarantee that a
trading market for the capital securities will develop or, if a trading market
does develop, the depth of that market or the ability of the holders to sell
their capital securities easily. The underwriters have advised us and the Trust
that they intend to make a market in the capital securities prior to
commencement of trading on the New York Stock Exchange, but they are not
obligated to do so and may discontinue market making at any time without notice.
Future trading prices of the capital securities may be subject to
significant fluctuations in response to prevailing interest rates, our future
operating results and financial condition, the market for similar securities and
general economic and market conditions. The initial public offering price of the
capital securities has been set at the liquidation amount of the capital
securities and may be greater than the market price following the offering.
The market price for the capital securities may decline during any period
that we are deferring interest payments on the junior subordinated debentures.
If this were the case, the capital securities would not trade at a price that
accurately reflects the value of accumulated but unpaid interest on the
underlying junior subordinated debentures.
THERE IS NO PUBLIC MARKET FOR THE JUNIOR SUBORDINATED DEBENTURES.
As discussed above, we will have the right to dissolve the Trust and to
distribute the junior subordinated debentures to holders of capital securities.
Under those circumstances, we will use our best efforts to list the junior
subordinated debentures on a market or an exchange. However, there is no
existing market for the junior subordinated debentures and, if distributed to
holders of capital securities, the junior subordinated debentures will be
subject to risks similar to those described above.
S-9
BANKNORTH GROUP, INC.
Banknorth is a Maine corporation that is registered as a bank holding
company and a financial holding company under the Bank Holding Company Act of
1956. We offer a broad range of commercial and consumer banking and trust and
investment advisory services and products through Banknorth, NA, which was
formed on January 1, 2002 upon the consolidation of all nine of Banknorth's
banking subsidiaries into a single national bank. Through subsidiaries of
Banknorth, NA, we also are engaged in insurance brokerage and equipment leasing
activities. At December 31, 2001, we had consolidated total assets of $21.1
billion and stockholders' equity of $1.8 billion. Based on total assets at
December 31, 2001, we are one of the 40 largest commercial banking organizations
in the United States. Our principal executive offices are located at Two
Portland Square, Portland, Maine 04112-9540, and our telephone number is (207)
761-8500.
BANKNORTH CAPITAL TRUST II
Banknorth Capital Trust II is a business trust created under Delaware law
by the trustees and us. The Trust was established solely for the following
purposes:
- issuing the capital securities, which represent undivided beneficial
ownership interests in the Trust's assets;
- issuing the common securities to us in a total liquidation amount equal
to at least 3% of the Trust's total capital;
- using the proceeds from these issuances to purchase our junior
subordinated debentures;
- maintaining the Trust's status as a grantor trust for federal income tax
purposes; and
- engaging in other activities that are directly related to the activities
described above, such as registering the transfer of the capital
securities.
Because the Trust was established only for the purposes listed above, the
junior subordinated debentures will be the Trust's sole assets. Payments on the
junior subordinated debentures will be the Trust's sole source of income. The
Trust will issue only one series of capital securities.
As issuer of the junior subordinated debentures, we will pay:
- all fees, expenses and taxes related to the Trust and the offering of the
capital securities and common securities; and
- all ongoing costs, expenses and liabilities of the Trust, except
obligations to make distributions and other payments on the common
securities and the capital securities.
For so long as the capital securities remain outstanding, we will:
- own, directly or indirectly, all of the common securities;
- cause the Trust to remain a business trust and not to voluntarily
dissolve, wind-up, liquidate or be terminated, except as permitted by the
agreement pursuant to which the Trust was created;
- use our commercially reasonable efforts to ensure that the Trust will not
be an "investment company" for purposes of the Investment Company Act of
1940; and
- take no action that would be reasonably likely to cause the Trust to be
classified as other than a grantor trust for United States federal income
tax purposes.
THE TRUSTEES
The business and affairs of the Trust will be conducted by its five
trustees. The three administrative trustees will be individuals who are our
employees. The fourth trustee, The Bank of New York, as property trustee, will
hold title to the junior subordinated debentures for the benefit of the holders
of the capital securities and will have the power to exercise all the rights and
powers of a registered holder of the junior subordinated debentures.
S-10
The fifth trustee, The Bank of New York (Delaware), as Delaware trustee,
maintains its principal place of business in Delaware and meets the requirements
of Delaware law for Delaware business trusts. In addition, The Bank of New York,
as guarantee trustee, will hold the guarantee for the benefit of the holders of
the capital securities.
We have the sole right to appoint, remove and replace the trustees of the
Trust, unless an event of default occurs with respect to the junior subordinated
debentures. In that case, the holders of a majority in liquidation amount of the
capital securities will have the right to remove and appoint the property
trustee and the Delaware trustee.
ADDITIONAL INFORMATION
For additional information concerning the Trust, see "The Trusts" on page 7
of the accompanying prospectus. The Trust will not be required to file any
reports with the SEC after the issuance of the capital securities. As discussed
below under the caption "Accounting Treatment," we will provide certain
information concerning the Trust and the capital securities in the consolidated
financial statements included in our own periodic reports to the SEC.
OFFICE OF THE TRUST
The executive office of the Trust is c/o Banknorth Group, Inc., P.O. Box
9540, Two Portland Square, Portland, Maine 04112-9540 and its telephone number
is (207) 761-8500.
USE OF PROCEEDS
The Trust will use the proceeds from the sale of the capital securities and
the common securities to purchase our junior subordinated debentures. We
anticipate that the net proceeds from the sale of the junior subordinated
debentures will be $ , or $ if the underwriters exercise the
over-allotment option in full, after we pay the underwriting commissions and
expenses relating to the offering. The net proceeds will be available to us for
general corporate purposes. Initially, the net proceeds may be used to make
short-term investments and repay short-term borrowings.
We are required by the Federal Reserve Board to maintain certain levels of
capital for bank regulatory purposes. See "Regulation and Supervision of
Banknorth -- Capital and Operational Requirements" on page 9 of the accompanying
prospectus. On October 21, 1996, the Federal Reserve Board announced that
cumulative capital securities having the characteristics of the capital
securities could be included as Tier 1 capital for bank holding companies,
provided that under current Federal Reserve Board guidelines no more than 25% of
such bank holding company's Tier I capital may comprise capital securities and
cumulative preferred stock. We expect that the capital securities will be
treated as Tier 1 capital of Banknorth for these purposes. Such Tier 1 capital
treatment, together with our ability to deduct, for federal income tax purposes,
interest payable on the junior subordinated debentures, will provide us with a
more cost-effective means of obtaining capital for bank regulatory purposes than
other Tier 1 capital alternatives currently available to us.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as our
subsidiary, and its accounts will be included in our consolidated financial
statements.
In our future financial reports, we will:
- present the debentures as part of a separate line item in the liabilities
section on our consolidated balance sheets;
- record distributions payable on the capital securities as interest
expense; and
- include a footnote in our consolidated financial statements stating,
among other things, that the sole assets of the Trust are the junior
subordinated debentures issued by us and providing information about the
capital securities, the junior subordinated debentures and the guarantee.
S-11
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
December 31, 2001 and as adjusted to reflect the issuance of the capital
securities. You should read this table together with the detailed information
and our financial statements included in the documents incorporated by reference
herein. See "Where You Can Find More Information" on page 4 of the accompanying
prospectus.
<Table>
<Caption>
DECEMBER 31, 2001
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
(IN THOUSANDS)
Deposits.................................................... $14,221,049 $14,221,049
FHLB advances............................................... 2,644,105 2,644,105
Federal funds purchased and securities sold under repurchase
agreements................................................ 1,620,555 1,620,555
Subordinated debt........................................... 200,000 200,000
Other borrowings............................................ 43,972 43,972
Company obligated, mandatorily redeemable securities of
subsidiary trusts holding solely parent junior
subordinated debentures................................... 93,756(1) (2)
Other liabilities........................................... 464,034 464,034
----------- -----------
Total liabilities...................................... 19,287,471
Shareholders' equity:
Preferred stock........................................... -- --
Common stock.............................................. 1,651 1,651
Paid-in capital........................................... 958,764 958,764
Retained earnings......................................... 1,056,678 1,056,678
Unearned compensation..................................... (1,017) (1,017)
Treasury stock............................................ (267,529) (267,529)
Other comprehensive income................................ 40,568 40,568
----------- -----------
Total shareholders' equity............................. 1,789,115 1,789,115
----------- -----------
Total liabilities and shareholders' equity.................. $21,076,586 $
=========== ===========
</Table>
- ---------------
(1) Consists of $63.8 million of 9.06% capital securities of Peoples Heritage
Capital Trust I due 2027 and $30.0 million of 10.52% capital securities of
Banknorth Capital Trust I due 2027.
(2) Reflects the capital securities referred to in footnote (1) plus the capital
securities offered hereby at their issue price. As described herein, the
sole assets of the Trust, which is a subsidiary of Banknorth, will be
$128,866,000 aggregate principal amount of the junior subordinated
debentures (including the amounts attributable to the issuance of the common
securities of the Trust), which will mature on , 2032. Banknorth
will own all of the common securities issued by the Trust.
S-12
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial data of Banknorth set forth below
should be read in conjunction with, and is qualified in its entirety by, our
consolidated financial statements, including the related notes, included in the
documents incorporated herein by reference. See "Where you Can Find More
Information" on page 4 of the accompanying prospectus.
<Table>
<Caption>
DECEMBER 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ----------- -----------
BALANCE SHEET DATA:
Total assets................ $21,076,586 $18,233,810 $18,508,264 $16,453,120 $15,332,821
Debt and equity
securities................ 6,156,861 5,880,658 6,873,182 4,379,774 3,617,236
Total loans and leases, net
(1)....................... 12,525,493 10,692,112 9,699,608 9,770,039 9,862,103
Goodwill and other
intangibles............... 466,633 185,520 184,381 204,587 158,535
Deposits.................... 14,221,049 12,107,256 11,710,501 12,016,212 11,088,410
Borrowings.................. 4,602,388 4,659,390 5,466,253 3,040,173 2,904,286
Shareholders' equity........ 1,789,115 1,330,857 1,192,274 1,222,390 1,164,383
Nonperforming assets........ 79,123 67,132 69,192 89,021 98,125
Book value per share........ 11.83 9.42 8.22 8.37 7.97
Tangible book value per
share..................... 8.75 8.11 6.95 6.97 6.88
</Table>
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
OPERATIONS DATA:
Interest and dividend income..... $1,263,789 $1,330,287 $1,227,519 $1,146,160 $1,056,027
Interest expense................. 583,825 726,663 613,124 567,860 500,136
---------- ---------- ---------- ---------- ----------
Net interest income.............. 679,964 603,624 614,395 578,300 555,891
Provision for loan and lease
losses......................... 41,889 23,819 23,575 23,775 15,763
---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan and lease
losses......................... 638,075 579,805 590,820 554,525 540,128
Net securities gains (losses)
(2)............................ 1,329 (15,456) 655 6,423 2,837
Other noninterest income......... 239,176 226,644 191,140 161,124 134,144
Noninterest expense (excluding
special charges)............... 501,782 459,459 460,306 446,110 429,874
Special charges (3).............. 7,614 43,007 28,002 61,140 23,559
---------- ---------- ---------- ---------- ----------
Income before income tax
expense........................ 369,184 288,527 294,307 214,822 223,676
Income tax expense............... 126,202 96,793 97,349 73,078 78,188
Extraordinary item, net of tax... (3,897) -- -- -- --
Cumulative effect of change in
accounting principle, net of
tax............................ (290) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income....................... $ 238,795 $ 191,734 $ 196,958 $ 141,744 $ 145,488
========== ========== ========== ========== ==========
Net income per share (4):
Basic.......................... $ 1.70 $ 1.33 $ 1.35 $ 0.97 $ 1.00
Diluted........................ 1.68 1.32 1.34 0.95 0.98
Dividends per share.............. 0.53 0.50 0.47 0.44 0.38
</Table>
S-13
<Table>
<Caption>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999 1998 1997
----- ----- ----- ----- -----
OTHER DATA:
Return on average assets............................... 1.29% 1.05% 1.12% 0.90% 1.05%
Return on average equity............................... 16.48 15.69 16.42 11.96 13.01
Average equity to average assets....................... 7.82 6.66 6.81 7.55 8.07
Interest rate spread (5)............................... 3.42 3.05 3.33 3.46 3.75
Net interest margin (5)................................ 3.99 3.60 3.80 4.02 4.33
Tier 1 leverage capital ratio at end of period......... 7.14 7.02 6.75 7.22 7.65
Dividend payout ratio.................................. 30.27 36.91 33.19 40.38 39.60
Efficiency ratio (6)................................... 54.59 55.34 57.14 60.33 62.30
Nonperforming assets as a percent of total assets at
end of period........................................ 0.38 0.37 0.37 0.54 0.64
</Table>
- ---------------
(1) Does not include loans held for sale.
(2) In 2000, includes a $15.9 million pre-tax loss incurred in connection with
the restructuring of our portfolio of investment securities.
(3) Special charges consist of merger-related expenses and, in 1997, a $7.2
million pre-tax charge relating to an acquired subsidiary, in 1999, a $7.4
million pre-tax charge relating to our exit from the correspondent mortgage
banking business, in 2000, $1.4 million of pre-tax expenses related to the
closing of 11 branch offices, and in 2001, $1.9 million of pre-tax expenses
related to branch closings, a $1.0 million pre-tax charge related to
subsidiary bank charter consolidations and a $900 thousand pre-tax charge
related to asset write-downs.
(4) Excluding special charges and, in 2001, the cumulative effect of change in
accounting principle and extraordinary item, and in 2000, a loss on
restructuring the investment portfolio, our basic income per share would
have been $1.76, $1.63, $1.49, $1.28 and $1.11 for the years ended December
31, 2001, 2000, 1999, 1998 and 1997, respectively, and our diluted income
per share would have been $1.75, $1.62, $1.48, $1.25 and $1.08 for the same
respective periods.
(5) Ratios are on a fully-tax equivalent basis.
(6) The efficiency ratio represents operating expenses, excluding special
charges as a percentage of net interest income and noninterest income,
excluding securities transactions.
S-14
CERTAIN TERMS OF THE CAPITAL SECURITIES
We have summarized below certain terms of the capital securities. This
summary supplements the general description of the capital securities under the
caption "Description of Capital Securities" and elsewhere in the accompanying
prospectus. To the extent that this summary is inconsistent with the description
in the accompanying prospectus, you should rely on the summary below. This
summary is not a complete description of all of the terms and provisions of the
capital securities. For more information, we refer you to the certificate of
trust, the form of the amended and restated trust agreement and the form of
capital security certificate (which will be substantially similar to the form of
the capital securities), which we filed as exhibits to the registration
statement of which the prospectus is a part.
The capital securities represent undivided beneficial ownership interests
in the assets of the Trust. The only assets of the Trust will be the junior
subordinated debentures. The capital securities will rank equally with the
common securities except as described below under the caption " -- Subordination
of Common Securities" in this section.
DISTRIBUTIONS
As an undivided beneficial owner in the junior subordinated debentures, you
will receive distributions on the capital securities that are cumulative and
will accumulate from the date of issuance at the annual rate of % of the
liquidation amount of $25 for each capital security. Interest on the junior
subordinated debentures will accrue and, as a result, distributions on the
capital securities will accumulate and will be payable quarterly in arrears on
January 1, April 1, July 1 and October 1 of each year, beginning April 1, 2002.
The amount of distributions payable for any period will be computed on the basis
of a 360-day year comprised of twelve 30-day months. The amount of distributions
payable for any period shorter than a full quarterly period will be computed on
the basis of a 30-day month and, for periods of less than a month, the actual
number of days elapsed per 30-day month. If the capital securities are issued in
the form of global securities, as is expected, the record date for determining
who will receive distributions on the capital securities will be the business
day preceding the payment date for such distributions; otherwise the record date
will be the fifteenth day preceding the payment date for such distributions. For
more information on global securities, see "-- Global Securities; Book-Entry
Issue" below, and under the caption "Book-Entry Issuance" commencing on page 33
of the accompanying prospectus.
Interest not paid when due will accrue additional interest at the annual
rate of % on the amount of unpaid interest, compounded quarterly. As a
result, distributions not paid when due will accumulate additional distributions
at the annual rate of % on the amount of unpaid distributions, compounded
quarterly. When we refer to any payment of distributions, the term
"distributions" includes any such additional accumulated distributions.
If distributions are payable on a date that is not a "business day,"
payment will be made on the next business day and without any interest or other
payment as a result of such delay. A "business day" means each day except
Saturday, Sunday and any day on which banking institutions in the cities of New
York, New York or Portland, Maine are authorized or required by law to close or
on which the corporate trust office of the property trustee or the indenture
trustee is closed for business.
The Trust's income available for the payment of distributions will be
limited to our payments made on the junior subordinated debentures. As a result,
if we do not make interest payments on the junior subordinated debentures, then
the Trust will not have funds to make distributions on the capital securities.
DEFERRAL OF DISTRIBUTIONS
If the junior subordinated debentures are not in default, we can, on one or
more occasions, defer interest payments on the junior subordinated debentures
for up to 20 consecutive quarterly interest payment periods. A deferral of
interest payments cannot extend, however, beyond the maturity date of the junior
subordinated debentures. If we defer interest payments on the junior
subordinated debentures, the
S-15
Trust also will defer distributions on the capital securities. During a deferral
period, interest on the junior subordinated debentures will accrue and compound
quarterly at the annual rate of %, to the extent permitted by applicable
law, and as a result distributions otherwise due to you would continue to
accumulate from the date that these distributions were due.
Once we make all deferred interest payments on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures in the same manner as discussed above. As a result, there could be
multiple periods of varying length during which you would not receive cash
distributions from the Trust.
We currently do not intend to defer interest payments on the junior
subordinated debentures. If we defer such interest payments, however, neither we
nor our subsidiaries generally will be permitted to pay dividends on or
repurchase shares of our capital stock or make payments on debt securities or
guarantees that rank equal or junior to the junior subordinated debentures and
the guarantee. These limitations are described in greater detail below under the
caption "Certain Terms of the Junior Subordinated Debentures -- Option to Defer
Interest Payments" commencing on page S-21 of this prospectus supplement.
If we choose to defer payments of interest on the junior subordinated
debentures, then the junior subordinated debentures would at that time be
treated as being issued with original issue discount for United States federal
income tax purposes. This means you will be required to include your share of
the accrued but unpaid interest on the junior subordinated debentures in your
gross income for United States federal income tax purposes before you receive
cash distributions from the Trust. This treatment will apply as long as you own
capital securities. For more information, see below under the caption "United
States Federal Income Tax Consequences -- Interest Income and Original Issue
Discount" commencing on page S-26 of this prospectus supplement.
PAYMENT OF DISTRIBUTIONS
Distributions on the capital securities will be payable to holders on the
relevant record date. As long as the capital securities are only in book-entry
form, the record date for the payment of distributions will be one business day
before the distribution date. If the capital securities are ever issued in
certificated form, the record date for the payment of distributions will be the
fifteenth day before the relevant payment date. Distributions payable on any
capital securities that are not paid on the scheduled distribution date will
cease to be payable to the person in whose name such capital securities are
registered on the relevant record date, and such distribution will instead be
payable to the person in whose name such capital securities are registered on a
special record date set for this purpose.
Payments on the capital securities while they are in book-entry form will
be made in immediately available funds to DTC, the depositary for the capital
securities.
REDEMPTION
We may redeem the junior subordinated debentures before their maturity at
100% of their principal amount plus accrued and unpaid interest:
- in whole or in part, on one or more occasions at any time on or after
April 1, 2007 or
- in whole at any time if certain changes occur in tax or investment
company laws and regulations, or in the treatment of the capital
securities for bank regulatory capital purposes. These events, which we
refer to as "Special Events," are described in detail below under the
caption "-- Redemption Upon a Special Event."
We may not redeem the junior subordinated debentures unless we receive the
prior approval of the Federal Reserve Board to do so, if that approval is then
required under the Federal Reserve Board's capital rules.
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When we repay the junior subordinated debentures, either at maturity on
, 2032 or upon early redemption (as discussed above), the Trust will
use the cash it receives from the repayment or redemption of the junior
subordinated debentures to redeem a corresponding amount of the capital
securities and common securities. The redemption price for the capital
securities will be equal to the liquidation amount, $25 per capital security,
plus accumulated but unpaid distributions on the capital securities to the
redemption date.
If less than all the capital securities and the common securities are
redeemed, the total amount of the capital securities and the common securities
to be redeemed will be allocated proportionately among the capital securities
and common securities, unless an event of default under the junior subordinated
debentures or similar event has occurred, as described below under the caption
"-- Subordination of Common Securities" in this section.
If we do not elect to redeem the junior subordinated debentures, then the
capital securities will remain outstanding until the repayment of the junior
subordinated debentures unless we liquidate the Trust and distribute the junior
subordinated debentures to you. For more information, see "-- Optional
Liquidation of the Trust and Distribution of Junior Subordinated Debentures" in
this section.
REDEMPTION UPON A SPECIAL EVENT
If a Special Event has occurred and is continuing, and we cannot cure that
event by some reasonable action, then we may redeem the junior subordinated
debentures within 90 days following the occurrence of the Special Event. A
"Special Event" means, for these purposes, the occurrence of a "Tax Event," a
"Regulatory Capital Event" or an "Investment Company Event." We summarize each
of these events below.
A "Tax Event" means that either we or the Trust will have received an
opinion of counsel (which may be our counsel or counsel of an affiliate but not
an employee and which must be reasonably acceptable to the property trustee)
experienced in tax matters stating that, as a result of any:
- amendment to, or change (including any announced prospective change) in,
the laws (or any regulations under those laws) of the United States or
any political subdivision or taxing authority affecting taxation; or
- interpretation or application of the laws, enumerated in the preceding
bullet point, or regulations by any court, governmental agency or
regulatory authority,
there is more than an insubstantial risk that:
- the Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to U.S. federal income tax on interest received on the
junior subordinated debentures;
- interest payable by us to the Trust on the junior subordinated debentures
is not, or will not be within 90 days of the date of the opinion of
counsel, deductible, 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 the opinion of
counsel, subject to more than a minimal amount of other taxes, duties,
assessments or other governmental charges.
A "Regulatory Capital Event" means the reasonable determination by us that,
as a result of any:
- amendment to, or change (including any prospective change) in, the laws
or any applicable regulation of the United States or any political
subdivision; or
- as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying the laws or regulations,
which amendment, change, pronouncement or action is effective or announced on or
after the date of issuance the capital securities, there is more than an
insubstantial risk of impairment of our ability to treat
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the capital securities (or any substantial portion) as Tier 1 capital (or its
equivalent) for purposes of the capital adequacy guidelines of the Federal
Reserve in effect and applicable to us.
An "Investment Company Event" means the receipt by us and the Trust of an
opinion of counsel experienced in matters relating to investment companies to
the effect that, as a result of any:
- change in law or regulation; or
- change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority,
the Trust is or will be considered an investment company that is required to be
registered under the Investment Company Act, which change becomes effective on
or after the original issuance of the capital securities.
REDEMPTION PROCEDURES
The Trust will give you at least 30 days' but not more than 60 days' notice
before any redemption of capital securities. To the extent funds are available
for payment, the Trust will irrevocably deposit with DTC sufficient funds to pay
the redemption amount for the capital securities being redeemed. The Trust also
will give DTC irrevocable instructions and authority to pay the redemption
amount to its participants. Any distribution to be paid on or before a
redemption date for any capital securities called for redemption will be payable
to the registered holders on the record date for the distribution.
Once notice of redemption is given and the Trust irrevocably deposits the
redemption amount, additional distributions on the capital securities will cease
to accumulate from and after the redemption date. In addition, all rights of the
holders of the capital securities called for redemption will cease, except for
the right to receive distributions payable prior to the redemption date and the
redemption amount.
If any redemption date is not a business day, the redemption amount will be
payable on the next business day, without any interest or other payment in
respect of any such delay.
If payment of the redemption amount for any capital securities called for
redemption is not paid because the payment of the redemption price on the junior
subordinated debentures is not made, interest on the junior subordinated
debentures will continue to accrue from the originally scheduled redemption date
to the actual date of payment, and, as a result, distributions on the capital
securities will continue to accumulate.
In addition, we may and our affiliates may, at any time, purchase
outstanding capital securities by tender, in the open market or by private
agreement.
OPTIONAL LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES
We may dissolve the Trust at any time, and after satisfying the creditors
of the Trust, may cause the junior subordinated debentures to be distributed to
the holders of the capital securities. We may not dissolve the Trust, however,
unless we first receive:
- the approval of the Federal Reserve Board to do so, if that approval is
then required under the Federal Reserve Board's capital rules; and
- an opinion of independent counsel that the distribution of the junior
subordinated debentures will not be taxable to the holders for United
States federal income tax purposes.
See below under the caption "Certain Terms of the Junior Subordinated
Debentures -- Distribution of Junior Subordinated Debentures" on page S-21 of
this prospectus supplement.
If we elect to dissolve the Trust, thus causing the junior subordinated
debentures to be distributed to the holders of the capital securities, we will
continue to have the right to redeem the junior subordinated debentures in
certain circumstances as described above.
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SUBORDINATION OF COMMON SECURITIES
Payment of distributions or any redemption or liquidation amounts by the
Trust regarding the capital securities and the common securities will be made
proportionately based on the total liquidation amounts of the securities.
However, if we are in default under the junior subordinated debentures, the
Trust will make no payments on the common securities until all unpaid amounts on
the capital securities have been provided for or paid in full.
TRUST ENFORCEMENT EVENTS
An event of default under the indenture constitutes an event of default
under the amended and restated trust agreement. We refer to such an event as a
"Trust Enforcement Event." For more information on events of default under the
indenture, see "Description of Junior Subordinated Debt Securities -- Events of
Default" in the accompanying prospectus. Upon the occurrence and continuance of
a Trust Enforcement Event, the property trustee, as the sole holder of the
junior subordinated debentures, will have the right under the indenture to
declare the principal amount of the junior subordinated debentures due and
payable. The amended and restated trust agreement does not provide for any other
events of default.
If the property trustee fails to enforce its rights under the junior
subordinated debentures, any holder of capital securities may, to the extent
permitted by applicable law, institute a legal proceeding against us to enforce
the property trustee's rights under the junior subordinated debentures and the
indenture without first instituting legal proceedings against the property
trustee or any other person. In addition, if a Trust Enforcement Event is due to
our failure to pay interest or principal on the junior subordinated debentures
when due, then the registered holder of capital securities may institute a
direct action on or after the due date directly against us for enforcement of
payment to that holder of the principal of or interest on the junior
subordinated debentures having a principal amount equal to the total liquidation
amount of that holder's capital securities. In connection with such a direct
action, we will have the right under the indenture to set off any payment made
to that holder by us. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the junior
subordinated debentures.
Pursuant to the amended and restated trust agreement, the holder of the
common securities will be deemed to have waived any Trust Enforcement Event
regarding the common securities until all Trust Enforcement Events regarding the
capital securities have been cured, waived or otherwise eliminated. Until all
Trust Enforcement Events regarding the capital securities have been so cured,
waived or otherwise eliminated, the property trustee will act 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 enforcement actions of the property
trustee.
VOTING RIGHTS
Holders of capital securities will have only limited voting rights. In
particular, holders of capital securities may not elect or remove any trustee,
except when there is a default under the junior subordinated debentures. If such
a default occurs, a majority in liquidation amount of the holders of the capital
securities would be entitled to remove or appoint the property trustee and the
Delaware trustee.
REMEDIES
So long as any junior subordinated debentures are held by the property
trustee, the holders of a majority of all outstanding capital securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the property trustee, or to direct the exercise of
any
S-19
power conferred upon the property trustee under the amended and restated trust
agreement, including the right to direct the property trustee, as holder of the
junior subordinated debentures to:
- exercise the remedies available to it under the indenture as a holder of
the junior subordinated debentures, including the right to rescind or
annul a declaration that the principal of all the junior subordinated
indentures will be due and payable;
- consent to any amendment, modification or termination of the indenture or
the junior subordinated debentures; or
- waive any past default that is waivable under the indenture.
However, where a consent or action under the indenture would require the
consent or action of the holders of more than a majority of the total principal
amount of junior subordinated debentures affected by it, only the holders of
that greater percentage of the capital securities may direct the property
trustee to give the consent or to take such action. See "Description of Capital
Securities -- Voting Rights; Amendment of Each Trust Agreement" on page 27 of
the accompanying prospectus.
If an event of default under the indenture has occurred and is continuing,
the holders of 25% of the total liquidation amount of the capital securities may
direct the property trustee to declare the principal and interest on the junior
subordinated debentures due and payable.
MEETINGS
Any required approval of holders of capital securities may be given at a
meeting of holders of capital securities convened for such purpose or pursuant
to written consent. The property trustee will cause a notice of any meeting at
which holders of capital securities are entitled to vote to be given to each
holder of record of capital securities in the manner described in the amended
and restated trust agreement.
No vote or consent of the holders of capital securities will be required
for the Trust to redeem and cancel its capital securities in accordance with the
amended and restated trust agreement.
GLOBAL SECURITIES; BOOK-ENTRY ISSUE
We expect that the capital securities will be issued in the form of global
securities held by The Depository Trust Company as described under the caption
"Book-Entry Issuance" commencing on page 33 of the accompanying prospectus.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only the duties that are
specifically described in the amended and restated trust agreement and, after a
Trust Enforcement Event which has not been cured or waived, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his own affairs. Subject to this provision, the property trustee is
under no obligation to exercise any of the powers vested in it by the amended
and restated trust agreement at the request of any holder of capital securities
unless it is offered reasonable security and indemnity against the costs,
expenses and liabilities that might be incurred in connection with taking that
action.
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
We have summarized below certain terms of the junior subordinated
debentures. This summary supplements the general description of these securities
under the caption "Description of Junior Subordinated Debt Securities" and
elsewhere in the accompanying prospectus. To the extent that this summary is
inconsistent with the description in the accompanying prospectus, you should
rely on the summary below. This summary is not a complete description of all of
the terms and provisions of the junior subordinated debentures. For more
information, we refer you to the indenture and the form of the
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junior subordinated debentures, which we filed as exhibits to the registration
statement of which the accompanying prospectus is a part.
The junior subordinated debentures will be issued pursuant to an indenture
between us and The Bank of New York as indenture trustee. The indenture provides
for the issuance from time to time of junior subordinated debentures in an
unlimited dollar amount and an unlimited number of series.
INTEREST RATE AND MATURITY
The junior subordinated debentures will bear interest at the annual rate of
%, payable quarterly in arrears on January 1, April 1, July 1 and October 1
of each year, beginning April 1, 2002. Interest payments not paid when due will
themselves accrue additional interest at the annual rate of % on the amount
of unpaid interest, to the extent permitted by law, compounded quarterly. The
amount of interest payable for any period will be computed based on a 360-day
year comprised of twelve 30-day months. The amount of interest payable for any
period shorter than a full quarterly period will be computed on the basis of a
30-day month and, for periods of less than a month, the actual number of days
elapsed per 30-day month. The distribution provisions of the capital securities
correspond to the interest payment provisions for the junior subordinated
debentures because the capital securities represent undivided beneficial
ownership interests in the junior subordinated debentures.
The junior subordinated debentures do not have a sinking fund. This means
that we are not required to make any principal payments prior to maturity.
The junior subordinated debentures will mature on , 2032.
RANKING
The junior subordinated debentures will be unsecured and will rank junior
and be subordinate in right of payment to all our senior debt.
As a holding company, our assets primarily consist of the equity securities
of our subsidiaries. As a result, the ability of holders of the junior
subordinated debentures to benefit from any distribution of assets of any
subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to the prior claims of present and future creditors of that
subsidiary.
The capital securities, the junior subordinated debentures and the
guarantee do not limit our or our subsidiaries' ability to incur additional
debt, including debt that ranks senior in priority of payment to the junior
subordinated debentures and the guarantee. At December 31, 2001, approximately
$1.1 million of our senior debt was outstanding. In addition, the junior
subordinated debentures will be effectively subordinated to all our
subsidiaries' existing and future obligations. At December 31, 2001, our
subsidiaries had outstanding debt and other liabilities, including deposits, of
approximately $19.0 billion.
REDEMPTION
We may, under certain circumstances, redeem some or all of the junior
subordinated debentures before their maturity. For more information, see above
under the caption "Certain Terms of the Capital Securities -- Redemption" on
page S-16 of this prospectus supplement.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
If the property trustee distributes the junior subordinated debentures to
the holders of the capital securities and the common securities upon the
liquidation of the Trust, we will cause the junior subordinated debentures to be
issued in denominations of $25 principal amount and integral multiples thereof.
We anticipate that the junior subordinated debentures would be distributed in
the form of one or more global securities and that DTC would act as depositary
for the junior subordinated debentures. The depositary arrangements for the
junior subordinated debentures would be substantially the same as those in
effect for the capital securities.
S-21
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemption and other notices and
other matters, see "Book-Entry Issuance" commencing on page 33 of the
accompanying prospectus.
OPTION TO DEFER INTEREST PAYMENTS
We can defer interest payments on the junior subordinated debentures for up
to 20 consecutive quarterly interest payment periods if the junior subordinated
debentures are not in default. A deferral of interest payments cannot extend,
however, beyond the maturity date of the junior subordinated debentures. During
the deferral period, interest will continue to accrue on the junior subordinated
debentures, compounded quarterly, and deferred interest payments will accrue
additional interest at %. No interest will be due and payable on the junior
subordinated debentures until the end of the deferral period except upon a
redemption of the junior subordinated debentures during a deferral period.
We may pay at any time all or any portion of the interest accrued to that
point during a deferral period. At the end of the deferral period or on any
redemption date, we will be obligated to pay all accrued and unpaid interest.
Once we pay all accrued and unpaid interest on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures as described above, provided that a deferral period cannot extend
beyond the maturity date of the junior subordinated debentures.
CERTAIN LIMITATIONS DURING A DEFERRAL PERIOD
During any deferral period, we will not and our subsidiaries will not be
permitted to:
- declare or pay any dividends or distributions, or redeem, purchase,
acquire, or make a liquidation payment on any of our capital stock;
- make any payment of principal of interest or premium, if any, on or
repay, repurchase or redeem any of our debt securities (including other
junior subordinated debentures) that rank equally with or junior in
interest to the junior subordinated debentures; or
- make any guarantee payments on any guarantee of debt securities of any of
our subsidiaries (including under other guarantees of junior subordinated
debentures) if the guarantee ranks equally with or junior in interest to
the junior subordinated debentures.
However, at any time, including during a deferral period, we will be
permitted to:
- pay dividends or distributions in additional shares of our capital stock;
- make payments under the guarantee of the series of the capital securities
and the common securities;
- declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under such a plan or repurchase
such rights; and
- purchase common stock for issuance pursuant to any of our employee
benefit plans.
NOTICE
We will give the Trust, the administrative trustees and the property
trustee notice if we decide to defer interest payments on the junior
subordinated debentures. We will give that notice five business days before the
earlier of:
- the next date distributions on the capital securities are payable; or
- the date the Trust is required to give notice to the New York Stock
Exchange (or any applicable self-regulatory organization) or to holders
of the capital securities on the record date or the date any distribution
is payable, but in any event at least five business days before the
record date.
S-22
The administrative trustees will give notice to the holders of capital
securities if we decide to defer interest payments on the junior subordinated
debentures.
AGREEMENT BY PURCHASERS OF CERTAIN TAX TREATMENT
Each junior subordinated debenture will provide that, by acceptance of the
junior subordinated debentures, or a beneficial interest therein, the holder of
the junior subordinated debenture intends that such junior subordinated
debenture constitutes debt and agrees to treat it as debt for United States
federal, state and local tax purposes.
MISCELLANEOUS
Under an expense agreement entered into by us under the amended and
restated trust agreement, we will irrevocably and unconditionally guarantee, to
each person or entity to whom the Trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the Trust, other than
obligations of the Trust to you under the terms of the capital securities or
other similar interests.
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the capital securities
are irrevocably guaranteed by us, to the extent the Trust has funds available
for the payment of such distributions, as described under "Description of the
Guarantee" on page 30 of the accompanying prospectus.
If we do not make payments under the junior subordinated debentures, the
Trust will not have sufficient funds to pay distributions or other amounts due
on the capital securities. The guarantee does not cover payment of distributions
when the Trust does not have sufficient funds to pay such distributions. In that
event, a holder of capital securities may institute a legal proceeding directly
against us to enforce payment of the junior subordinated debentures to such
holder in accordance with their terms, including our right to defer interest
payments.
Taken together, our obligations under the amended and restated trust
agreement, the junior subordinated debentures, the indenture and the guarantee
provide a full and unconditional guarantee of payments of distributions and
other amounts due on the capital securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest, principal and other payments are made when
due on the junior subordinated debentures, those payments will be sufficient to
cover distributions and other payments due on the capital securities because of
the following factors:
- the total principal amount of the junior subordinated debentures will be
equal to the sum of the total stated liquidation amount of the capital
securities and the common securities;
- the interest rate and payment dates on the junior subordinated debentures
will match the distribution rate and payment dates for the capital
securities;
- as borrower, we will pay, and the Trust will not be obligated to pay, all
costs, expenses and liabilities of the Trust except the Trust's
obligations under the capital securities and common securities; and
- the amended and restated trust agreement further provides that the Trust
will engage only in activity that is consistent with the limited purposes
of the Trust.
We have the right to set-off any payment we are otherwise required to make
under the indenture with and to the extent we make a related payment under the
guarantee.
S-23
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
If a Trust Enforcement Event occurs, the holders of capital securities
would rely on the enforcement by the property trustee of its rights as
registered holder of the junior subordinated debentures against us. In addition,
the holders of a majority in liquidation amount of the capital securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the property trustee or to direct the exercise of
any trust or power conferred upon the property trustee under the amended and
restated trust agreement, including the right to direct the property trustee to
exercise the remedies available to it as the holder of the junior subordinated
debentures.
If the property trustee fails to enforce its rights under the junior
subordinated debentures in respect of an event of default under the indenture
after a holder of capital securities has made a written request, such holder
may, to the extent permitted by applicable law, institute a legal proceeding
against us to enforce the property trustee's rights under the junior
subordinated debentures. In addition, if we fail to pay interest or principal on
the junior subordinated debentures, a holder of capital securities may institute
a proceeding directly against us for enforcement of payment to that holder of
the principal of or interest on junior subordinated debentures having a
principal amount equal to the total liquidation amount of that holder's capital
securities (which we refer to as a "direct action"). In connection with such a
direct action, we will have the right to set off any payment made to such holder
by us. The holders of capital securities will not be able to exercise directly
any other remedy available to the holders of the junior subordinated debentures.
LIMITED PURPOSE OF TRUST
The capital securities evidence undivided beneficial ownership interests in
the assets of the Trust, and the Trust exists for the sole purpose of issuing
the common securities and capital securities to us in exchange for the junior
subordinated debentures. A principal difference between the rights of a holder
of capital securities and a holder of junior subordinated debentures is that a
holder of junior subordinated debentures is entitled to receive from us the
principal of and interest accrued on junior subordinated debentures held, while
a holder of capital securities is entitled to receive distributions to the
extent the Trust has funds available for the payment of such distributions.
RIGHTS UPON DISSOLUTION
Upon any dissolution, winding-up or liquidation of the Trust involving the
liquidation of the junior subordinated debentures, the holders of the capital
securities will be entitled to receive, out of assets held by the Trust, subject
to the rights of any creditors of the Trust, the liquidation distribution in
cash. Upon our voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the junior subordinated debentures, would be our
subordinated creditor, subordinated in right of payment to all senior debt as
described in the indenture, but entitled to receive payment in full of principal
and interest before any of our stockholders receive payments or distributions.
Because we are the guarantor under the guarantee and, under the indenture, as
borrower, we have agreed to pay for all costs, expenses and liabilities of the
Trust (other than the Trust's obligations to the holders of the capital
securities), the positions of a holder of capital securities and a holder of the
junior subordinated debentures relative to other creditors and to our
stockholders in the event of our liquidation or bankruptcy would be
substantially the same.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the purchase, ownership and disposition of the capital
securities and the junior subordinated debentures as of the date of this
prospectus supplement. Where noted, it constitutes the opinion of Elias, Matz,
Tiernan & Herrick L.L.P., counsel to Banknorth and the Trust.
S-24
Except where we state otherwise, this summary deals only with capital
securities and junior subordinated debentures held as capital assets by a holder
who:
- is a United States person (as defined below), and
- purchases the capital securities upon original issuance at their original
issue price.
A "United States person" is a holder who is one of the following:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision of the
United States;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust
- that is subject to the primary supervision of a court within the
United States and the control of one or more United States
persons, or
- that has a valid election in effect under applicable United
States Treasury regulations to be treated as a United States
person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all the tax consequences that may be relevant to
holders that are subject to special tax treatment, such as:
- dealers in securities or currencies;
- financial institutions;
- tax-exempt investors;
- traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
- insurance companies;
- persons holding capital securities or junior subordinated debentures as
part of a hedging, conversion, integrated or constructive sale
transaction;
- persons holding capital securities or junior subordinated debentures as
part of a straddle; or
- United States persons whose functional currency is not the United States
dollar.
In addition, this summary does not include any description of the tax laws
of any state, local or foreign government and any description of alternative
minimum tax consequences.
Furthermore, if a partnership holds capital securities or junior
subordinated debentures, the tax treatment of a partner will generally depend
upon the status of the partner and the activities of the partnership. If you are
a partner of a partnership holding capital securities or junior subordinated
debentures, you should consult your own tax advisor.
This summary is based on the Internal Revenue Code of 1986, as amended
(which we refer to as the "Code"), the Treasury regulations promulgated under
the Code and administrative and judicial interpretations thereof. These income
tax laws, regulations and interpretations, however, may change at any time. Any
change could be retroactive to the issuance date of the capital securities or
junior subordinated debentures.
The authorities on which this summary is based are subject to various
interpretations, and the opinions of Elias, Matz, Tiernan & Herrick L.L.P. are
not binding on the Internal Revenue Service (which we refer to as the "IRS") or
the courts. Either the IRS or the courts could disagree with the explanations or
conclusions contained in this summary.
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The United States federal income tax discussion set forth above is included
for general information only and may not be applicable depending upon your
particular situation. You should consult your own tax advisor regarding the tax
consequences to you of the purchase, ownership and disposition of the capital
securities and the junior subordinated debentures, including the tax
consequences under state, local, foreign and other tax laws and the possible
effects of changes in United States federal or other tax laws. For a discussion
of the possible redemption of the capital securities upon the occurrence of a
Tax Event, see "Certain Terms of the Capital Securities -- Redemption Upon a
Special Event" commencing on page S-17 of this prospectus supplement.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the capital securities, Elias, Matz,
Tiernan & Herrick L.L.P. is of the opinion that under current law and assuming
full compliance with the terms of the amended and restated trust agreement, and
based upon certain facts and assumptions contained in such opinion, the Trust
will be classified as a grantor trust for United States federal income tax
purposes and not as an association taxable as a corporation. As a result, for
United States federal income tax purposes, you generally will be treated as
owning an undivided beneficial ownership interest in the junior subordinated
debentures. Thus, you will be required to include in your gross income your
proportionate share of the interest income or original issue discount that is
paid or accrued on the junior subordinated debentures. See below under the
caption "-- Interest Income and Original Issue Discount" in this section.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Banknorth, the Trust and you (by your acceptance of a beneficial ownership
interest in a capital security) agree to treat the junior subordinated
debentures as indebtedness for all United States tax purposes. In connection
with the issuance of the junior subordinated debentures, Elias, Matz, Tiernan &
Herrick L.L.P. is of the opinion that under current law, and based on certain
representations, facts and assumptions set forth in its opinion, the junior
subordinated debentures will be classified as indebtedness for United States
federal income tax purposes.
POSSIBLE TAX LAW CHANGES
On January 24, 2002, Representative Charles B. Rangel introduced in the
U.S. House of Representatives proposed legislation known as the "Emergency
Worker and Investor Protection Act of 2002." The proposed legislation was
introduced in the wake of the highly-publicized bankruptcy filing by Enron and
would, among other things, disallow a deduction for United States tax purposes
for certain indebtedness, including in the case of an SEC registrant:
"(i) any indebtedness of such registrant if such indebtedness is not shown
in the certified annual report as part of the total liabilities of such
registrant, and
(ii) any indebtedness of an off-balance-sheet entity if the proceeds from
the issuance of such indebtedness are used directly or indirectly to
acquire stock (or other ownership interest) in such registrant."
If either of the foregoing provisions was deemed to apply to the junior
subordinated debentures, we might be unable to deduct interest payments on the
junior subordinated debentures. This legislation is proposed to be effective for
instruments issued on or after the date of enactment of such legislation.
Consequently, as drafted, this legislation would not affect the capital
securities or junior subordinated debentures or otherwise result in a Tax Event
as described under "Certain Terms of the Capital Securities -- Redemption Upon a
Special Event" commencing on page S-17 of this prospectus supplement. However,
there can be no assurance that the proposed legislation, final legislation or
any other future legislative proposals will not adversely affect our ability to
deduct interest on the junior subordinated debentures or otherwise affect the
tax treatment of the transactions described in this prospectus supplement. Such
a change could, if applicable to the junior subordinated debentures or capital
securities, give rise to a Tax Event, which would permit us to cause a
redemption of the capital securities.
S-26
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
We anticipate that the junior subordinated debentures will not be issued
with an issue price that is less than their stated redemption price at maturity.
Under applicable United States Treasury regulations, a contingency that stated
interest will not be timely paid that is "remote" will be ignored in determining
whether a debt instrument is issued with original issue discount (which we refer
to as "OID"). As a result of terms and conditions of the junior subordinated
debentures that prohibit payments with respect to our capital stock and
indebtedness if we elect to defer interest payments, we believe that the
likelihood of our exercising our option to defer payments is remote. Based on
the foregoing, we believe that the junior subordinated debentures will not be
considered to be issued with OID at the time of their original issuance and,
accordingly, you should include in gross income your allocable share of interest
on the junior subordinated debentures at the time that it is paid or accrued in
accordance with your regular method of accounting, although the IRS could take a
contrary position. The following discussion assumes that unless and until we
exercise our own option to defer interest on the junior subordinated debentures,
the junior subordinated debentures will not be treated as issued with OID.
If the option to defer any payment of interest was determined not to be
"remote" or we exercise our right to defer payments of interest on the junior
subordinated debentures, the junior subordinated debentures will become OID
instruments at such time. In such case, you will be subject to the special OID
rules described below. Once the junior subordinated debentures become OID
instruments, they will be taxed as OID instruments for as long as they remain
outstanding.
Under the OID economic accrual rules, the following occur:
- regardless of your method of accounting, you would accrue an amount of
interest income each year that approximates the stated interest payments
called for under the terms of the junior subordinated debentures using
the constant-yield-to-maturity method of accrual described in section
1272 of the Code;
- the actual cash payments of interest you receive on the junior
subordinated debentures would not be reported separately as taxable
income;
- any amount of OID included in your gross income (whether or not during a
deferral period) with respect to the capital securities would increase
your tax basis in such capital securities; and
- the amount of distributions in respect of such accrued OID would reduce
your tax basis in such capital securities.
Because the junior subordinated debentures are debt for tax purposes,
corporate holders will not be entitled to a dividends received deduction with
respect to any income recognized on the capital securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON DISSOLUTION OF THE
TRUST
As described under the caption "Certain Terms of the Capital Securities --
Optional Liquidation of the Trust and Distribution of Junior Subordinated
Debentures" on page S-18 of this prospectus supplement, the junior subordinated
debentures held by the Trust may be distributed to you in exchange for your
capital securities if the Trust is liquidated before the maturity of the junior
subordinated debentures, as long as we first receive:
- the approval of the Federal Reserve Board to do so, if that approval is
then required under the Federal Reserve Board's capital rules; and
- an opinion of independent counsel to the effect that the distribution of
the junior subordinated debentures will not be taxable to you.
Under current law, except as described below, this type of distribution
from a grantor trust would not be taxable. Upon such a distribution, you will
receive your proportionate share of the junior subordinated debentures
previously held indirectly through the Trust. Your holding period and aggregate
tax basis in the
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junior subordinated debentures will equal the holding period and aggregate tax
basis that you had in your capital securities before the distribution.
If, however, the Trust is treated as an association taxable as a
corporation, a Tax Event will occur. If we elect to distribute the junior
subordinated debentures to you at this time, the distribution would be taxable
to the Trust and to you.
If you receive junior subordinated debentures in exchange for your capital
securities, you would accrue interest in respect of the junior subordinated
debentures received from the Trust in the manner described above under the
caption "-- Interest Income and Original Issue Discount" in this section.
In certain circumstances described above under the captions "Certain Terms
of the Capital Securities -- Redemption Upon a Special Event" commencing on page
S-17 of this prospectus supplement, we may redeem the junior subordinated
debentures and distribute cash in liquidation of the Trust. This distribution of
cash would be taxable as described below under "-- Sales of Capital Securities
or Redemption of Junior Subordinated Debentures" in this section.
SALES OF CAPITAL SECURITIES OR REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES
If you sell your capital securities or receive cash upon redemption of the
junior subordinated debentures, you will recognize gain or loss equal to the
difference between:
- the amount realized on the sale or redemption of the capital securities
or junior subordinated debentures (less an amount equal to any accrued
but unpaid interest that you did not previously include in income, which
will be taxable as interest income); and
- your adjusted tax basis in your capital securities or junior subordinated
debentures sold or redeemed.
Your gain or loss will be a capital gain or loss, provided that you held
the capital securities or junior subordinated debentures as a capital asset. The
gain or loss will generally be a long-term capital gain or loss if you have held
your capital securities or junior subordinated debentures for more than one
year. Long-term capital gains of individuals derived with respect to capital
assets held for more than one year are currently subject to tax at a maximum
rate of 20%. The deductibility of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
The following discussion only applies to you if you are not a United States
person. As discussed above, the capital securities will be treated by the
parties as evidence of undivided beneficial ownership interests in the junior
subordinated debentures. See above under the caption "-- Classification of the
Trust" in this section.
U.S. Federal Withholding Tax. The 30% U.S. federal withholding tax will
not apply to any payment of principal or interest (including OID) on the capital
securities (or the junior subordinated debentures) provided that in the case of
payments of interest:
- you do not actually (or constructively) own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and the United States Treasury regulations;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on the capital securities
(or the junior subordinated debentures) is described in section
881(c)(3)(A) of the Code; and
- (a) you provide your name and address on an IRS Form W-8BEN (or other
applicable form), and certify, under penalties of perjury, that you are
not a United States person, or (b) you hold your capital securities (or
junior subordinated debentures) through certain foreign intermediaries
and you
S-28
satisfy the certification requirements of applicable United States
Treasury regulations. Special certification rules apply to non-United
States persons that are pass-through entities.
If you cannot satisfy the requirements described above, payments of
premium, if any, and interest (including OID) made to you will be subject to the
30% U.S. federal withholding tax, unless you provide us with a properly executed
(1) IRS Form W-8BEN (or other applicable form) claiming an exemption from, or
reduction in the rate of, withholding under the benefit of an applicable tax
treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on
the capital securities (or the junior subordinated debentures) is not subject to
withholding tax because it is effectively connected with your conduct of a trade
or business in the United States as discussed below under the caption "U.S.
Federal Income Tax" in this section.
The 30% U.S. federal withholding tax will not apply to any gain that you
realize on the sale, exchange, retirement or other disposition of the capital
securities or junior subordinated debentures.
U.S. Federal Income Tax. If you are engaged in a trade or business in the
United States and interest on the capital securities (or the junior subordinated
debentures) is effectively connected with the conduct of that trade or business,
you will be subject to U.S. federal income tax on that interest on a net income
basis (although exempt from the 30% withholding tax), in the same manner as if
you were a United States person as defined under the Code. In addition, if you
are a foreign corporation, you may be subject to a branch profits tax equal to
30% (or lower applicable treaty rate) of your earnings and profits for the
taxable year, subject to adjustments, that are effectively connected with the
conduct by you of a trade or business in the United States.
Any gain realized on the disposition of a capital security (or a junior
subordinated debenture) generally will not be subject to U.S. federal income tax
unless (1) that gain is effectively connected with the conduct of a trade or
business by you in the United States, or (2) you are an individual who is
present in the United States for 183 days or more in the taxable year of that
disposition, and certain other conditions are met.
U.S. Federal Estate Tax. Your estate will not be subject to U.S. federal
estate tax on the capital securities (or the junior subordinated debentures)
beneficially owned by you at the time of your death, provided that (1) you do
not own 10% or more of the total combined voting power of all classes of our
voting stock (within the meaning of the Code and the United States Treasury
regulations) and (2) interest on those capital securities (or junior
subordinated debentures) would not have been, if received at the time of your
death, effectively connected with the conduct by you of a trade or business in
the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
United States Holders. In general, information reporting requirements will
apply to payments of income on the capital securities (or the junior
subordinated debentures) and to the proceeds of the sale of the capital
securities (or the junior subordinated debentures) made to you (unless you are
an exempt recipient such as a corporation). A backup withholding tax will apply
to such payments if you fail to provide a taxpayer identification number, a
certification of exempt status, or fail to report in full interest income.
Non-United States Holders. In general, no information reporting or backup
withholding will be required regarding payments of income on the capital
securities (or the junior subordinated debentures) that we make to you provided
that we do not have actual knowledge that you are a United States person and we
have received from you the certification described above in the fourth bullet
point under the caption "Non-United States Holders -- U.S. Federal Withholding
Tax" in this section.
In addition, no information reporting or backup withholding will be
required regarding the proceeds of the sale of capital securities (or junior
subordinated debentures) made within the United States or conducted through
certain United States financial intermediaries if (1) the payor receives the
certification
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described above and does not have actual knowledge that you are a United States
person or (2) you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
ERISA CONSIDERATIONS
Each fiduciary of an employee benefit plan subject to Title I of ERISA, a
plan described in Section 4975 of the Code, including an individual retirement
arrangement or a Keogh plan, a plan subject to provisions under applicable
federal, state, local, non-U.S. or other laws or regulations that are similar to
the provisions of Title I of ERISA or Section 4975 of the Code ("Similar Laws"),
and any entity whose underlying assets include "plan assets" by reason of any
such employee benefit plan's or plan's investment in such entity (each of which
we refer to as a "Plan") should consider the fiduciary responsibility and
prohibited transaction provisions of ERISA, applicable Similar Laws and Section
4975 of the Code in the context of the Plan's particular circumstances before
authorizing an investment in the capital securities. Accordingly, such a
fiduciary should consider, among other factors, that each Plan investing in the
capital securities will be deemed to have represented that the Plan's purchase
of the capital securities is covered by one or more prohibited transaction
exemptions. Plan fiduciaries should also consider whether the Plan's investment
in the capital securities would satisfy the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing their Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") regarding such a Plan. A violation of these "prohibited
transaction" rules may result in an excise tax, penalty or other liabilities
under ERISA and/or Section 4975 of the Code for such persons or, in the case of
an individual retirement account, the occurrence of a prohibited transaction
involving the individual who established the individual retirement account, or
his or her beneficiaries, would cause the individual retirement account to lose
its tax-exempt status, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
ERISA and the Code do not define "plan assets." However, regulations (the
"Plan Assets Regulations") promulgated under ERISA by the DOL generally provide
that when a Plan subject to Title I of ERISA or Section 4975 of the Code
acquires an equity interest in an entity that is neither a "publicly-offered
security" nor a security issued by an investment company registered under the
Investment Company 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 equity participation in the entity by "benefit plan
investors" is not "significant" or that the entity is an "operating company," in
each case as defined in the Plan Assets Regulations. The Trust is not expected
to qualify as an operating company and will not be an investment company
registered under the Investment Company Act. For purposes of the Plan Assets
Regulations, equity participation in an entity by benefit plan investors will
not be significant if they hold, in the aggregate less than 25% of the value of
any class of such entity's equity, excluding equity interests held by persons
(other than a benefit plan investor) with discretionary authority or control
over the assets of the entity or who provide investment advice for a fee (direct
or indirect) with respect to such assets, and any affiliates thereof. For
purposes of this 25% test (the "Benefit Plan Investor Test"), "benefit plan
investors" include all employee benefit plans, whether or not subject to ERISA
or the Code, including governmental plans, "Keogh" plans, individual retirement
accounts and pension plans maintained by foreign corporations, as well as any
entity whose underling assets are deemed to include plan assets under the Plan
Assets Regulations (e.g., an entity of which 25% or more of the value of any
class of equity interests is held by employee benefit plans or other benefit
plan investors and which does
S-30
not satisfy another exception under the Plan Assets Regulations). No assurance
can be given that the value of the capital securities held by "benefit plan
investors" will be less than 25% of the total value of such capital securities
at the completion of the initial offering of the capital securities or
thereafter, and no monitoring or other measures will be taken regarding the
satisfaction of the conditions to this exception. All of the common securities
will be purchased and held by Banknorth.
For purposes of the Plan Assets Regulations, a "publicly-offered security"
is a security that is (a) "freely transferable," (b) part of a class of
securities that is "widely held," and (c)(i) sold to the Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act of 1933 within 120 days after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred or (ii) is part of a class of securities that is registered
under Section 12 of the Securities Exchange Act of 1934 (the "Registration
Requirement"). It is anticipated that the capital securities will be offered in
a manner which satisfies the Registration Requirement. The Plan Assets
Regulations provide that a security is "widely held" only if it is part of a
class of securities that is owned by 100 or more investors independent of the
issuer and of one another. A security will not fail to be "widely held" because
the number of independent investors falls below 100 subsequent to the initial
offering as a result of events beyond the control of the issuer. It is
anticipated that the capital securities will be "widely held" within the meaning
of the Plan Assets Regulations, although no assurance can be given in this
regard. The Plan Assets Regulations provide that whether a security is "freely
transferable" is a factual question to be determined on the basis of all
relevant facts and circumstances. The Plan Assets Regulations further provide
that when a security is part of an offering in which the minimum investment in
US $10,000 or less, certain restrictions described in the Plan Assets
Regulations ordinarily will not, alone or in combination, affect the finding
that such securities are "freely transferable." It is anticipated that the
capital securities will be "freely transferable" within the meaning of the Plan
Assets Regulations, although no assurance can be given in this regard.
As indicated above, there can be no assurance that any of the exceptions
set forth in the Plan Assets Regulations will apply to the capital securities,
and, as a result, under the terms of the Plan Assets Regulations, an investing
Plan's assets could be considered to include an undivided interest in the assets
held by the Trust (including the junior subordinated debentures).
If the assets of the Trust were to be deemed to be "plan assets" under
ERISA, this would result, among other things, in (i) the application of the
prudence and other fiduciary responsibility standards of ERISA to investments
made by the Trust and (ii) the possibility that certain transactions in which
the Trust might seek to engage could constitute "prohibited transactions" under
ERISA and the Code. If a prohibited transaction occurs for which no exemption is
available, any fiduciary that has engaged in the prohibited transaction could be
required (i) to restore to the Plan any profit realized on the transaction and
(ii) to reimburse the Plan for any losses suffered by the Plan as a result of
the investment. In addition, each disqualified person (within the meaning of
Section 4975 of the Code) involved could be subject to an excise tax equal to
15% of the amount involved in the prohibited transaction for each year the
transaction continues and, unless the transaction is corrected within
statutorily required periods, to an additional tax of 100%. Plan fiduciaries who
decide to invest in the Trust could, under certain circumstances, be liable for
prohibited transactions or other violations as a result of their investment in
the Trust or as co-fiduciaries for actions taken by or on behalf of the Trust.
With respect to an individual retirement account ("IRA") that invests in the
Trust, the occurrence of a prohibited transaction involving the individual who
established the IRA, or his or her beneficiaries, would cause the IRA to lose
its tax-exempt status.
Regardless of whether the assets of the Trust are deemed to be "plan
assets" of Plans investing in the Trust, as discussed above, the acquisition and
holding of the capital securities with "plan assets" of a Plan could itself
result in a prohibited transaction. The DOL has issued five prohibited
transaction class exemptions ("PTCEs") that may provide exemptive relief for
direct or indirect prohibited transactions resulting from the purchase and/or
holding of the capital securities by a Plan. These class exemptions are:
- PTCE 96-23 (for certain transactions determined by "in-house asset
managers");
S-31
- PTCE 95-60 (for certain transactions involving insurance company general
accounts);
- PTCE 91-38 (for certain transactions involving bank collective investment
funds);
- PTCE 90-1 (for certain transactions involving insurance company pooled
separate accounts); and
- PTCE 84-14 (for certain transactions determined by independent "qualified
professional asset managers").
Such class exemptions may not, however, apply to all of the transactions
that could be deemed prohibited transactions in connection with a Plan's
investment in the capital securities.
Any purchaser of the capital securities that is an insurance company using
assets of its general account should note that, based on the reasoning of the
United States Supreme Court set forth in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993), and amendments to
ERISA Section 401(c), an insurance company's general account may be deemed to
include assets of Plans investing in such general account (e.g., through the
purchase of an annuity contract).
Any insurance company considering the use of its general account assets to
purchase capital securities should consult with its counsel concerning matters
affecting its purchase decision.
Because of ERISA's prohibitions and those of Section 4975 of the Code,
discussed above and the potential application of Similar Laws to Plans not
subject to Title I of ERISA or Section 4975 of the Code (a "Non-ERISA Plan"),
the capital securities, or any interest therein, should not be purchased or held
by any Plan or any person investing "plan assets" of any Plan, unless such
purchase and holding is covered by the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or individual
exemption) (or, in the case of a Non-ERISA Plan, a similar exemption applicable
to the transaction). Accordingly, each 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:
- it is not a Plan and no part of the assets to be used by it to purchase
and/or hold such capital securities or any interest therein constitutes
"plan assets" of any Plan; or
- it is itself a Plan, or is purchasing or holding the capital securities
or an interest therein on behalf of or with "plan assets" of one or more
Plans, and each such purchase and holding of such securities either (i)
satisfies the requirements of, and is entitled to full exemptive relief
under, PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable
class or individual exemption) (or, in the case of a Non-ERISA Plan, a
similar exemption applicable to the transaction) or (ii) will not result
in a prohibited transaction under ERISA or the Code or its equivalent
under applicable Similar Laws.
Although, as noted above, governmental plans and certain other plans are
not subject to ERISA, including the prohibited transaction provisions thereof,
or of Section 4975 of the Code, Similar Laws governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and Section 4975 of the Code
discussed above. Similarly, fiduciaries of other plans not subject to ERISA may
be subject to other legal restrictions under applicable Similar Laws.
Accordingly, fiduciaries of governmental plans or other plans not subject to
ERISA, in consultation with their advisors, should consider the impact of their
respective Similar Laws on their investment in capital securities, and the
considerations discussed above, to the extent applicable.
The foregoing discussion is general in nature and is not intended to be
inclusive. Consequently, and due to the complexity of the fiduciary
responsibility and prohibited transaction rules described above and the
penalties that may be imposed upon persons involved in non-exempt prohibited
transactions, it is particularly important that fiduciaries or other persons
considering purchasing the capital securities on behalf of or with "plan assets"
of any Plan consult with their counsel, prior to any such purchase, regarding
the potential applicability of ERISA, Section 4975 of the Code and any Similar
Laws to such investment and whether any exemption would be applicable and
determine on their own whether all
S-32
conditions of such exemption or exemptions have been satisfied such that the
acquisition and holding of capital securities by the purchaser Plan are entitled
to full exemption relief thereunder.
UNDERWRITING
We intend to offer the capital securities through the underwriters. Subject
to the terms and conditions contained in an underwriting agreement between us
and the underwriters, we have agreed to sell to the underwriters and the
underwriters severally has agreed to purchase from us, the amount of the capital
securities listed opposite their names below:
<Table>
<Caption>
UNDERWRITER NUMBER OF CAPITAL SECURITIES
- ----------- ----------------------------
Lehman Brothers Inc. .............................
Keefe, Bruyette & Woods, Inc. ....................
A.G. Edwards & Sons, Inc. ........................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................
Prudential Securities, Incorporated...............
UBS Warburg LLC...................................
Sandler O'Neill & Partners, L.P. .................
Stifel Nicolaus & Company, Incorporated...........
U.S. Bancorp Piper Jaffray Inc....................
---------
Total........................................ 5,000,000
=========
</Table>
The underwriters have agreed to purchase all of the capital securities
being sold pursuant to the underwriting agreement if any of these capital
securities are purchased. If an underwriter defaults, the underwriting agreement
provides that the purchase commitments of the nondefaulting underwriters may be
increased or the underwriting agreement may be terminated.
We and the Trust have agreed to indemnify the underwriters against, or to
contribute to payments that the underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act.
The underwriters are offering the capital securities, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
legal matters by their counsel, including the validity of the capital
securities, and other conditions contained in the underwriting agreement, such
as the receipt by the underwriters of officer's certificates, legal opinions and
comfort letters. The underwriters reserve the right to withdraw, cancel or
modify offers to that public and to reject orders in whole or in part.
COMMISSIONS AND DISCOUNTS
The underwriters propose initially to offer the capital securities to the
public at the initial public offering price set forth on the cover page of this
prospectus and to dealers at such price less a concession not in excess of
$ per capital security. The underwriters may allow, and the dealers may
reallow, a discount not in excess of $ per capital security to other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
In view of the fact that the proceeds of the sale of the capital securities
will ultimately be used to purchase the junior subordinated debentures, the
underwriting agreement provides that we will pay as compensation to the
underwriters arranging the investment therein of those proceeds, an amount in
immediately available funds of $ per capital security, or $ in the
aggregate ($ in the aggregate, if the underwriters exercise in full
their over-allotment option), for the account of the several underwriters.
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The following table shows that per share capital security and total public
offering price, underwriting commission to be paid by us and proceeds to the
Trust. The information assumes either no exercise or full exercise by the
underwriters of their over-allotment option.
<Table>
<Caption>
PER
CAPITAL
SECURITY WITHOUT OPTION WITH OPTION
--------- -------------- -----------
Public offering price................................... $ $ $
Underwriting discount................................... $ $ $
Proceeds, before expenses, to the Trust................. $ $ $
</Table>
The expenses of the offering, not including the underwriters' discount, are
estimated to be $ and are payable by us.
OVER-ALLOTMENT OPTION
The Trust has granted the underwriters an option exercisable for 30 days
after the date of this prospectus to purchase up to an aggregate of 750,000
additional shares of capital securities solely to cover over-allotments, if any.
If the underwriters exercise their over-allotment option, the underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares of capital securities to be
purchased by each of them, as shown in the table above, bears to the shares of
capital securities offered hereby. The underwriters have agreed to reimburse the
Trust for accrued dividends, if any, on such additional shares of capital
securities purchased to cover over-allotments, from the date of original issue
of the shares of capital securities to their time of delivery.
NO SALE OF SIMILAR SECURITIES
During a period of 30 days from the date of the prospectus, neither we nor
the Trust will, without the prior written consent of Lehman Brothers Inc. and
Keefe, Bruyette & Woods, Inc., directly or indirectly sell, offer to sell, grant
any option for sale of, or otherwise dispose of, any capital securities, any
security convertible into or exchangeable into or exercisable for capital
securities or junior subordinated debentures or any debt securities
substantially similar to the junior subordinated debentures or equity securities
substantially similar to the capital securities, except for the capital
securities offered in connection with this offering.
NEW YORK STOCK EXCHANGE LISTING
Prior to this offering, there has been no public market for the capital
securities. The Trust will apply to have the capital securities listed on the
New York Stock Exchange. Trading of the capital securities on the New York Stock
Exchange is expected to commence within a 30-day period after the initial
delivery of the capital securities. The underwriters have advised us and the
Trust that they intend to make a market in the capital securities prior to the
commencement of trading on the New York Stock Exchange, but are not obligated to
do so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the capital
securities.
In order to meet one of the requirements for listing the capital securities
on the New York Stock Exchange the underwriters have undertaken to sell capital
securities to a minimum of 400 beneficial holders.
PRICE STABILIZATION AND SHORT POSITIONS
Until the distribution of the capital securities is completed, rules of the
SEC may limit the ability of the underwriters and any selling group members to
bid for and purchase the capital securities. As an exception to these rules, the
underwriters are permitted to engage in some transactions that stabilize the
price of the capital securities. Those transactions consist of bids or purchases
for the purposes of pegging, fixing or maintaining the price of the capital
securities.
S-34
If the underwriters create a short position in the capital securities in
connection with the offering, i.e., if they sell more capital securities than
are listed on the cover page of this prospectus supplement, the underwriters may
reduce that short position by purchasing capital securities in the open market.
The underwriters may also impose a penalty bid on certain selling group
members. This means that if the underwriters purchase capital securities in the
open market to reduce the underwriters' short position or to stabilize the price
of the capital securities, they may reclaim the amount of the selling concession
from the selling group members who sold those capital securities as part of the
offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of these purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the capital securities. In addition,
neither we nor any of the underwriters makes any representation that the
underwriters will engage in these transactions or that these transactions, once
commenced, will not be discontinued without notice.
OTHER RELATIONSHIPS
Some of the underwriters or their affiliates engage in transactions with,
and, from time to time, have performed services for, us and our subsidiaries in
the ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating to the Trust will be passed upon
for the Trust and Banknorth by Richards, Layton & Finger, P.A., Wilmington,
Delaware. The due authorization, execution and delivery of the junior
subordinated debentures and the validity of the junior subordinated debentures
and the guarantees will be passed upon for Banknorth and the Trust by Elias,
Matz, Tiernan & Herrick L.L.P., Washington, D.C. The validity of the junior
subordinated debentures and the guarantees will be passed upon for the
underwriters by Sidley Austin Brown & Wood LLP, New York, New York. Certain
United States federal income taxation matters also will be passed upon for
Banknorth and the Trust by Elias, Matz, Tiernan & Herrick L.L.P., Washington,
D.C.
EXPERTS
The consolidated financial statements of Banknorth as of December 31, 2000
and 1999 and for each of the years in the three-year period ended December 31,
2000, incorporated by reference herein from Banknorth's annual report on Form
10-K for the year ended December 31, 2000, have been so incorporated in reliance
upon the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
S-35
5,000,000 Securities
BANKNORTH CAPITAL TRUST II
% Trust Preferred Securities
Fully and unconditionally guaranteed by
BANKNORTH GROUP, INC.
------------------------------------------
PROSPECTUS SUPPLEMENT
February , 2002
------------------------------------------
KEEFE, BRUYETTE & WOODS, INC.
LEHMAN BROTHERS
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
PRUDENTIAL SECURITIES
UBS WARBURG
SANDLER O'NEILL & PARTNERS, L.P.
Stifel Nicolaus
U.S. Bancorp Piper Jaffray
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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2002
PROSPECTUS
$1,000,000,000
BANKNORTH GROUP, INC.
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBT SECURITIES
BANKNORTH CAPITAL TRUST II
BANKNORTH CAPITAL TRUST III
BANKNORTH CAPITAL TRUST IV
CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED
IN THIS PROSPECTUS, BY
BANKNORTH GROUP, INC.
---------------------
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
---------------------
The securities will be unsecured obligations of Banknorth and/or the trusts
and will not be savings accounts deposits or other obligations of any bank or
non-bank subsidiary of Banknorth and/or the trusts and are not insured by the
Federal Deposit Insurance Corporation, the Bank Insurance Fund or any other
government agency.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus may not be used to sell securities unless accompanied by
the applicable prospectus supplement.
The date of this prospectus is , 2002.
You should rely on the information incorporated by reference or provided in
this prospectus. Neither we, the trusts nor the underwriters have authorized
anyone else to provide you with different information. Neither we, the trusts
nor the underwriters are making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
---------------------
TABLE OF CONTENTS
PROSPECTUS
<Table>
<Caption>
PAGE
----
About this Prospectus....................................... 3
Where You Can Find More Information......................... 4
Forward-Looking Statements.................................. 5
Banknorth Group, Inc........................................ 6
The Trusts.................................................. 7
Use of Proceeds............................................. 7
Ratios of Earnings to Fixed Charges......................... 8
Supervision and Regulation.................................. 8
Description of Junior Subordinated Debt Securities.......... 11
Description of Capital Securities........................... 21
Description of the Guarantee................................ 30
Relationship among the Capital Securities, the Corresponding
Junior Subordinated Debt Securities and the Guarantees.... 32
Book-Entry Issuance......................................... 33
Plan of Distribution........................................ 35
Validity of Securities...................................... 36
Experts..................................................... 36
Glossary.................................................... 37
</Table>
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we, along with the
trusts, Banknorth Capital Trust II, Banknorth Capital Trust III and Banknorth
Capital Trust IV, filed with the SEC using a shelf registration process. Under
this shelf process, we may sell:
- debt securities;
- preferred stock;
- depositary shares;
- common stock; and
- warrants;
and the trusts may sell:
- capital securities (representing undivided beneficial interests in the
trusts) to the public; and
- common securities to us in one or more offerings.
The trusts will use the proceeds from sales of securities to buy a series
of our junior subordinated debt securities with terms that correspond to the
capital securities.
We:
- will pay principal and interest on our junior subordinated debt
securities, subject to the payment of our more senior debt;
- may choose to distribute our junior subordinated debt securities pro rata
to the holders of the related capital securities and common securities if
we terminate a trust; and
- will fully and unconditionally guarantee the capital securities based on:
- our obligations to make payments on our junior subordinated debt
securities;
- our obligations under our guarantee (our payment obligations are subject
to payment on all of our general liabilities); and
- our obligations under the trust agreements.
This prospectus provides you with a general description of the capital
securities, the junior subordinated debt securities and our guarantee relating
to the capital securities. The description of the debt securities, the preferred
stock, the depositary shares, common stock and warrants will be included in a
separate prospectus in this registration statement. Each time we sell capital
securities, we will provide an applicable prospectus supplement that will
contain specific information about the terms of that offering. The applicable
prospectus supplement may also add, update or change information in this
prospectus. You should read this prospectus and the applicable prospectus
supplement together with the additional information described under the heading
"Where You Can Find More Information."
The registration statement that contains this prospectus (including the
exhibits to the registration statement) has additional information about us and
about the trusts and the securities offered under this prospectus. That
registration statement can be read at the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information."
The words "Banknorth," "we," "our" and "us" refer to Banknorth Group, Inc.
and its subsidiaries, unless otherwise stated. We have also defined terms in the
glossary section at the back of this prospectus.
Unless otherwise indicated, currency amounts in this prospectus and in any
prospectus supplement are stated in U.S. dollars.
3
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities
Act of 1933 that registers the offer and sale of the securities offered by this
prospectus. The registration statement, including the accompanying exhibits
included or incorporated by reference therein, contains additional relevant
information about us. The rules and regulations of the SEC allow us to omit
certain information included in the registration statement from this prospectus.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to incorporate by reference the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the following documents listed below and any future filings made with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, until the termination of the offering of the securities offered hereby:
- Annual Report on Form 10-K for the year ended December 31, 2000;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001; and
- Current Reports on Form 8-K filed on January 24, 2001, June 11, 2001 (as
amended on June 13, 2001 and on July 25, 2001), November 1, 2001 and
January 22, 2002.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Banknorth Group, Inc.
P.O. Box 9540
Two Portland Square
Portland, Maine 04112-9540
Attn: Investor Relations Department
(207) 761-8500
The trusts have no separate financial statements. The statements would not
be material to holders of the capital securities because the trusts have no
independent operations.
4
FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the information
incorporated by reference in this prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are
based on our management's beliefs and assumptions and on information currently
available to our management. Forward-looking statements include information
concerning our possible or assumed future results of operations and statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. Factors that could cause actual results to differ
from these forward-looking statements include, but are not limited to, the
following, as well as those discussed elsewhere in this prospectus, any
accompanying prospectus supplement and in the documents incorporated by
reference herein:
- our investments in our businesses and in our Internet development could
require additional incremental spending, and might not produce expected
deposit and loan growth and anticipated contributions to our earnings;
- general economic or industry conditions could be less favorable than
expected, resulting in a deterioration in credit quality, a change in the
allowance for loan and lease losses or a reduced demand for credit or
fee-based products and services;
- changes in the domestic interest rate environment could reduce net
interest income and could increase credit losses;
- the conditions of the securities markets could change, which could
adversely affect, among other things, the value or credit quality of our
assets, the availability and terms of funding necessary to meet our
liquidity needs and our ability to originate loans and leases;
- changes in the extensive laws, regulations and policies governing
financial holding companies and their subsidiaries could alter our
business environment or affect our operations;
- the potential need to adapt to industry changes in information technology
systems, on which we are highly dependent, could present operational
issues or require significant capital spending;
- competitive pressures could intensify and affect our profitability,
including as a result of continued industry consolidation, the increased
availability of financial services from non-banks, technological
developments such as the Internet or bank regulatory reform; and
- acquisitions may result in large one-time charges to income, may not
produce revenue enhancements or cost savings at levels or within time
frames originally anticipated and may result in unforeseen integration
difficulties.
You should not put undue reliance on any forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update them in light of new information or future
events except to the extent required by Federal securities laws.
5
BANKNORTH GROUP, INC.
We conduct business from our headquarters in Portland, Maine and, as of
December 31, 2001, 308 banking offices located in Maine, New Hampshire,
Massachusetts, Vermont, New York and Connecticut. At December 31, 2001, we had
consolidated assets of $21.1 billion and consolidated stockholders' equity of
$1.8 billion. Based on total assets at December 31, 2001, we are one of the 40
largest commercial banking organizations in the United States.
We offer a broad range of commercial, consumer banking and trust and
investment advisory services and products through Banknorth, NA, which was
formed on January 1, 2002 upon the consolidation of all nine of our banking
subsidiaries into a single national bank. Through subsidiaries of Banknorth, NA,
we also are engaged in insurance brokerage, equipment leasing and financial
planning activities.
Our profitability and market share have been enhanced in recent years
through internal growth and acquisitions of both financial and nonfinancial
institutions. We continually evaluate acquisition opportunities and frequently
conduct due diligence in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases, negotiations frequently take place
and future acquisitions involving cash, debt or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore, some dilution of our book value and net income per
common share may occur in connection with any future transactions. Moreover,
acquisitions commonly result in significant one-time charges against earnings,
although cost-savings, especially incident to in-market acquisitions, frequently
are anticipated.
We are a Maine corporation which is subject to extensive regulation and
supervision under federal and state banking laws. For additional information in
this regard, see "Supervision and Regulation," commencing on page 8.
Our executive offices are located at Two Portland Square, Portland, Maine
04112-9540, and our telephone number is (207) 761-8500.
Additional information about us and our subsidiaries can be obtained from
the documents incorporated by reference herein. See "Where You Can Find More
Information" on page 4.
6
THE TRUSTS
We created a number of trusts under Delaware law under separate trust
agreements established for each trust. A trust is a fiduciary relationship where
one person known as the trustee, holds some property for the benefit of another
person, in this case, the purchasers of the securities. For the securities being
sold, the trustees and we will enter into amended and restated trust agreements
that will be essentially in the form filed as an exhibit to the registration
statement, which will state the terms and conditions for each trust to issue and
sell the specific capital securities and common securities.
The trusts exist solely to:
- issue and sell capital securities and common securities;
- use the gross proceeds from the sale of the capital securities and common
securities to purchase corresponding series of our junior subordinated
debt securities;
- maintain their status as grantor trusts for federal income tax purposes;
and
- engage in other activities that are necessary or incidental to these
purposes.
We will purchase all of the common securities of each trust. The common
securities will represent an aggregate liquidation amount equal to at least 3%
of each trust's total capitalization. The capital securities will represent the
remaining 97% of each trust's total capitalization. The common securities will
have terms substantially identical to, and will rank equal in priority of
payment with, the capital securities. If we default on the corresponding junior
subordinated debt securities, then distributions on the common securities will
be subordinate to the preferred securities in priority of payment.
For each trust, as the direct or indirect holder of the common securities,
we have appointed five trustees to conduct each trust's business and affairs. As
holder of the common securities we (except in some circumstances) have the power
to:
- appoint the trustees;
- replace or remove the trustees; and
- increase or decrease the number of trustees.
This means that if you are dissatisfied with a trustee you will not be able
to remove the trustee without our assistance. Similarly, if we are dissatisfied
with a trustee we can remove the trustee even if you are satisfied with the
trustee.
The capital securities will be fully and unconditionally guaranteed by us
as described under "Description of the Guarantees."
The principal executive offices of each trust is c/o Banknorth Group, Inc.,
P.O. Box 9540, Two Portland Square, Portland, Maine 04112-9540 and the telephone
number is (207) 761-8500.
USE OF PROCEEDS
Each trust will use all the proceeds from the sale of the capital
securities to purchase our junior subordinated debt securities. Except as
otherwise stated in the applicable prospectus supplement, we intend to use the
proceeds from the sale of our junior subordinated debt securities (including
corresponding junior subordinated debt securities) for general corporate
purposes, including working capital, capital expenditures, investments in or
advances to existing or future indebtedness, repayment of maturing obligations,
replacement of outstanding indebtedness and repurchase of outstanding stock.
Pending such use, we may temporarily invest the proceeds or use them to reduce
short-term indebtedness.
The applicable prospectus supplement provides more details on the use of
proceeds of any specific offering.
7
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods shown. For purposes of computing the ratios, earnings
represent income before income taxes and change in accounting principle, plus
fixed charges. Fixed charges include all interest expense and the proportion
deemed representative of the interest factor of rent expense. These ratios are
presented both including and excluding interest on deposits.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999 1998 1997
----- ----- ----- ----- -----
Ratio of earnings to fixed charges:
Including interest on deposits....................... 1.63x 1.39x 1.48x 1.38x 1.44x
Excluding interest on deposits....................... 2.63x 1.90x 2.20x 2.29x 2.68x
</Table>
SUPERVISION AND REGULATION
GENERAL
Banknorth currently is registered as a bank holding company and a financial
holding company under the Bank Holding Company Act of 1956, as amended. As such,
we are subject to regulation, supervision and examination by the Federal Reserve
Board. We also are registered as a Maine financial institution holding company
under Maine law and as such are subject to regulation and examination by the
Superintendent of Banking of the State of Maine. Banknorth, NA is a national
bank subject to regulation, supervision and examination by the OCC, its
chartering authority, and by the FDIC, which insures Banknorth, NA's deposits to
the maximum extent permitted by law. The following discussion summarizes certain
aspects of those federal banking laws and regulations that affect us and our
subsidiaries.
FINANCIAL MODERNIZATION
Effective March 11, 2000, the Gramm-Leach-Bliley Act permits bank holding
companies to become financial holding companies and thereby affiliate with
securities firms and insurance companies and engage in other activities that are
financial in nature and which are not authorized for bank holding companies. A
bank holding company may become a financial holding company if each of its
subsidiary banks is well capitalized under the FDICIA prompt corrective action
provisions, is well managed and has at least a satisfactory rating under the
Community Reinvestment Act by filing a declaration with the Federal Reserve
Board that the bank holding company seeks to become a financial holding company.
No regulatory approval is required for a financial holding company to acquire a
company, other than a bank or savings association, engaged in activities that
are financial in nature or incidental to activities that are financial in
nature, as determined by the Federal Reserve Board.
The Gramm-Leach-Bliley Act defines "financial in nature" to include
securities underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities; and activities that the Federal Reserve Board has determined to be
closely related to banking. A national bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory Community Reinvestment Act rating. Subsidiary banks of a financial
holding company or national banks with financial subsidiaries must continue to
be well capitalized and well managed in order to continue to engage in
activities that are financial in nature without regulatory actions or
restrictions, which could include divestiture of the financial in nature
subsidiary or subsidiaries. In addition, a financial holding company or a bank
may not acquire a company that is engaged in activities that are financial in
nature unless each of the subsidiary banks of the financial holding company or
the bank has a Community Reinvestment Act rating of satisfactory or better.
8
BANK ACQUISITIONS
Pursuant to the Bank Holding Company Act, we are required to obtain the
prior approval of the Federal Reserve Board before acquiring more than 5% of any
class of voting stock of any bank that is not already majority owned by us.
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Interstate Banking and Branching Act"), a bank holding company became
able to acquire banks in states other than its home state beginning September
29, 1995, without regard to the permissibility of such acquisitions under state
law, but subject to any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company, prior to or following the proposed
acquisition, controls no more than 10% of the total amount of deposits of
insured depository institutions in the United States and less than 30% of such
deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, subject to certain restrictions, thereby creating interstate
branches. Pursuant to the Interstate Banking and Branching Act, a bank also may
open new branches in a state in which it does not already have banking
operations if the state enacts a law permitting such de novo branching.
CAPITAL AND OPERATIONAL REQUIREMENTS
The Federal Reserve Board, the OCC and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to U.S. banking
organizations. In addition, those regulatory agencies may from time to time
require that a banking organization maintain capital above the minimum levels,
whether because of its financial condition or actual or anticipated growth. The
Federal Reserve Board risk-based guidelines define a three-tier capital
framework. "Tier 1 capital" generally consists of common and qualifying
preferred stockholders' equity, less certain intangibles and other adjustments.
"Tier 2 capital" and "Tier 3 capital" generally consist of subordinated and
other qualifying debt, preferred stock that does not qualify as Tier 1 capital
and the allowance for credit losses up to 1.25% of risk-weighted assets.
The sum of Tier 1, Tier 2 and Tier 3 capital, less investments in
unconsolidated subsidiaries, represents qualifying "total capital," at least 50%
of which must consist of Tier 1 capital. Risk-based capital ratios are
calculated by dividing Tier 1 capital and total capital by risk-weighted assets.
Assets and off-balance sheet exposures are assigned to one of four categories of
risk weights, based primarily on relative credit risk. The minimum Tier 1
risk-based capital ratio is 4% and the minimum total risk-based capital ratio is
8%. At December 31, 2001, Banknorth's Tier 1 risk-based capital and total
risk-based capital ratios under these guidelines were in excess of 9.5% and
12.0%, respectively.
The "leverage ratio" requirement is determined by dividing Tier 1 capital
by adjusted average total assets. Although the stated minimum ratio is 3%, most
banking organizations are required to maintain ratios of at least 100 to 200
basis points above 3%. At December 31, 2001, Banknorth's leverage ratio was
7.14%.
Federal bank regulatory agencies require banking organizations that engage
in significant trading activity to calculate a capital charge for market risk.
Significant trading activity means trading activity of at least 10% of total
assets or $1 billion, whichever is smaller, calculated on a consolidated basis
for bank holding companies. Federal bank regulators may apply the market risk
measure to other banks and bank holding companies as the agency deems necessary
or appropriate for safe and sound banking practices. Each agency may exclude
organizations that it supervises that otherwise meet the criteria under certain
circumstances. The market risk charge will be included in the calculation of an
organization's risk-based capital ratios.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective U.S. federal regulatory agencies
to implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA
9
imposes progressively more restrictive constraints on operations, management and
capital distributions, depending on the category in which an institution is
classified. Failure to meet the capital guidelines could also subject a banking
institution to capital raising requirements. An "undercapitalized" bank must
develop a capital restoration plan and its parent holding company must guarantee
that bank's compliance with the plan. The liability of the parent holding
company under any such guarantee is limited to the lesser of 5% of the bank's
assets at the time it became undercapitalized or the amount needed to comply
with the plan. Furthermore, in the event of the bankruptcy of the parent holding
company, such guarantee would take priority over the parent's general unsecured
creditors. In addition, FDICIA requires the various regulatory agencies to
prescribe certain non-capital standards for safety and soundness related
generally to operations and management, asset quality and executive compensation
and permits regulatory action against a financial institution that does not meet
such standards.
The various federal bank regulatory agencies have adopted substantially
similar regulations that define the five capital categories identified by
FDICIA, using the total risk-based capital, Tier 1 risk-based capital and
leverage capital ratios as the relevant capital measures. Such regulations
establish various degrees of corrective action to be taken when an institution
is considered undercapitalized. Under the regulations, a "well capitalized"
institution must have a Tier 1 capital ratio of at least 6%, a total capital
ratio of at least 10% and a leverage ratio of at least 5% and not be subject to
a capital directive order. An "adequately capitalized" institution must have a
Tier 1 capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines,
Banknorth, NA is considered "well capitalized."
The Federal bank regulatory agencies also have adopted regulations which
mandate that regulators take into consideration concentrations of credit risk
and risks from non-traditional activities, as well as an institution's ability
to manage those risks, when determining the adequacy of an institution's
capital. That evaluation will be made as part of the institution's regular
safety and soundness examination. Banking agencies also have adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance sheet position) in the
determination of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. The banking agencies
do not intend to establish an explicit risk-based capital charge for interest
rate risk but will continue to assess capital adequacy for interest rate risk
under a risk assessment approach based on a combination of quantitative and
qualitative factors and have provided guidance on prudent interest rate risk
management practices.
DISTRIBUTIONS
We derive funds for cash distributions to our stockholders primarily from
dividends received from banking subsidiaries. Banknorth, NA is subject to
various general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain capital above regulatory minimums.
The appropriate U.S. federal regulatory authority is authorized to determine
under certain circumstances relating to the financial condition of the bank or
bank/financial holding company that the payment of dividends would be an unsafe
or unsound practice and to prohibit payment thereof.
In addition to the foregoing, the ability of us and Banknorth, NA to pay
dividends may be affected by the various minimum capital requirements and the
capital and non-capital standards established under FDICIA, as described above.
The right of us and our stockholders and creditors to participate in any
distribution of the assets or earnings of our subsidiaries is further subject to
the prior claims of creditors of such subsidiaries.
"SOURCE OF STRENGTH" POLICY
According to Federal Reserve Board policy, bank/financial holding companies
are expected to act as a source of financial strength to each subsidiary bank
and to commit resources to support each such subsidiary. This support may be
required at times when a bank/financial holding company may not be able to
provide such support. Similarly, under the cross-guarantee provisions of the
Federal Deposit Insurance
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Act, in the event of a loss suffered or anticipated by the FDIC -- either as a
result of default of a banking or thrift subsidiary of a bank/financial holding
company such as Banknorth or related to FDIC assistance provided to a subsidiary
in danger of default -- the other banking subsidiaries of such bank/financial
holding company may be assessed for the FDIC's loss, subject to certain
exceptions.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
This section describes the general terms and provisions of the junior
subordinated debt securities that are offered by this prospectus. The applicable
prospectus supplement will describe the specific terms of the series of the
junior subordinated debt securities offered under that prospectus supplement and
any general terms outlined in this section that will not apply to those junior
subordinated debt securities.
The junior subordinated indenture will be qualified under the Trust
Indenture Act. A form of the junior subordinated indenture is filed as an
exhibit to the registration statement relating to this prospectus.
This section summarizes the material terms and provisions of the junior
subordinated indenture and the junior subordinated debt securities. Because this
is a summary, it does not contain all of the details found in the full text of
the junior subordinated indenture and the junior subordinated debt securities.
If you would like additional information, you should read the form of junior
subordinated indenture and the form of junior subordinated debt securities.
GENERAL
We can issue the junior subordinated debt securities in one or more series.
A series of junior subordinated debt securities initially will be issued to a
trust in connection with a capital securities offering.
Unless otherwise described in the applicable prospectus supplement
regarding any offered junior subordinated debt securities, the junior
subordinated debt securities will rank equally with all other series of junior
subordinated debt securities, will be unsecured and will be subordinate and
junior in priority of payment to all of our Senior Debt as described below under
"Subordination."
The indenture does not limit the amount of junior subordinated debt
securities which we may issue, nor does it limit our issuance of any other
secured or unsecured Debt.
We can issue the junior subordinated debt securities under a supplemental
indenture, an officers' certificate or a resolution of our board of directors.
The applicable prospectus supplement will describe the following terms of
the junior subordinated debt securities:
- the title;
- any limit on the aggregate principal amount that may be issued;
- the date(s) on which the principal is payable or the method of
determining that date;
- the interest rate, if any, the interest payment dates, any rights we may
have to defer or extend an interest payment date, and the regular record
date for any interest payment or the method by which any of the foregoing
will be determined;
- the place(s) where payments shall be payable and where the junior
subordinated debt securities can be presented for registration of
transfer or exchange, and the place(s) where notices and demands to or on
us can be made;
- any period(s) within which or date(s) on which, price(s) at which and the
terms and conditions on which the junior subordinated debt securities can
be redeemed, in whole or in part, at our option or at the option of a
holder of the junior subordinated debt securities;
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- our or any holder's obligation or right, if any, to redeem, purchase or
repay the junior subordinated debt securities and other related terms and
provisions;
- the denominations in which any junior subordinated debt securities will
be issued if other than denominations of $100,000 and integral multiples
of $1,000 in excess thereof;
- if other than in U.S. dollars, the currency in which the principal,
premium and interest, if any, that the junior subordinated debt
securities will be payable or denominated;
- any additions, modifications or deletions in the events of default or
covenants specified in the indenture;
- the portion of the principal amount that will be payable at declaration
of acceleration of the maturity;
- any additions or changes to the indenture as will be necessary to
facilitate the issuance of a series of junior subordinated debt
securities in bearer form, registrable or not registrable for the
principal, and with or without interest coupons;
- the index or indices used to determine the amount of payments of
principal and premium, if any, on any junior subordinated debt securities
and how these amounts will be determined;
- the terms and conditions under which temporary global securities are
exchanged for definitive junior subordinated debt securities of the same
series;
- whether the junior subordinated debt securities will be issued in global
form and, in that case, the terms and the depositary for these global
securities;
- the paying agent;
- the terms and conditions of any right to convert or exchange any junior
subordinated debt securities into any of our other securities or
property;
- the form of trust agreement and guarantee agreement;
- the relative degree, if any, to which the junior subordinated debt
securities shall be senior or subordinated to other junior subordinated
debt securities or any of our other indebtedness in right of payment; and
- any other terms of the junior subordinated debt securities consistent
with the provisions of the indenture.
Junior subordinated debt securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Some U.S. federal income
tax consequences and special considerations applicable to any the junior
subordinated debt securities will be described in the applicable prospectus
supplement.
The applicable prospectus supplement will describe the restrictions,
elections, some U.S. federal income tax consequences, and specific terms and
other information related to the junior subordinated debt securities if the
purchase price, principal, premium, or interest of any of the junior
subordinated debt securities is payable or denominated in one or more foreign
currencies or currency units.
If any index is used to determine the amount of payments of principal,
premium, or interest on any series of junior subordinated debt securities,
special U.S. federal income tax, accounting and other considerations applicable
to the junior subordinated debt securities will be described in the applicable
prospectus supplement.
OPTION TO EXTEND INTEREST PAYMENT DATES
If provided in the applicable prospectus supplement and if the junior
subordinated debentures are not in default, we shall have the right at any time
and from time to time during the term of any series of
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junior subordinated debt securities to defer payment of interest for a number of
consecutive interest payment periods as specified in the applicable prospectus
supplement (extension period).
Some U.S. federal income tax consequences and considerations applicable to
any junior subordinated debt securities that permit extension periods will be
described in the applicable prospectus supplement.
REDEMPTION
Unless otherwise indicated in the applicable prospectus supplement, junior
subordinated debt securities will not be subject to any sinking fund.
Unless the applicable prospectus supplement indicates otherwise, we may, at
our option and subject to the receipt of prior approval by the Board of
Governors of the Federal Reserve System, if then required under applicable
capital guidelines or policies, redeem the junior subordinated debt securities
of any series:
- in whole at any time or in part from time to time on or after the date
which is five years after the original date of issuance; or
- upon the occurrence of a Tax Event, an Investment Company Event or a
Regulatory Capital Event in whole (but not in part) at any time within 90
days of the occurrence of the Tax Event, the Investment Company Event or
Regulatory Capital Event.
If the junior subordinated debt securities of any series are redeemable
only on or after a specified date or by the satisfaction of additional
conditions, the applicable prospectus supplement will specify the date or
describe these conditions.
Junior subordinated debt securities shall be redeemable in the
denominations specified in the prospectus supplement. Unless the applicable
prospectus supplement indicates otherwise, junior subordinated debt securities
will be redeemed at the redemption price.
A Tax Event means that either we or a trust will have received an opinion
of counsel (which may be our counsel or counsel of an affiliate but not an
employee and which must be reasonably acceptable to the property trustee)
experienced in tax matters stating that, as a result of any:
- amendment to, or change (including any announced prospective change) in,
the laws (or any regulations under those laws) of the United States or
any political subdivision or taxing authority affecting taxation; or
- interpretation or application of the laws enumerated in the preceding
bullet point or regulations, by any court, governmental agency or
regulatory authority;
there is more than an insubstantial risk that:
- a trust is, or will be within 90 days of the date of the opinion of
counsel, subject to U.S. federal income tax on interest received on the
junior subordinated debt securities;
- interest payable by us to the trusts on the junior subordinated debt
securities is not, or will not be within 90 days of the date of the
opinion of counsel, deductible, in whole or in part, for U.S. federal
income tax purposes; or
- a trust is, or will be within 90 days of the date of the opinion of
counsel, subject to more than a minimal amount of other taxes, duties,
assessments or other governmental charges.
An Investment Company Event means the receipt by us and a trust of an
opinion of counsel experienced in matters relating to investment companies to
the effect that, as a result of any:
- change in law or regulation; or
- change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority,
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the trust is or will be considered an investment company that is required to be
registered under the Investment Company Act, which change becomes effective on
or after the original issuance of the capital securities.
A Regulatory Capital Event means the reasonable determination by us that,
as a result of any:
- amendment to, or change (including any prospective change) in, laws or
any applicable regulation of the United States and any political
subdivision; or
- as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying the laws or regulations, which
amendment is effective or announced on or after the date of issuance the
capital securities,
there is more than an insubstantial risk of impairment of our ability to treat
the capital securities (or any substantial portion) as Tier 1 capital (or its
equivalent) for purposes of the capital adequacy guidelines of the Federal
Reserve Board, in effect and applicable to us.
Notice of any redemption will be mailed at least 30 days and not more than
60 days before the redemption date to each holder of redeemable junior
subordinated debt securities, at its registered address. Unless we default in
the payment of the redemption price, on or after the redemption date, interest
will cease to accrue on the junior subordinated debt securities or portions
called for redemption.
RESTRICTIONS ON SOME PAYMENTS
We agreed that we will not permit any of our subsidiaries to:
- declare or pay any dividends or distributions, or redeem, purchase,
acquire, or make a liquidation payment on any of our capital stock;
- make any payment of principal of interest or premium, if any, on or
repay, repurchase or redeem any of our debt securities (including other
junior subordinated debt securities) that rank equally with or junior in
interest to the junior subordinated debt securities; or
- make any guarantee payments on any guarantee of debt securities of any of
our subsidiaries (including under other guarantees) if the guarantee
ranks equally with or junior in interest to the junior subordinated debt
securities, except in some circumstances,
if at that time:
- we have actual knowledge of an event that with the giving of notice or
the lapse of time, or both, would constitute an event of default under
the indenture and we will not have taken reasonable steps to cure the
event of default;
- the junior subordinated debt securities are held by a trust that is the
issuer of a series of related capital securities and we are in default
on our payment obligations under the guarantee relating to those related
capital securities; or
- we have given notice of our selection of an extension period on the
junior subordinated debt securities of a series and we have not
rescinded the notice, or extension period, or any extension relating to
the junior subordinated debt securities shall be continuing.
MODIFICATION OF INDENTURE
We may and the trustee may change the indenture without your consent for
specified purposes, including:
- to fix any ambiguity, defect or inconsistency, provided that the change
does not materially adversely affect the interest of any holder of any
series of junior subordinated debt securities or, in the case of
corresponding junior subordinated debt securities, the interest of a
holder of any related capital securities so long as they remain
outstanding; and
- to qualify or maintain the qualification of the indenture under the Trust
Indenture Act.
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In addition, under the indenture, we may and the trustee may modify the
indenture to affect the rights of the holders of the series of the junior
subordinated debt securities, with the consent of the holders of a majority in
principal amount of the outstanding series of junior subordinated debt
securities that are affected. However, we cannot and the trustee cannot take the
following actions without the consent of each holder of the outstanding junior
subordinated debt securities affected:
- change the maturity date of any series of junior subordinated debt
securities (except as otherwise specified in the applicable prospectus
supplement), or reduce the principal amount, rate of interest, or extend
the time of payment of interest;
- reduce the percentage in principal amount of junior subordinated debt
securities of any series, necessary to modify the indenture;
- modify some provisions of the indenture relating to modification or
waiver, except to increase the required percentage; or
- modify the provisions of the indenture relating to the subordination of
the junior subordinated debt securities of any series in a manner adverse
to the holders, provided that, in the case of corresponding junior
subordinated debt securities, as long as any of the related capital
securities are outstanding, no modification will be made that adversely
affects the holders of these capital securities in any material respect.
Also the indenture cannot be terminated, and a waiver of any event of
default or compliance with any covenant under the indenture cannot be
effective, without the prior consent of the holders of a majority of the
liquidation preference of the related capital securities unless and until
the principal of the corresponding junior subordinated debt securities
and all accrued and unpaid interest have been paid in full and some other
conditions are satisfied.
In addition, we may and the trustee may execute any supplemental indenture
to create any new series of junior subordinated debt securities, without the
consent of any holders.
EVENTS OF DEFAULT
The following are events of defaults under the indenture:
- failure to pay interest, when due under the terms of the series of junior
subordinated debt securities, and that failure continues for 30 days and
the time for payment has not been extended or deferred;
- failure to pay any principal of or premium on the series of junior
subordinated debt securities when due, whether at maturity, redemption by
declaration or otherwise;
- failure to observe or perform in any material respect, any other covenant
contained in the indenture, and that failure continues for 60 days after
we receive written notice from the trustee or holders of at least 25% in
principal amount of the outstanding series of junior subordinated debt
securities; or
- some events of bankruptcy, insolvency or reorganization.
The holders of a majority in aggregate outstanding principal amount of any
series of junior subordinated debt securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee. If an event of default under the indenture of any series occurs and is
continuing, the junior subordinated trustee or the holders of at least 25% in
aggregate principal amount of the outstanding junior subordinated debt
securities can declare the unpaid principal and accrued interest, if any, to the
date of acceleration on all the outstanding junior subordinated debt securities
of that series to be due and payable immediately. Similarly, in the case of
corresponding junior subordinated debt securities, if the trustee or holders of
the corresponding junior subordinated debt securities fail to make this
declaration, the holders of at least 25% in aggregate liquidation preference of
the related capital securities will have that right.
The holders of a majority in aggregate outstanding principal of the series
of junior subordinated debt securities can rescind a declaration of acceleration
and waive the default if the default (other than the non-payment of principal
which has become due solely by acceleration) has been cured and a sum
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sufficient to pay all principal and interest due (other than by acceleration)
has been deposited with the trustee. In the case of corresponding junior
subordinated debt securities, if the holders of the corresponding junior
subordinated debt securities fail to rescind a declaration and waive the
default, the holders of a majority in aggregate liquidation amount of the
related capital securities will have that right.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debt securities of any affected series may, on behalf of
holders of all of the junior subordinated debt securities, waive any past
default, except:
- a default in the payment of principal or interest (unless the default has
been cured or a sum sufficient to pay all matured installments of
principal and interest has been deposited with the trustee); or
- a default in a covenant or provision of the indenture which cannot be
modified or amended without the consent of the holders of each
outstanding junior subordinated debt securities.
In the case of corresponding junior subordinated debt securities, if the
holders of the corresponding junior subordinated debt securities fail to rescind
a declaration and waive the default, the holders of a majority in liquidation
preference of the related capital securities will have that right.
We are required to file annually, with the trustee, a certificate stating
whether or not we are in compliance with all the conditions and covenants
applicable to us under the indenture.
If an event of default occurs and is continuing on a series of
corresponding junior subordinated debt securities, the property trustee will
have the right to declare the principal, of, and the interest on, the
corresponding junior subordinated debt securities, and any amounts payable under
the indenture, to be immediately due and payable, and to enforce its other
rights as a creditor for these corresponding junior subordinated debt
securities.
ENFORCEMENT OF SOME RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an event of default under the indenture has occurred and is continuing,
and this event can be attributable to our failure to pay interest or principal
on the related junior subordinated debt securities when due, you may institute a
legal proceeding directly against us to enforce the payment of the principal of
or interest on those subordinated debt securities having a principal amount
equal to the liquidation amount of your related capital securities. We cannot
amend the indenture to remove the right to bring a direct action, without the
written consent of holders of all capital securities. If the right to bring a
direct action is removed, the applicable trust may become subject to reporting
obligations under the Exchange Act.
You would not be able to exercise directly any remedy other than those
stated in the preceding paragraph which are available to the holders of the
junior subordinated debt securities unless there has been an event of default
under the trust agreement. See "Description of Capital Securities -- Events of
Default; Notice."
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
The indenture states that we cannot consolidate with or merge into any
other person or convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person will consolidate with
or merge into us or convey, transfer or lease its properties and assets
substantially as an entirety to us, unless:
- the successor is organized under the laws of the United States or any
state or the District of Columbia, and expressly assumes all of our
obligations under the indenture;
- immediately after the transaction, no event of default, and no event
which, after notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing;
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- this transaction is permitted under the related trust agreement and the
related guarantee and does not give rise to any breach or violation of
the related trust agreement or the related guarantee; and
- some other conditions prescribed in the indenture are met.
The general provisions of the indenture do not afford protection to the
holders of the junior subordinated debt securities in the event of a highly
leveraged or other transaction involving us that may adversely affect the
holders.
SATISFACTION AND DISCHARGE
The indenture provides that when all junior subordinated debt securities
not previously delivered to the trustee for cancellation:
- have become due and payable; or
- will become due and payable within one year, and
- we deposit with the trustee money sufficient to pay and discharge the
entire indebtedness on the junior subordinated debt securities;
- we deliver to the trustee officers' certificates and opinions of
counsel; and
- we comply with some other requirements under the indenture,
then the indenture will cease to be of further effect and we will be considered
to have satisfied and discharged the indenture.
CONVERSION OR EXCHANGE
If indicated in the applicable prospectus supplement, the junior
subordinated debt securities of any series may be convertible or exchangeable
into capital securities or other securities. The applicable prospectus
supplement will describe the specific terms on which the junior subordinated
debt securities of any series may be so converted or exchanged. The terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder, or at our option, in which case the number of shares of capital
securities or other securities to be received by the holders of junior
subordinated debt securities would be calculated as of a time and in the manner
stated in the applicable prospectus supplement.
SUBORDINATION
The indenture provides that any junior subordinated debt securities will be
subordinate and junior in right of payment to all Senior and Subordinated Debt.
Upon any payment or distribution of assets to creditors upon our
liquidation, dissolution, winding up, reorganization, whether voluntary or
involuntary, assignment for the benefit of creditors, marshaling of assets or
any bankruptcy, insolvency, debt restructuring or similar proceedings, the
holders of Senior Debt will first be entitled to receive payment in full of the
principal, premium, or interest due before the holders of junior subordinated
debt securities or, in the case of corresponding junior subordinated debt
securities, the property trustee, on behalf of the holders, will be entitled to
receive any payment or distribution.
In the event of the acceleration of the maturity of any junior subordinated
debt securities, the holders of all Senior and Subordinated Debt outstanding at
the time of the acceleration will first be entitled to receive payment in full
of all amounts due on the Senior and Subordinated Debt (including any amounts
due upon acceleration) before the holders of junior subordinated debt
securities.
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No payment, by or on our behalf, of principal, premium, if any, or
interest, on the junior subordinated debt securities shall be made if at the
time of the payment, there exists:
- a default in any payment on any Senior and Subordinated Debt, or any
other default under which the maturity of any Senior and Subordinated
Debt has been accelerated; and
- any judicial proceeding relating to the defaults which shall be pending.
We are a non-operating holding company and almost all of our operating
assets are owned by our subsidiaries. We rely primarily on dividends from our
subsidiaries to meet our obligations to pay the principal of and interest on our
outstanding debt obligations and corporate expenses. We are a legal entity
separate and distinct from our banking and non-banking affiliates. Our principal
sources of income are dividends, interest and fees from our banking subsidiary,
Banknorth, NA. Our bank subsidiary is subject to some restrictions imposed by
federal law on any extensions of credit to, and some other transactions with, us
and some other affiliates, and on investments in stock or other securities.
These restrictions prevent us and our other affiliates from borrowing from our
bank subsidiary unless the loans are secured by various types of collateral.
Further, these secured loans, other transactions and investments by Banknorth,
NA is generally limited in amount for us and each of our other affiliates to 10%
of Banknorth, NA's capital and surplus, and as to us and all of our other
affiliates to an aggregate of 20% of Banknorth, NA's capital and surplus. In
addition, payment of dividends by Banknorth, NA to us are subject to ongoing
review by banking regulators and to various statutory limitations and in some
circumstances requires approval by banking regulatory authorities. Because we
are a holding company, our right to participate in any distribution of assets of
any subsidiary upon the liquidation or reorganization or otherwise of our
subsidiary is subject to the prior claims of creditors of the subsidiary, unless
we can be recognized as a creditor of that subsidiary. Accordingly, the junior
subordinated debt securities will be effectively subordinated to all existing
and future liabilities of Banknorth, NA, and holders of junior subordinated debt
securities should look only to our assets for payments on the junior
subordinated debt securities.
The indenture places no limitation on the amount of Senior and Subordinated
Debt that we may incur. We expect to incur from time to time additional
indebtedness constituting Senior and Subordinated Debt.
The indenture provides that these subordination provisions, as they relate
to any particular issue of junior subordinated debt securities, may be changed
before the issuance. The applicable prospectus supplement will describe any of
these changes.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless the applicable prospectus supplement specifies otherwise, we will
issue the junior subordinated debt securities in registered form only, without
coupons and in the denominations specified in the prospectus supplement. Holders
can exchange junior subordinated debt securities of any series for other junior
subordinated debt securities:
- of the same issue and series;
- in any authorized denominations;
- in a like aggregate principal amount;
- of the same date of issuance and maturity; and
- having the same terms.
Subject to the terms of the indenture and the limitations applicable to
global securities stated in the applicable prospectus supplement, junior
subordinated debt securities will be presented for exchange or for registration
of transfer (duly endorsed or with the form of transfer duly endorsed, or a
satisfactory written instrument of transfer, duly executed) at the office of the
security registrar or at the office of any transfer agent designated by us for
that purpose.
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Unless otherwise provided in the applicable prospectus supplement, no
service charge will be made for any registration of transfer or exchange, but we
may require payment of any taxes or other governmental charges. We have
appointed the trustee as security registrar for the junior subordinated debt
securities. Any transfer agent (in addition to the security registrar) initially
designated by us for any junior subordinated debt securities will be named in
the applicable prospectus supplement. We may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the location through which any transfer agent acts, except that we
will be required to maintain a transfer agent in each place of payment for the
junior subordinated debt securities of each series.
If the junior subordinated debt securities of any series are to be
redeemed, neither the trustee nor us will be required to:
- issue, register the transfer of, or exchange any junior subordinated debt
securities of any series during a period beginning on the business day
that is 15 days before the day of mailing of notice of redemption of any
junior subordinated debt securities that is selected for redemption and
ending at the close of business on the day of mailing of the relevant
notice; or
- transfer or exchange any junior subordinated debt securities selected for
redemption, except, the unredeemed portion of any junior subordinated
debt securities being redeemed in part.
GLOBAL JUNIOR SUBORDINATED DEBT SECURITIES
We may issue, in whole or in part, the junior subordinated debt securities
of a series in the form of one or more global junior subordinated debt
securities that will be deposited with, or on behalf of, a depositary identified
in the applicable prospectus supplement relating to those series. The specific
terms of the depositary arrangements for a series of junior subordinated debt
securities will be described in the applicable prospectus supplement. See
"Book-Entry Issuance."
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of and any premium and interest on junior subordinated debt
securities will be made at the office of the trustee in the City of New York or
at the office of the paying agent(s) designated by us, from time to time, in the
applicable prospectus supplement. However, we may make interest payment by:
- check mailed to the address of the person entitled to it at the address
appearing in the securities register (except in the case of global junior
subordinated debt securities); or
- transfer to an account maintained by the person entitled to it as
specified in the securities register, so long as we receive proper
transfer instructions by the regular record date.
Unless otherwise indicated in the applicable prospectus supplement, payment
of the interest on junior subordinated debt securities on any interest payment
date will be made to the person in whose name the junior subordinated debt
securities are registered at the close of business on the regular record date
relating to the interest payment date, except in the case of defaulted interest.
We may at any time designate additional paying agents or cancel the
designation of any paying agent. We will at all times be required to maintain a
paying agent in each place of payment for each series of junior subordinated
debt securities.
Any money deposited with the trustee or any paying agent, or held by us in
trust, for the payment of the principal of and any premium or interest on any
junior subordinated debt securities that remains unclaimed for two years after
the principal, any premium or interest has become due and payable will, at our
request, be repaid to us and the holder of the junior subordinated debt
securities can then only look to us for payment.
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INFORMATION ABOUT THE TRUSTEE
The Trust Indenture Act describes the duties and responsibilities of the
trustee. Subject to the provisions under the Trust Indenture Act, the trustee
has no obligation to exercise any of the powers vested in it by the indenture,
at the request of any holder of junior subordinated debt securities, unless the
holder offers reasonable indemnity against the costs, expenses and liabilities
that are incurred. The trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if it reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
The corresponding junior subordinated debt securities are issued in one or
more series of junior subordinated debt securities under the indenture with
terms corresponding to the terms of a series of related capital securities.
Concurrently with the issuance of each trust's capital securities, the trust
will invest the proceeds and the consideration paid by us for the related common
securities in a series of corresponding junior subordinated debt securities.
Each series of corresponding junior subordinated debt securities will be in the
principal amount equal to the aggregate stated liquidation amount of the related
capital securities and the common securities of the trust and will rank equally
with all other series of junior subordinated debt securities. As a holder of the
related capital securities for a series of corresponding junior subordinated
debt securities, you will have rights in connection with modifications to the
indenture or at the occurrence of events of default under the indenture
described under "-- Modification of Indenture" and "-- Events of Default,"
unless provided otherwise in the applicable prospectus supplement for these
related capital securities.
Unless otherwise specified in the applicable prospectus supplement, if a
Tax Event relating to a trust of related capital securities occurs and is
continuing, we have the option, and subject to prior approval by the Federal
Reserve Board (if required at the time under applicable capital guidelines or
policies), to redeem the corresponding junior subordinated debt securities at
any time within 90 days of the occurrence of the Tax Event, in whole but not in
part, at the redemption price. As long as the applicable trust is the holder of
all outstanding series of corresponding junior subordinated debt securities, the
trust will use the proceeds of the redemption to redeem the corresponding
capital securities and common securities in accordance with their terms. We may
not redeem a series of corresponding junior subordinated debt securities in
part, unless all accrued and unpaid interest has been paid in full on all
outstanding corresponding junior subordinated debt securities of the applicable
series.
We will covenant in the indenture that if and as long as:
- the trust of the related series of capital securities and common
securities is the holder of all the corresponding junior subordinated
debt securities;
- a Tax Event related to the trust has occurred and is continuing;
- we have not redeemed the junior subordinated debt securities or
terminated the trust; and
- we have elected, and have not revoked our election to pay Additional Sums
for the capital securities and common securities,
we will pay to the trust the Additional Sums.
We will also covenant, as to each series of corresponding junior
subordinated debt securities:
- to maintain directly or indirectly 100% ownership of the common
securities of the trust to which corresponding junior subordinated debt
securities have been issued, provided that some successors which are
permitted under the indenture, may succeed to our ownership of the common
securities;
- not to voluntarily terminate, wind-up or liquidate any trust, except:
20
- with prior approval of the Federal Reserve Board if then so required
under applicable capital guidelines or policies of the Federal Reserve
Board; and
- in connection with a distribution of corresponding junior subordinated
debt securities to the holders of the capital securities in liquidation
of a trust, or in connection with some mergers, consolidations or
amalgamations permitted by the related trust agreement; and
- to use our reasonable efforts, consistent with the terms and provisions
of the related trust agreement, to cause the trust to remain classified
as a grantor trust and not as an association taxable as a corporation for
United States federal income tax purposes.
DESCRIPTION OF CAPITAL SECURITIES
GENERAL
This section describes the general terms and provisions of the capital
securities that are offered by this prospectus. The applicable prospectus
supplement will describe the specific terms of the series of the capital
securities offered under that prospectus supplement and any general terms
outlined in this section that will not apply to those capital securities.
The capital securities will be issued under the trust agreement. The trust
agreement will be qualified as an indenture under the Trust Indenture Act. The
forms of trust agreement and capital securities have been filed as an exhibit to
the registration statement.
The capital securities will have the terms described in the applicable
trust agreement or made part of the trust agreement by the Trust Indenture Act
or the Delaware Business Trust Act. The terms of the capital securities will
mirror the terms of the junior subordinated debt securities held by each trust.
This section summarizes the material terms and provisions of the trust
agreement and the capital securities. Because this is only a summary, it does
not contain all of the details found in the full text of the trust agreement and
the capital securities. If you would like additional information you should read
the form of trust agreement and the form of capital securities.
The trust agreement of each trust authorizes the administrative trustees to
issue on behalf of each trust one series of capital securities and one series of
common securities containing the terms described in the applicable prospectus
supplement. The proceeds from the sale of the capital securities and common
securities will be used by each trust to purchase a series of junior
subordinated debt securities from us. The junior subordinated debt securities
will be held in trust by the property trustee for your benefit and the benefit
of the holder of the common securities.
Under the guarantee, we will agree to make payments of distributions and
payments on redemption or liquidation of the capital securities, to the extent
that the related trust holds funds available for this purpose and has not made
such payments. See "Description of the Guarantee" on page 30 of this prospectus.
The assets of each trust available for distribution to you will be limited
to payments received from us under the corresponding junior subordinated debt
securities. If we fail to make a payment on the corresponding junior
subordinated debt securities, the property trustee will not have sufficient
funds to make related payments, including distributions, on the capital
securities.
Each guarantee, when taken together with our obligations under the
corresponding junior subordinated debt securities and the indenture, the
applicable trust agreement and the expense agreement, will provide a full and
unconditional guarantee of amounts due on the capital securities issued by each
trust.
Each trust will redeem an amount of capital securities equal to the amount
of any corresponding junior subordinated debt securities redeemed.
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Specific terms relating to the capital securities will be described in the
applicable prospectus supplement, including:
- the name of the capital securities;
- the dollar amount and number of capital securities issued;
- the annual distribution rate(s) (or method of determining this rate(s)),
the payment date(s) and the record dates used to determine the holders
who are to receive distributions;
- the date from which distributions shall be cumulative;
- the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which the capital securities
shall be purchased or redeemed, in whole or in part;
- the terms and conditions, if any, under which the junior subordinated
debt securities are distributed to you by the trusts;
- any securities exchange on which the capital securities are listed;
- whether the capital securities are to be issued in book-entry form and
represented by one or more global certificates, and if so, the depositary
for the global certificates and the specific terms of the depositary
arrangements; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of the capital securities.
The applicable prospectus supplement will also describe some U.S. federal
income tax considerations applicable to any offering of capital securities.
REDEMPTION OR EXCHANGE
Mandatory Redemption. If any corresponding junior subordinated debt
securities are repaid or redeemed in whole or in part, whether at maturity or
upon earlier redemption, the property trustee will use the proceeds from this
repayment or redemption to redeem a Like Amount of the capital securities and
common securities. The property trustee will give you at least 30 days notice,
but not more than 60 days notice, before the date of redemption. The capital
securities and (unless there is a default under the junior subordinated debt
securities) the common securities will be redeemed at the redemption price at
the concurrent redemption of the corresponding junior subordinated debt
securities. See "Description of the Junior Subordinated Debt
Securities -- Redemption."
If less than all of any series of corresponding junior subordinated debt
securities are to be repaid or redeemed on a date of redemption, then the
proceeds from the repayment or redemption shall be allocated, pro rata, to the
redemption of the related capital securities and the common securities.
We may redeem any series of corresponding junior subordinated debt
securities:
- on or after the date as specified in the applicable prospectus
supplement, in whole at any time or in part from time to time;
- at any time, in whole (but not in part), on the occurrence of a Tax
Event, an Investment Company Event or a Regulatory Capital Event; or
- as is otherwise specified in the applicable prospectus supplement.
Distribution of Corresponding Junior Subordinated Debt Securities. We may
at any time dissolve any trust and, after satisfaction of the liabilities of
creditors of the trust as provided by applicable law, cause the corresponding
junior subordinated debt securities relating to the capital securities and
common securities issued by the trust to be distributed to you and the holders
of the common securities in liquidation of the trust.
Tax Event, Investment Company Event or Regulatory Capital Event. If a Tax
Event, Investment Company Event or Regulatory Capital Event relating to a series
of capital securities and common
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securities shall occur and be continuing, we may redeem the corresponding junior
subordinated debt securities in whole, but not in part. This will cause a
mandatory redemption of all of the related capital securities and common
securities at the redemption price within 90 days following the occurrence of
the Tax Event, Investment Company Event or Regulatory Capital Event.
If a Tax Event relating to a series of capital securities and common
securities occurs and is continuing and we elect not to redeem the corresponding
junior subordinated debt securities or to terminate the related trust and cause
the corresponding junior subordinated debt securities to be distributed to
holders of the capital securities and common securities as described above,
those capital securities and common securities will remain outstanding and
Additional Sums may be payable on the corresponding junior subordinated debt
securities.
Once the liquidation date is fixed for any distribution of corresponding
junior subordinated debt securities for any series of capital securities:
- the series of capital securities will no longer be deemed to be
outstanding;
- DTC, or its nominee, as the record holder of the series of capital
securities, will receive a registered global certificate or certificates
representing the corresponding junior subordinated debt securities to be
delivered upon the distribution; and
- certificates representing the series of capital securities not held by
DTC or its nominee will be deemed to represent the corresponding junior
subordinated debt securities. Those certificates will bear accrued and
unpaid interest in an amount equal to the accrued and unpaid
distributions on the series of capital securities until the certificates
are presented to the administrative trustees of the applicable trust or
their agent for transfer or reissuance.
We cannot assure you of the market prices for the capital securities or the
corresponding junior subordinated debt securities. Accordingly, the capital
securities that you may purchase, or the corresponding junior subordinated debt
securities that you may receive on dissolution and liquidation of a trust, may
trade at a discount of the price that you paid for the capital securities.
REDEMPTION PROCEDURES
Capital securities redeemed on date of redemption shall be:
- redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the corresponding junior subordinated debt
securities; and
- payable on each date of redemption only to the extent that the related
trust has funds on hand available for the payment of the redemption
price.
If notice of redemption is given, then, by 12:00 noon, New York City time,
on the date of redemption, to the extent funds are available, the property
trustee will deposit irrevocably with DTC funds sufficient to pay the applicable
redemption price and will give DTC irrevocable instructions and authority to pay
the redemption price to you. See "Book-Entry Issuance." If the capital
securities are no longer in book-entry form, the property trustee, to the extent
funds are available, will irrevocably deposit with the paying agent for the
capital securities, funds sufficient to pay the applicable redemption price and
will give the paying agent irrevocable instructions and authority to pay the
redemption price to you when you surrender your certificates evidencing the
capital securities.
Distributions payable on or before the date of redemption for any capital
securities called for redemption shall be payable to the holders on the relevant
record dates for the related distribution dates.
If notice of redemption is given and funds deposited as required, all of
your rights will cease, except your right to receive the redemption price, and
the capital securities will cease to be outstanding.
If a date of redemption is not a business day, then payment of the
redemption price payable on the date of redemption will be made on the next
succeeding day which is a business day (and without any
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interest or other payment for any delay). However, if the business day falls in
the next calendar year, then payment will be made on the immediately preceding
business day.
If payment of the redemption price of the capital securities called for
redemption is improperly withheld or refused and not paid either by the trust or
by us under the guarantee, then distributions on the capital securities will
continue to accrue at the then applicable rate from the date of redemption to
the date that the redemption price is actually paid. In this case the actual
payment date will be the date of redemption for purposes of calculating the
redemption price.
Subject to applicable law (including, without limitation, federal
securities law), our subsidiaries or us may at any time and from time to time
purchase outstanding capital securities by tender offer, in the open market or
by private agreement.
Payment of the redemption price on the capital securities and any
distribution of corresponding junior subordinated debt securities to holders of
capital securities shall be payable to the holders on the relevant record date
as they appear on the register of capital securities. The record date shall be
one business day before the relevant date of redemption or liquidation date as
applicable. However, if the capital securities are not in book-entry form, the
relevant record date for the capital securities shall be at least 15 days before
the date of redemption or liquidation date.
If less than all of the capital securities and common securities issued by
a trust are to be redeemed on a redemption date, then the aggregate Liquidation
Amount of the capital securities and common securities to be redeemed shall be
allocated pro rata to the capital securities and the common securities based
upon the relative Liquidation Amounts of such classes. The property trustee will
select the capital securities to be redeemed on a pro rata basis not more than
60 days before the date of redemption, by a method deemed fair and appropriate
by it. The property trustee will promptly notify the registrar in writing of the
capital securities selected for redemption and, in the case of any capital
securities selected for partial redemption, the Liquidation Amount to be
redeemed.
You will receive notice of any redemption at least 30 days but not more
than 60 days before the date of redemption at your registered address. Unless we
default in the payment of the redemption price on the corresponding junior
subordinated debt securities, on and after the date of redemption, interest will
cease to accrue on the junior subordinated debt securities or portions of the
junior subordinated debt securities (and distributions will cease to accrue on
the related capital securities or portions of the capital securities) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, each trust's
capital securities and common securities, will be made pro rata based on the
liquidation amount of the capital securities and common securities. However, if
an event of default under the indenture shall have occurred and is continuing,
no payment may be made on any of the trust's common securities, unless all
unpaid amounts on each of the trust's outstanding capital securities shall have
been made or provided for in full.
If an event of default under the indenture has occurred and is continuing,
we, as holder of the trust's common securities, will be deemed to have waived
any right to act on the event of default under the applicable trust agreement
until the effect of all events of default relating to the capital securities
have been cured, waived or otherwise eliminated. Until the events of default
under the applicable trust agreement relating to the capital securities have
been so cured, waived or otherwise eliminated, the property trustee will act
solely on your behalf and not on our behalf as holder of the trust's common
securities, and only you and the other holders of capital securities will have
the right to direct the property trustee to act on your behalf.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Each trust agreement states that each trust shall be automatically
dissolved upon the expiration of the term of the trust and shall also be
dissolved on the first to occur of:
- our bankruptcy or dissolution;
- the distribution of a Like Amount of the junior subordinated debt
securities directly to the holders of the capital securities and common
securities. For this distribution, we must give at least 30 days written
notice to the trustees;
- the redemption of all of the capital securities and common securities of
a trust; and
- a court order for the dissolution of a trust is entered.
If dissolution of a trust occurs, the applicable trustees shall wind up the
trust as soon as practicable. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the trust (each a "Liquidation"), the
holders of the capital securities and the common securities on the date of the
Liquidation will be entitled to receive, out of the assets of the trust
available for distribution to holders of securities after satisfaction of the
trust's liabilities to creditors, if any, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per security plus accumulated and unpaid distributions
thereon to the date of payment, unless, in connection with a dissolution of the
trust, junior subordinated debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accumulated and unpaid interest equal
to accrued and unpaid distributions on, such securities shall be distributed on
a pro rata basis to the holders of the securities in exchange for such
securities.
If a trust cannot pay the full amount due on its capital securities and
common securities because insufficient assets are available for payment, then
the amounts payable by the trust on its capital securities and common securities
shall be paid pro rata. However, if an event of default under the indenture has
occurred and is continuing, the total amounts due on the capital securities
shall be paid before any distribution on the common securities.
TRUST ENFORCEMENT EVENT
An event of default under the indenture constitutes an event of default
under the amended and restated trust agreement. We refer to such an event as a
"Trust Enforcement Event." For more information on events of default under the
indenture, see "Description of the Junior Subordinated Debt Securities -- Events
of Default." Upon the occurrence and continuance of a Trust Enforcement Event,
the property trustee, as the sole holder of the junior subordinated debentures,
will have the right under the indenture to declare the principal amount of the
junior subordinated debentures due and payable. The amended and restated trust
agreement does not provide for any other events of default.
If the property trustee fails to enforce its rights under the junior
subordinated debentures, any holder of capital securities may, to the extent
permitted by applicable law, institute a legal proceeding against us to enforce
the property trustee's rights under the junior subordinated debentures and the
indenture without first instituting legal proceedings against the property
trustee or any other person. In addition, if a Trust Enforcement Event is due to
our failure to pay interest or principal on the junior subordinated debentures
when due, then the registered holder of capital securities may institute a
direct action on or after the due date directly against us for enforcement of
payment to that holder of the principal of or interest on the junior
subordinated debentures having a principal amount equal to the total liquidation
amount of that holder's capital securities. In connection with such a direct
action, we will have the right under the indenture to set off any payment made
to that holder by us. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the junior
subordinated debentures.
Pursuant to the amended and restated trust agreement, the holder of the
common securities will be deemed to have waived any Trust Enforcement Event
regarding the common securities until all Trust
25
Enforcement Events regarding the capital securities have been cured, waived or
otherwise eliminated. Until all Trust Enforcement Events regarding the capital
securities have been so cured, waived or otherwise eliminated, the property
trustee will act 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
enforcement actions of the property trustee.
REMOVAL OF TRUSTEES
Unless an event of default under a trust agreement has occurred and is
continuing, we can remove and replace any trustee at any time. If an event of
default under a trust agreement has occurred and is continuing, the property
trustee and the Delaware trustee may be removed or replaced by the holders of at
least a majority in Liquidation Amount of the outstanding capital securities. We
are the only one that have the right to remove or replace the administrative
trustees. No resignation or removal of any of the trustees and no appointment of
a successor trustee shall be effective until the acceptance of appointment by
the successor trustee as described in the applicable trust agreement.
MERGER OR CONSOLIDATION OF TRUSTEES
If any of the trustees merge, convert, or consolidate with or into another
entity or sells its trust operations to another entity, the new entity shall be
the successor of the trustee under each trust agreement, provided that the
corporation or other entity shall be qualified and eligible to be a trustee.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
A trust may not merge with or into, consolidate, amalgamate, or be replaced
by or transfer or lease all or substantially all of its properties and assets to
any other entity (a merger event), except as described below. A trust may, at
our request, with the consent of the administrative trustees and without your
consent, merge with or into, consolidate, amalgamate or be replaced by another
trust provided that:
- the successor entity either:
- expressly assumes all of the obligations of the trust relating to the
capital securities; or
- substitutes for the capital securities other securities with terms
substantially similar to the capital securities (successor securities)
so long as the successor securities has the same rank as the capital
securities for distributions and payments upon liquidation, redemption
and otherwise;
- we expressly appoint a trustee of the successor entity who has the same
powers and duties as the property trustee of the trust as it relates to
the junior subordinated debt securities;
- the successor securities are listed or will be listed on the same
national securities exchange or other organization that the capital
securities are listed or quoted on;
- the merger event does not cause the capital securities or successor
securities to be downgraded by any national statistical rating
organization;
- the merger event does not adversely affect the rights, preferences and
privileges of the holders of the capital securities or successor
securities in any material way;
- the successor entity has a purpose substantially similar to that of the
trust;
- before the merger event, we have received an opinion of counsel stating
that:
- the merger event does not adversely affect the rights of the holders
of the capital securities or any successor securities in any material
way;
- following the merger event, neither the trust nor the successor entity
will be required to register as an investment company under the
Investment Company Act; and
26
- following the merger, the trust will continue to be classified as a
grantor trust for United States federal income tax purposes; and
- we own all of the common securities of the successor entity and guarantee
the successor entity's obligations under the successor securities in the
same manner provided by the related guarantee.
The trusts and any successor entity must always be classified as grantor
trusts for U.S. federal income tax purposes unless all of the holders of the
capital securities approve otherwise.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
You have no voting rights except as discussed under "Description of the
Capital Securities -- Mergers, Consolidations, Amalgamations or Replacements of
the Trust" and "Description of the Guarantee -- Amendments and Assignment," and
as otherwise required by law and the applicable trust agreement. The property
trustee, the Delaware trustee, the administrative trustees and us may amend each
trust agreement without your consent:
- to cure any ambiguity or inconsistency;
- to correct or supplement any provision in the trust agreement that is
defective or inconsistent with any other provision;
- to add to the covenants, restrictions or obligations related to us;
- to conform to any change in Rule 3a-5 under the Investment Company Act or
written change in interpretation or application of Rule 3a-5 under the
Investment Company Act by any legislative body, court, government agency
or regulatory body; or
- to modify, eliminate or add provisions to the applicable trust agreement
as shall be necessary to ensure that each trust shall at all times be
classified as a grantor trust 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.
The trustees and us may amend each trust agreement for any other reason as
long as the holders of at least a majority in aggregate liquidation amount of
the capital securities agree, and the trustees receive an opinion of counsel
which states that the amendment will not affect the applicable trust status as a
grantor trust for U.S. federal income tax purposes, or its exemption from
regulation as an investment company under the Investment Company Act, except to:
- change the amount and/or timing or otherwise adversely affect the method
of payment of any distribution on the capital securities or common
securities; or
- restrict your right or the right of the common security holder to
institute suit for enforcement of any distribution on the capital
securities or common securities.
The changes described in the two bullet points above require the approval
of each holder of the capital securities affected.
Other than as provided by the relevant trust agreement or the terms of the
capital securities, the trust shall not and the trustees, including the property
trustee, shall not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or executing any trust or power conferred
on the trustee relating to the corresponding junior subordinated debt
securities;
- waive any past default under Section 5.13 of the indenture;
- cancel an acceleration of the principal of the corresponding junior
subordinated debt securities; or
- agree to any change in the indenture or the corresponding junior
subordinated debt securities, where the trustees' approval is required,
unless the trust shall have received an opinion of counsel to the
27
effect that such modification will not cause more than an insubstantial
risk that the trust will be deemed an investment company required to be
registered under the Investment Company Act or that the trust will be
classified as other than a grantor trust for United States federal income
tax purposes.
The trustees cannot change anything previously approved by you without your
approval to make the change. The property trustee shall notify you of any notice
of default relating to the corresponding junior subordinated debt securities.
In addition, before taking any of the actions described above, the trustees
must obtain an opinion of counsel experienced in these matters, stating that the
trust will continue to be classified as a grantor trust for U.S. federal income
tax purposes.
As described in each trust agreement, the administrative trustees may hold
a meeting so that you may vote on a change or request that you approve the
change by written consent.
Your vote or consent is not required for the trust to redeem and cancel its
capital securities under the trust agreement.
If your vote is taken or a consent is obtained, any capital securities that
are owned by us, the trustees or any affiliate of either of us shall, for
purposes of the vote or consent, be treated as if they were not outstanding.
GLOBAL CAPITAL SECURITIES
The capital securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the applicable prospectus supplement. The
specific terms of the depositary arrangements for a series of capital securities
will be described in the applicable prospectus supplement. See "Book-Entry
Issuance."
PAYMENT AND PAYING AGENTS
Payments regarding the capital securities shall be made to a depositary,
which shall credit the relevant accounts at the depositary on the applicable
distribution dates or, if any trusts capital securities are not held by a
depositary, the payments shall be made by check mailed to the address of the
holder entitled to it at the address listed in the register.
Unless otherwise specified in the applicable prospectus supplement, the
paying agent shall initially be the property trustee. The paying agent shall be
permitted to resign as paying agent with 30 days' written notice to the property
trustee and to us. If the property trustee shall no longer be the paying agent,
the administrative trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the administrative trustees and to us) to act as
paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the capital
securities.
Registration of transfers of capital securities will be effected without
charge by or on behalf of each trust, after payment of any tax or other
governmental charges that are imposed in connection with any transfer or
exchange. No transfers of capital securities called for redemption will be
registered.
INFORMATION ABOUT THE PROPERTY TRUSTEE
The property trustee will perform only those duties that are specifically
stated in each trust agreement. If an event of default arises under a trust
agreement, the property trustee must use the same degree of care and skill in
the exercise of its duties as a prudent person would exercise or use in the
conduct of his or her own affairs. The property trustee is under no obligation
to exercise any of the powers given it by the
28
applicable trust agreement at your request unless it is offered reasonable
security or indemnity against the costs, expenses and liabilities that it might
incur.
If no event of default under a trust agreement has occurred and is
continuing, and the property trustee is required to decide between alternative
courses of action, construe ambiguous provisions in applicable trust agreement
or is unsure of the application of any provisions of the applicable trust
agreement, and the matter is not one on which you are entitled to vote, then the
property trustee shall:
- take some action as directed by us; and
- if not so directed, shall take whatever action that the property trustee
deems advisable and in your best interests, and in the best interests of
the holders of the capital securities and common securities of the
applicable trust and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trusts in the manner that:
- no trust will be deemed to be an investment company required to be
registered under the Investment Company Act or to fail to be classified
as a grantor trust for U.S. federal income tax purposes;
- the corresponding junior subordinated debt securities will be treated as
our indebtedness for U.S. federal income tax purposes.
In this connection, the administrative trustees and us are authorized to
take any action, consistent with applicable law or the certificate of trust of
each trust or each trust agreement, that we each determine in our discretion to
be necessary or desirable for these purposes.
You have no preemptive or similar rights. A trust may not borrow money,
issue Debt or mortgages, or pledge any of its assets.
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DESCRIPTION OF THE GUARANTEE
GENERAL
We will execute a guarantee, for your benefit at the same time that a trust
issues the capital securities. The guarantee trustee will hold the guarantee for
your benefit. The guarantee will be qualified as an indenture under the Trust
Indenture Act. The form of guarantee has been filed as an exhibit to the
registration statement.
This section summarizes the material terms and provisions of the guarantee.
Because this is only a summary, it does not contain all of the details found in
the full text of the guarantee. If you would like additional information you
should read the form of guarantee agreement.
We will irrevocably agree to pay to you in full the Guarantee Payments as
and when due, regardless of any defense, right of set-off or counterclaim which
the trust may have or assert other than the defense of payment. The following
payments, to the extent not paid by a trust, will be subject to the guarantee:
- any accumulated and unpaid distributions required to be paid on the
capital securities, to the extent that the trust has applicable funds
available to make the payment;
- the redemption price and all accrued and unpaid distributions to the date
of redemption on the capital securities called for redemption, to the
extent that the trust has funds available to make the payment; or
- in the event of a voluntary or involuntary dissolution, winding up or
liquidation of the trust (other than in connection with a distribution of
corresponding junior subordinated debt securities to you or the
redemption of all the related capital securities), the lesser of:
- the aggregate of the Liquidation Amount specified in the applicable
prospectus supplement for each capital security plus all accrued and
unpaid distributions on the capital securities to the date of
payment; and
- the amount of assets of the trust remaining available for
distribution to you.
We can satisfy our obligation to make a guarantee payment by direct payment
to you of the required amounts or by causing the trust to pay those amounts to
the holders.
Each guarantee will be an irrevocable guarantee on a subordinated basis of
the related trust's obligations under the capital securities, but will apply
only to the extent that the related trust has funds sufficient to make the
payments, and is not a guarantee of collection.
No single document executed by us that is related to the issuance of the
capital securities will provide for its full, irrevocable and unconditional
guarantee of the capital securities. It is only the combined operation of the
applicable guarantee, the applicable trust agreement, the indenture and the
expense agreement that has the effect of providing a full, irrevocable and
unconditional guarantee of the trust's obligations under its capital securities.
STATUS OF GUARANTEES
Each guarantee will constitute an unsecured obligation of ours and will
rank subordinate and junior in right of payment to all of our Senior Debt; and
each guarantee will rank equally with all other guarantees issued by us. The
guarantee will constitute a guarantee of payment and not of collection (in other
words you may sue us, or seek other remedies, to enforce your rights under the
guarantee without first suing any other person or entity). Each guarantee will
be held for your benefit. Each guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not previously paid by
the trust or upon distribution to you of the corresponding series of junior
subordinated debt securities. None of the guarantees places a limitation on the
amount of additional Senior Debt that we may incur. We expect to incur from time
to time additional indebtedness constituting Senior Debt.
30
AMENDMENTS AND ASSIGNMENT
Except regarding any changes which do not adversely affect your rights in
any material respect (in which case your consent will not be required), the
guarantee may only be amended with the prior approval of the holders of at least
a majority in aggregate Liquidation Amount of the outstanding capital
securities. A description of the manner in which approval may be obtained is
described under "Description of the Capital Securities -- Voting Rights;
Amendment of Each Trust Agreement." All guarantees and agreements contained in
each guarantee will be binding on our successors, assigns, receivers, trustees
and representatives and shall inure to the benefit of the holders of the related
capital securities then outstanding.
EVENTS OF DEFAULT
An event of default under each guarantee occurs if we fail to make any of
our required payments or perform our obligations under the guarantee. The
holders of at least a majority in aggregate Liquidation Amount of the related
capital securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee
relating to the guarantee or to direct the exercise of any trust or power given
to the guarantee trustee under the guarantee.
You may institute a legal proceeding directly against us to enforce your
rights under the guarantee without first instituting a legal proceeding against
the trust, the guarantee trustee or any other person or entity.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee.
INFORMATION ABOUT THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
an event of default by us in the performance of any guarantee, will only perform
the duties that are specifically described in the guarantee. After an event of
default on any guarantee, the guarantee trustee will 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 is under no
obligation to exercise any of its powers as described in the guarantee at your
request unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might incur.
TERMINATION OF CAPITAL SECURITIES GUARANTEES
Each guarantee will terminate once the related capital securities are paid
in full or upon distribution of the corresponding series of junior subordinated
debt securities to you. Each guarantee will continue to be effective or will be
reinstated if at any time you are required to restore payment of any sums paid
under the capital securities or the guarantee.
31
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE CORRESPONDING
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the capital securities
(to the extent the trust has funds available for the payments) will be
irrevocably guaranteed by us to the extent described under "Description of the
Guarantee." No single document executed by us in connection with the issuance of
the capital securities will provide for its full, irrevocable and unconditional
guarantee of the capital securities. It is only the combined operation of our
obligations under the related guarantee, the related trust agreement, the
corresponding series of junior subordinated debt securities, the indenture and
the expense agreement that has the effect of providing a full, irrevocable and
unconditional guarantee of the trust's obligations under the related series of
capital securities.
If we do not make payments on any series of corresponding junior
subordinated debt securities, the related trust will not pay distributions or
other amounts on the related capital securities. The guarantee does not cover
payments of distributions when the related trust does not have sufficient funds
to pay such distributions. If that occurs, your remedy is to sue us, or seek
other remedies, to enforce your rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee.
SUFFICIENCY OF PAYMENTS
As long as we make payments of interest and other payments when due on each
series of corresponding junior subordinated debt securities, the payments will
be sufficient to cover the payment of distributions and other payments due on
the related capital securities, primarily because:
- the aggregate principal amount of each series of corresponding junior
subordinated debt securities will be equal to the sum of the aggregate
liquidation amount of the related capital securities and common
securities;
- the interest rate and interest and other payment dates on each series of
corresponding junior subordinated debt securities will match the
distribution rate and distribution and other payment dates for the
related capital securities;
- we shall pay for any and all costs, expenses and liabilities of a trust
except the trust's obligations to holders of its capital securities under
the capital securities; and
- each trust agreement provides that the trust will not engage in any
activity that is inconsistent with the limited purposes of the trust.
We have the right to set-off any payment we are otherwise required to make
under the indenture with and to the extent we have made, or are concurrently on
the date of the payment making, a payment under the related guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
You may institute a legal proceeding directly against us to enforce your
rights under the related guarantee without first instituting a legal proceeding
against the guarantee trustee, the related trust or any other person or entity.
A default or event of default under any of our Senior Debt would not
constitute a default or event of default under the trust agreements. However, in
the event of payment defaults under, or acceleration of, any of our Senior Debt,
the subordination provisions of the indenture provide that no payments will be
made regarding the corresponding junior subordinated debt securities until the
Senior Debt has been paid in full or any payment default on it has been cured or
waived. Failure to make required payments on any series of corresponding junior
subordinated debt securities would constitute an event of default under the
trust agreements.
32
LIMITED PURPOSE OF TRUSTS
Each trust's capital securities evidence a beneficial interest in the
respective trust, and each trust exists for the sole purpose of issuing its
capital securities and common securities and investing the proceeds in
corresponding junior subordinated debt securities. A principal difference
between the rights of a holder of a capital security and a holder of a
corresponding junior subordinated debt security is that a holder of a
corresponding junior subordinated debt security is entitled to receive from us
the principal amount of and interest accrued on corresponding junior
subordinated debt securities held, while a holder of capital securities is
entitled to receive distributions from the trust (or from us under the
applicable guarantee) if and to the extent the trust has funds available for the
payment of distributions.
RIGHTS UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution of any trust
involving a liquidation of the corresponding junior subordinated debt securities
held by a trust, you will be entitled to receive, out of assets held by that
trust, the liquidation distribution in cash. See "Description of the Capital
Securities -- Liquidation Distribution Upon Dissolution." In the event of our
voluntary or involuntary liquidation or bankruptcy, the property trustee, as
holder of the corresponding junior subordinated debt securities, would be a
subordinated creditor of ours, subordinated in right of payment to all Senior
Debt, but entitled to receive payment in full of principal, premium, if any, and
interest, before any of our common stockholders receive payments or
distributions. Since we are the guarantor under each guarantee and have agreed
to pay for all costs, expenses and liabilities of each trust (other than the
trust's obligations to you), your position and the position of a holder of the
corresponding junior subordinated debt securities relative to other creditors
and to our stockholders in the event of our liquidation or bankruptcy are
expected to be substantially the same.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the capital securities and
the junior subordinated debt securities, unless otherwise stated in the
applicable prospectus supplement. We will issue the capital securities and
junior subordinated debt securities only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). We will issue and deposit
with DTC one or more fully-registered global certificates for the capital
securities of each trust and junior subordinated debt securities representing in
the aggregate, the total number of the trust's capital securities or aggregate
principal balance of junior subordinated debt securities, respectively.
DTC is a limited purpose trust company organized under the New York Banking
Law, a banking organization under the meaning of the New York Banking Law, a
member of the Federal Reserve System, a clearing corporation under the meaning
of the New York Uniform Commercial Code, and a clearing agency registered under
the provisions of Section 17A of the Exchange Act. DTC holds securities that its
participants deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, like transfers and pledges, in
deposited securities through electronic computerized book-entry changes in the
participants' accounts, eliminating in this manner the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Others like securities brokers
and dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly, the
Indirect Participants, also have access to the DTC system. The rules applicable
to DTC and its participants are on file with the SEC.
Purchases of capital securities or junior subordinated debt securities
within the DTC system must be made by or through Direct Participants, who will
receive a credit for the capital securities or junior subordinated debt
securities on DTC's records. The ownership interest of each actual purchaser of
each capital security and each junior subordinated debt securities is in turn to
be recorded on the Direct and
33
Indirect Participants' records. DTC will not send written confirmation to
Beneficial Owners of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased capital securities or junior
subordinated debt securities. Transfers of ownership interests in the capital
securities or junior subordinated debt securities are to be accomplished by
entries made on the books of participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in capital securities or junior subordinated debt securities, unless
the book-entry system for the capital securities of the trust or junior
subordinated debt securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the capital
securities or junior subordinated debt securities. DTC's records reflect only
the identity of the Direct Participants to whose accounts the capital securities
or junior subordinated debt securities are credited, which may or may not be the
Beneficial Owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners,
subject to any statutory or regulatory requirements as is in effect from time to
time, will be governed by arrangements among them.
We will send redemption notices to Cede & Co. as the registered holder of
the capital securities or junior subordinated debt securities. If less than all
of a trust's capital securities or the junior subordinated debt securities are
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting on the capital securities or the junior subordinated debt
securities is limited to the holders of record of the capital securities or
junior subordinated debt securities, in those instances in which a vote is
required, neither DTC nor Cede & Co. will itself consent or vote on capital
securities or junior subordinated debt securities. Under its usual procedures,
DTC would mail an Omnibus Proxy to the relevant trustee as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to Direct Participants for whose accounts the capital securities
or junior subordinated debt securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
The relevant trustee will make distribution payments on the capital
securities or on the junior subordinated debt securities to DTC. DTC's practice
is to credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payments on the payment date.
Standing instructions and customary practices will govern payments from
participants to Beneficial Owners. Subject to any statutory or regulatory
requirements, participants, and not DTC, the relevant trustee, trust or us will
be responsible for the payment. The relevant trustee is responsible for payment
of distributions to DTC. Direct and Indirect Participants are responsible for
the disbursement of the payments to the Beneficial Owners.
DTC may discontinue providing its services as securities depositary on any
of the capital securities or the junior subordinated debt securities at any time
by giving reasonable notice to the relevant trustee and to us. If a successor
securities depositary is not obtained, final capital securities or junior
subordinated debt securities certificates must be printed and delivered. We may
at our option decide to discontinue the use of the system of book-entry
transfers through DTC (or a successor depositary). After an event of default,
the holders of a majority in liquidation preference of capital securities or
aggregate principal amount of junior subordinated debt securities may
discontinue the system of book-entry transfers through DTC. In this case, final
certificates for the capital securities or junior subordinated debt securities
will be printed and delivered.
34
The trusts and us have obtained the information in this section about DTC
and DTC's book-entry system from sources that they believe to be accurate, but
the trusts and us assume no responsibility for the accuracy of the information.
Neither the trusts nor Banknorth have any responsibility for the performance by
DTC or its participants of their respective obligations as described in this
prospectus or under the rules and procedures governing their respective
operations.
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters or dealers;
- directly to one or more purchasers; or
- through agents.
The applicable prospectus supplement will include the names of
underwriters, dealers or agents retained. The applicable prospectus supplement
will also include the purchase price of the securities, our proceeds from the
sale, any underwriting discounts or commissions and other items constituting
underwriters' compensation, and any securities exchanges on which the securities
are listed.
The underwriters will acquire the securities for their own account. They
may resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the
securities will be subject to some conditions. The underwriters will be
obligated to purchase all the securities offered if any of the securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to time.
Underwriters, dealers, and agents that participate in the distribution of
the securities may be underwriters as defined in the Securities Act, and any
discounts or commissions received by them from us and any profit on the resale
of the securities by them may be treated as underwriting discounts and
commissions under the Securities Act.
We may have agreements with the underwriters, dealers, and agents to
indemnify them against some civil liabilities, including liabilities under the
Act, or to contribute to payments which the underwriters, dealers or agents may
be required to make.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our subsidiaries in the ordinary course of their
businesses.
We may authorize underwriters, dealers and agents to solicit offers by
certain specified institutions to purchase securities from us at the public
offering price stated in the applicable prospectus supplement on delayed
delivery contracts providing for payment and delivery on a specified date in the
future. These contracts will be subject only to the conditions included in the
applicable prospectus supplement, and the prospectus supplement will specify the
commission payable for solicitation of such contracts.
Unless the applicable prospectus supplement states otherwise, all
securities will be new issues of securities with no established trading market.
Any underwriters who purchase securities from us for public offering and sale
may make a market in such securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. We cannot assure you that the trading market for any securities will be
liquid.
The dealers/underwriters do not intend to make sales of the capital
securities to accounts over which they exercise discretionary authority without
obtaining the prior written approval of the account holder.
35
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable prospectus supplement, some
legal matters will be passed upon for us by Elias, Matz, Tiernan & Herrick
L.L.P., Washington, D.C., our counsel, and for the underwriters by Sidley Austin
Brown & Wood LLP, New York, New York. Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel for the trusts, will pass on some
legal matters for the trusts. Elias, Matz, Tiernan & Herrick L.L.P. and Sidley
Austin Brown & Wood LLP will rely on the opinion of Richards, Layton & Finger,
P.A., Wilmington, Delaware as to matters of Delaware law regarding the trusts.
EXPERTS
The consolidated financial statements of Banknorth as of December 31, 2000
and 1999 and for each of the years in the three-year period ended December 31,
2000, incorporated by reference herein from Banknorth's annual report on Form
10-K for the year ended December 31, 2000, have been so incorporated in reliance
upon the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
36
GLOSSARY
Below are abbreviated definitions of capitalized terms used in this
prospectus and in the applicable prospectus supplement. The applicable
prospectus supplement may contain a more complete definition of some of the
terms defined here and reference should be made to the applicable prospectus
supplement for a more complete definition of these terms.
"Additional Sums" refers to the additional amounts required to be paid so
that the amount of distributions due and payable by a trust on outstanding
capital securities and common securities shall not be reduced because of any
additional taxes, duties and other governmental charges to which a trustee is
subject because of a Tax Event.
"Beneficial Owner" refers to the ownership interest of each actual
purchaser of each debt security.
"Company" refers to Banknorth Group, Inc. and its subsidiaries, unless
otherwise stated.
"Debt" means, for any person, whether recourse is to all or a portion of
the assets of the person and whether or not contingent:
- every obligation of the person for money borrowed;
- every obligation of the person evidenced by bonds, debt securities, notes
or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses;
- every reimbursement obligation of the person regarding letters of credit,
bankers' acceptances or similar facilities issued for the account of the
person;
- every obligation of the person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business);
- every capital lease obligation of the person;
- all indebtedness of the person whether incurred on, before, or after the
date of the indenture, for claims relating to derivative products
including interest rate, foreign exchange rate and commodity forward
contracts, options and swaps and similar arrangements; and
- every obligation of the type referred to in the first through the sixth
bullet points above of another person and all dividends of another person
the payment of which, in either case, the person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Depositary" refers to a bank or trust company selected by us, having its
principal office in the United States, and having a combined capital and surplus
of at least $50 million, and where we will deposit the shares of any series of
the preferred stock underlying the depositary shares under a separate deposit
agreement between us and that bank or trust company.
"Direct Participants" refers to securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations who, with the New
York Stock Exchange, Inc., the American Stock Exchange Inc., and the National
Association of Securities Dealers, Inc., own DTC. Purchases of debt securities
within the DTC system must be made by or through Direct Participants who will
receive a credit for the debt securities on DTC's records.
"Guarantee Payments" refers to the following payments, to the extent not
paid by a trust, which will be subject to the guarantee:
- any accumulated and unpaid distributions required to be paid on the
capital securities, to the extent that the trust has applicable funds
available to make the payment;
37
- the redemption price and all accrued and unpaid distributions to the date
of redemption with respect to capital securities called for redemption,
to the extent that the trust has funds available to make the payment; or
- in the event of a voluntary or involuntary dissolution, winding up or
liquidation of the trust (other than in connection with a distribution of
corresponding junior subordinated debt securities to you or the
redemption of all the related capital securities), the lesser of:
- the aggregate of the Liquidation Amount specified in the prospectus
supplement for each capital security plus all accrued and unpaid
distributions on the capital securities to the date of payment; and
- the amount of assets of the trust remaining available for
distribution to you.
"Indirect Participants" refers to others, like securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly, and who
also have access to the DTC system.
"Omnibus Proxy" refers to the omnibus proxy that DTC would mail under its
usual procedures to the relevant trustee as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
Direct Participants for whose accounts the debt securities are credited on the
record date.
"Senior Debt" means the principal of, 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 us whether or not the claim for
post-petition interest is allowed in the proceeding) on, our Debt whether
incurred on, before or subsequent to the date of the indenture, unless, in the
instrument creating or evidencing the Debt or under which the Debt is
outstanding, it is provided that the obligations are not superior in right of
payment to the junior subordinated debt securities or to other Debt which ranks
equally with, or subordinated to the junior subordinated debt securities.
However, Senior Debt shall not include:
- any of our Debt which, when incurred and without regard to any election
under section 1111(b) of the Bankruptcy Code, was without recourse to us;
- any of our Debt to any of our banking subsidiaries;
- Debt to any of our employees; and
- any other debt securities issued under our indenture.
"Tier 1 Capital" refers to the sum of core capital elements, less goodwill
and other intangible assets. The core capital elements include: common
stockholders' equity, qualifying noncumulative perpetual preferred stock
(including related surplus), qualifying cumulative perpetual preferred stock
(including related surplus), and minority interest in the equity account of
consolidated subsidiaries.
38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$1,000,000,000
BANKNORTH GROUP, INC.
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBT SECURITIES
BANKNORTH CAPITAL TRUST II
BANKNORTH CAPITAL TRUST III
BANKNORTH CAPITAL TRUST IV
CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED IN THIS DOCUMENT, BY
BANKNORTH GROUP, INC.
-------------------------
PROSPECTUS
-------------------------
, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<Table>
SEC registration fee........................................ $ 92,000
Listing fees................................................ 100,000
Accountant's fee and expenses............................... 50,000
Attorneys' fees and expenses................................ 250,000
Trustees' and Depositary fees and expenses.................. 50,000
Printing and engraving expenses............................. 100,000
Transfer agent fees......................................... 25,000
State qualification fees and expenses....................... 25,000
Rating agencies' fees....................................... 500,000
Miscellaneous............................................... 108,000
----------
Total.................................................. $1,300,000*
==========
</Table>
- ---------------
* All fees and expenses other than the SEC registration fee are estimated. The
expenses listed above will be paid by Banknorth.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 719 of the Maine Business Corporation Act ("MBCA") sets forth
certain circumstances under which directors, officers, employees and agents may
be indemnified against liability which they may incur in their capacity as such.
Indemnification may be provided against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred; provided that no indemnification may be provided with respect to any
matter where such person shall have been finally adjudicated (i) not to have
acted honestly or in the reasonable belief that such action was in or not
opposed to the best interests of the corporation or its stockholders, or (ii)
with respect to any criminal action, to have had reasonable cause to believe
such conduct was unlawful. A corporation may not indemnify a person with respect
to any action or matter by or in the right of the corporation as to which that
person is finally adjudicated to be liable to the corporation unless the court
in which the action was brought determines that, in view of all the
circumstances, that person is fairly and reasonably entitled to indemnity for
such amounts as the court deems reasonable. To the extent such person has been
successful on the merits or otherwise in defense of such action, that person
shall be entitled to indemnification. Any indemnification, unless ordered by a
court or required in the corporation's bylaws, shall be made only as authorized
in the specific case upon a determination by the board of directors that
indemnification is proper in the circumstances and in the best interests of the
corporation. Expenses incurred in defending an action may be paid by the
corporation in advance of the final disposition of that action upon a
determination made that the person seeking indemnification satisfied the
standard of conduct required for indemnification and receipt by the corporation
of a written undertaking by or on behalf of such person to repay that amount if
that person is finally adjudicated to not have met such standard or not be
entitled to such indemnification. In addition, Section 719 of the MBCA provides
that a corporation may purchase and maintain insurance on behalf of directors,
officers, employees and agents against liability whether or not the corporation
would have the power to indemnify such person against liability under such
section. See Title 13-A Maine Revised Statutes Annotated sec.719.
Banknorth's bylaws provide that Banknorth shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or proceeding by reason of the fact that he or she is or was
a director, officer, employee or agent of Banknorth to the fullest extent
provided by the MBCA, provided that Banknorth shall not be liable for any amount
which may be due to
II-1
any person in connection with a settlement of any action or proceeding effected
without its prior written consent or any action or proceeding initiated by an
indemnified person without its prior written consent, other than an action or
proceeding seeking indemnification from Banknorth.
Banknorth's bylaws provide that Banknorth shall pay the expenses incurred
by an indemnified person in advance of a final disposition of an action or
proceeding upon receipt by Banknorth of (1) a written undertaking by or on
behalf of the indemnified person to repay such amount if the indemnified person
is ultimately determined not to have acted in the manner required under the MBCA
in order to permit indemnification and (2) a written affirmation by the
indemnified person that the person has met the requisite standard of conduct for
indemnification.
Directors and officers also may be indemnified pursuant to the terms of
various employee benefit plans of Banknorth. In addition, Banknorth carries a
liability insurance policy for its directors and officers.
ITEM 16. LIST OF EXHIBITS.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1 Form of Underwriting Agreement with respect to the Debt
Securities (to be filed subsequently by Form 8-K).
1.2 Form of Distribution Agreement with respect to the Debt
Securities (to be filed subsequently by Form 8-K).
1.3 Form of Underwriting Agreement with respect to the Capital
Securities (to be filed subsequently by Form 8-K).
4.1(i) Articles of Incorporation of Banknorth (incorporated by
reference to Exhibit A the agreement and plan of merger,
dated as of October 27, 1997, between Banknorth and CFX
Corporation, which is included as Exhibit A to the
prospectus/proxy statement included in the Form S-4
Registration Statement (No. 333-23991) filed by Banknorth
(then known as Peoples Heritage Financial Group, Inc.) with
the SEC on December 31, 1997).
4.1(ii) Amendments to Articles of Incorporation of Banknorth
(incorporated by reference to (i) the proxy statement filed
by Banknorth (then known as Peoples Heritage Financial
Group, Inc.) with the SEC on March 23, 1998, (ii) the proxy
statement filed by Peoples Heritage Financial Group, Inc.
with the SEC on March 22, 2000 and (iii) the Form S-4
Registration Statement (No. 333-95587) filed by Peoples
Heritage Financial Group, Inc. with the SEC on January 28,
2000, which describes an amendment which changed the name of
the registrant from Peoples Heritage Financial Group, Inc.
to "Banknorth Group, Inc.").
4.2 Bylaws of Banknorth (incorporated by reference to
Banknorth's annual report on Form 10-K for the year ended
December 31, 2000).
*4.3 Form of Indenture for Senior Debt.
*4.4 Form of Indenture for Subordinated Debt.
*4.5 Form of Junior Subordinated Indenture between Banknorth and
The Bank of New York, as Property Trustee.
*4.6 Certificate of Trust of Banknorth Capital Trust II.
*4.7 Certificate of Trust of Banknorth Capital Trust III.
*4.8 Certificate of Trust of Banknorth Capital Trust IV.
*4.9 Trust Agreement, with respect to Banknorth Capital Trust II,
dated January 31, 2002, among Banknorth, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware),
as Delaware Trustee, and the Administrative Trustees named
therein.
*4.10 Trust Agreement, with respect to Banknorth Capital Trust
III, dated January 31, 2002, among Banknorth, The Bank of
New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative
Trustees named therein.
</Table>
II-2
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*4.11 Trust Agreement, with respect to Banknorth Capital Trust IV,
dated January 31, 2002, among Banknorth, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware),
as Delaware Trustee, and the Administrative Trustees named
therein.
*4.12 Form of Amended and Restated Trust Agreement.
*4.13 Form of Senior Debt Security (included as part of Exhibit
4.3).
*4.14 Form of Subordinated Debt Security (included as part of
Exhibit 4.4).
*4.15 Form of Capital Security Certificate (included as part of
Exhibit 4.12).
*4.16 Form of Junior Subordinated Debt Security (included as part
of Exhibit 4.5).
*4.17 Form of Guarantee Agreement.
4.18 Form of Warrant Agreement (to be filed subsequently by Form
8-K).
4.19 Form of Warrant Certificate (to be filed subsequently by
Form 8-K).
4.20 Form of Statement of Resolutions (to be filed subsequently
by Form 8-K).
4.21 Form of Deposit Agreement (to be filed subsequently by Form
8-K).
*5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
to the legality of the Debt Securities, Preferred Stock,
Depositary Shares, Warrants and Guarantees to be issued by
Banknorth.
*5.2 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust II.
*5.3 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust III.
*5.4 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust IV.
8.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
as to the federal income tax consequences of the Securities
(to be filed subsequently by Form 8-K).
*12.1 Computation of ratios of earnings to fixed charges.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included
as part of Exhibits 5.1 and 8.1).
*23.3 Consent of Richards, Layton & Finger, P.A. (included as part
of Exhibits 5.2, 5.3 and 5.4).
*24.1 Power of attorney for directors and officers of Banknorth
(included in the signature page to this registration
statement).
25.1 Form T-1 Statement of Eligibility of the trustee to act as
Senior Trustee and Subordinated Trustee under the Senior
Indenture and the Subordinated Indenture, respectively (to
be filed subsequently by Form 8-K).
*25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Junior Subordinated Indenture.
*25.3 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee with respect to the Amended and Restated
Trust Agreement of Banknorth Capital Trust II.
*25.4 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee with respect to the Amended and Restated
Trust Agreement of Banknorth Capital Trust III.
*25.5 Form T-1 Statement of Eligibility of The Bank of New York
Company to act as Trustee with respect to the Amended and
Restated Trust Agreement of Banknorth Capital Trust IV.
*25.6 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust II.
</Table>
II-3
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*25.7 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust III.
*25.8 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust IV.
</Table>
- ---------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. 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 Commission
pursuant to Rule 424(b) under the Securities Act 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
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change in the information set forth in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by Banknorth pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each the post-effective amendment will be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of the securities at that time will be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Each of the undersigned registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Banknorth's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement will be deemed to be a new registration statement
relating to the securities offered therein, and the offering of the securities
at that time will be deemed to be the initial bona fide offering thereof.
II-4
Each of the undersigned registrants hereby undertakes that:
(i)For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of
the time it was declared effective; and
(ii)For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Each of the undersigned registrants hereby undertakes to file an
application for the purpose of determining the eligibility of the Trustee to act
under subsection(a) of Section 310 of the Trust Indenture Act (the "TIA") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the TIA.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
registrant pursuant to the foregoing provisions, or otherwise, each registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
the indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
liabilities (other than the payment by each registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, each registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether the indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of the issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, State of Maine, on this 11th day of
February 2002.
BANKNORTH GROUP, INC.
By: /s/ WILLIAM J. RYAN
------------------------------------
William J. Ryan, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<Table>
/s/ GARY G. BAHRE* February 11, 2002
- ------------------------------------------
Gary G. Bahre
Director
/s/ STEPHEN J. BOYLE February 11, 2002
- ------------------------------------------
Stephen J. Boyle
Executive Vice President and Controller
(principal accounting officer)
/s/ P. KEVIN CONDRON* February 11, 2002
- ------------------------------------------
P. Kevin Condron
Director
/s/ GEORGE W. DOUGAN* February 11, 2002
- ------------------------------------------
George W. Dougan
Director
/s/ ALLEN M. GLICK* February 11, 2002
- ------------------------------------------
Allen M. Glick
Director
/s/ LUTHER F. HACKETT* February 11, 2002
- ------------------------------------------
Luther F. Hackett
Director
/s/ DANA S. LEVENSEN* February 11, 2002
- ------------------------------------------
Dana S. Levensen
Director
/s/ JOHN M. NAUGHTON* February 11, 2002
- ------------------------------------------
John M. Naughton
Director
</Table>
II-6
<Table>
/s/ MALCOLM W. PHILBROOK, JR.* February 11, 2002
- ------------------------------------------
Malcolm W. Philbrook, Jr.
Director
/s/ ANGELO P. PIZZAGALLI* February 11, 2002
- ------------------------------------------
Angelo P. Pizzagalli
Director
/s/ PAMELA PLUMB* February 11, 2002
- ------------------------------------------
Pamela Plumb
Director
/s/ IRVING E. ROGERS, III* February 11, 2002
- ------------------------------------------
Irving E. Rogers, III
Director
/s/ WILLIAM J. RYAN February 11, 2002
- ------------------------------------------
William J. Ryan
Chairman, President and Chief Executive
Officer (principal executive officer)
/s/ CURTIS M. SCRIBNER* February 11, 2002
- ------------------------------------------
Curtis M. Scribner
Director
/s/ PAUL R. SHEA* February 11, 2002
- ------------------------------------------
Paul R. Shea
Director
/s/ JOHN E. VEASEY* February 11, 2002
- ------------------------------------------
John E. Veasey
Director
/s/ PETER J. VERRILL February 11, 2002
- ------------------------------------------
Peter J. Verrill
Executive Vice President, Chief Operating
Officer, Chief Financial Officer and
Treasurer (principal financial officer)
/s/ PATRICK E. WELCH* February 11, 2002
- ------------------------------------------
Patrick E. Welch
Director
</Table>
- ---------------
*By William J. Ryan, Attorney-in-fact.
II-7
Pursuant to the requirements of the Securities Act of 1933, each of
Banknorth Capital Trust II, Banknorth Capital Trust III and Banknorth Capital
Trust IV certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, State of Maine, on this 11th day of
February 2002.
BANKNORTH CAPITAL TRUST II
BANKNORTH CAPITAL TRUST III
BANKNORTH CAPITAL TRUST IV
By: BANKNORTH GROUP, INC., as Sponsor
By: /s/ WILLIAM J. RYAN
------------------------------------
William J. Ryan, Chairman,
President and Chief Executive
Officer
II-8
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1 Form of Underwriting Agreement with respect to the Debt
Securities (to be filed subsequently by Form 8-K).
1.2 Form of Distribution Agreement with respect to the Debt
Securities (to be filed subsequently by Form 8-K).
1.3 Form of Underwriting Agreement with respect to the Capital
Securities (to be filed subsequently by Form 8-K).
4.1(i) Articles of Incorporation of Banknorth (incorporated by
reference to Exhibit A the agreement and plan of merger,
dated as of October 27, 1997, between Banknorth and CFX
Corporation, which is included as Exhibit A to the
prospectus/proxy statement included in the Form S-4
Registration Statement (No. 333-23991) filed by Banknorth
(then known as Peoples Heritage Financial Group, Inc.) with
the SEC on December 31, 1997).
4.1(ii) Amendments to Articles of Incorporation of Banknorth
(incorporated by reference to (i) the proxy statement filed
by Banknorth (then known as Peoples Heritage Financial
Group, Inc.) with the SEC on March 23, 1998, (ii) the proxy
statement filed by Peoples Heritage Financial Group, Inc.
with the SEC on March 22, 2000 and (iii) the Form S-4
Registration Statement (No. 333-95587) filed by Peoples
Heritage Financial Group, Inc. with the SEC on January 28,
2000, which describes an amendment which changed the name of
the registrant from Peoples Heritage Financial Group, Inc.
to "Banknorth Group, Inc.").
4.2 Bylaws of Banknorth (incorporated by reference to
Banknorth's annual report on Form 10-K for the year ended
December 31, 2000).
*4.3 Form of Indenture for Senior Debt.
*4.4 Form of Indenture for Subordinated Debt.
*4.5 Form of Junior Subordinated Indenture between Banknorth and
The Bank of New York, as Property Trustee.
*4.6 Certificate of Trust of Banknorth Capital Trust II.
*4.7 Certificate of Trust of Banknorth Capital Trust III.
*4.8 Certificate of Trust of Banknorth Capital Trust IV.
*4.9 Trust Agreement, with respect to Banknorth Capital Trust II,
dated January 31, 2002, among Banknorth, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware),
as Delaware Trustee, and the Administrative Trustees named
therein.
*4.10 Trust Agreement, with respect to Banknorth Capital Trust
III, dated January 31, 2002, among Banknorth, The Bank of
New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative
Trustees named therein.
*4.11 Trust Agreement, with respect to Banknorth Capital Trust IV,
dated January 31, 2002, among Banknorth, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware),
as Delaware Trustee, and the Administrative Trustees named
therein.
*4.12 Form of Amended and Restated Trust Agreement.
*4.13 Form of Senior Debt Security (included as part of Exhibit
4.3).
*4.14 Form of Subordinated Debt Security (included as part of
Exhibit 4.4).
*4.15 Form of Capital Security Certificate (included as part of
Exhibit 4.12).
*4.16 Form of Junior Subordinated Debt Security (included as part
of Exhibit 4.5).
*4.17 Form of Guarantee Agreement.
4.18 Form of Warrant Agreement (to be filed subsequently by Form
8-K).
4.19 Form of Warrant Certificate (to be filed subsequently by
Form 8-K).
4.20 Form of Statement of Resolutions (to be filed subsequently
by Form 8-K).
4.21 Form of Deposit Agreement (to be filed subsequently by Form
8-K).
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
to the legality of the Debt Securities, Preferred Stock,
Depositary Shares, Warrants and Guarantees to be issued by
Banknorth.
*5.2 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust II.
*5.3 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust III.
*5.4 Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to the legality of the Capital Securities to be
issued by Banknorth Capital Trust IV.
8.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
as to the federal income tax consequences of the Securities
(to be filed subsequently by Form 8-K).
*12.1 Computation of ratios of earnings to fixed charges.
*23.1 Consent of KPMG LLP.
*23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included
as part of Exhibits 5.1 and 8.1).
*23.3 Consent of Richards, Layton & Finger, P.A. (included as part
of Exhibits 5.2, 5.3 and 5.4).
*24.1 Power of attorney for directors and officers of Banknorth
(included in the signature page to this registration
statement).
25.1 Form T-1 Statement of Eligibility of the trustee to act as
Senior Trustee and Subordinated Trustee under the Senior
Indenture and the Subordinated Indenture, respectively (to
be filed subsequently by Form 8-K).
*25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Junior Subordinated Indenture.
*25.3 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee with respect to the Amended and Restated
Trust Agreement of Banknorth Capital Trust II.
*25.4 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee with respect to the Amended and Restated
Trust Agreement of Banknorth Capital Trust III.
*25.5 Form T-1 Statement of Eligibility of The Bank of New York
Company to act as Trustee with respect to the Amended and
Restated Trust Agreement of Banknorth Capital Trust IV.
*25.6 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust II.
*25.7 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust III.
*25.8 Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Guarantee Agreement for the benefit
of the holders of Capital Securities of Banknorth Capital
Trust IV.
</Table>
- ---------------
* Previously filed.