<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1997
REGISTRATION NOS. 333- AND 333- -01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM SB-2
----------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GBCI CAPITAL TRUST
GOLD BANC CORPORATION, INC.
(NAME OF SMALL BUSINESS ISSUERS IN THEIR CHARTERS)
DELAWARE 6712 APPLIED FOR
KANSAS (PRIMARY STANDARD INDUSTRIAL 48-1008593
(STATES OR OTHER CLASSIFICATION CODE NUMBER) (IRS EMPLOYER
JURISDICTIONS IDENTIFICATION NOS.)
OF INCORPORATION OR
ORGANIZATION)
11301 NALL AVENUE
LEAWOOD, KANSAS 66211
(913) 451-8050
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL
PLACES OF BUSINESS)
MICHAEL W. GULLION
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
GOLD BANC CORPORATION, INC.
11301 NALL AVENUE
LEAWOOD, KANSAS 66211
(913) 451-8050
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
STEVEN F. CARMAN, ESQ. STEVEN L. KAPLAN, ESQ.
BLACKWELL SANDERS MATHENY WEARY & ARNOLD & PORTER
LOMBARDI LLP THURMAN ARNOLD BUILDING
TWO PERSHING SQUARE 555 TWELFTH STREET, N.W.
2300 MAIN, SUITE 1100 WASHINGTON, D.C. 20004-1202
KANSAS CITY, MISSOURI 64108 (202) 942-5998
(816) 983-8153 FAX: (202) 942-5999
FAX: (816) 983-8080
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
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 following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT* PRICE* FEE
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<S> <C> <C> <C> <C>
% Preferred Securities
of GBCI Capital Trust.. 1,150,000 $25.00 $28,750,000 $8,713
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% Junior Subordinated
Debentures of Gold Banc
Corporation, Inc. (1)..
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Guarantee of Gold Banc
Corporation, Inc. of
certain obligations
under the Preferred
Securities (2).........
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</TABLE>
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*Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(1) The Junior Subordinated Debentures will be purchased by GBCI Capital Trust
with the proceeds of the sale of the Preferred Securities. Such Debentures
may later be distributed for no additional consideration to the holders of
the Preferred Securities upon the dissolution of the Trust and the
distribution of its assets.
(2) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
required for the Guarantee.
The prospectus contained in this Registration Statement will be used for the
offering of the following securities: (1) % Preferred Securities of GBCI
Capital Trust; (2) % Junior Subordinated Debentures of Gold Banc
Corporation, Inc.; and (3) a Guarantee of Gold Banc Corporation, Inc. of
certain obligations under the Preferred Securities.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY THE EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 1997
$25,000,000
GBCI CAPITAL TRUST
% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
GOLD BANC CORPORATION, INC.
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of GBCI Capital Trust, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
Gold Banc Corporation, Inc. (the "Company") will initially be the holder of
all of the beneficial interests represented by common securities of the Issuer
Trust (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities").
(Continued on next page)
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.
----------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A
BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER INSURER OR GOVERNMENT AGENCY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS (2) ISSUER TRUST(3)(4)
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<S> <C> <C> <C>
Per Preferred Security.. $25.00 (4) $25.00
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Total(5)................ $25,000,000 (4) $25,000,000
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</TABLE>
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(1) Plus accrued Distributions, if any, from , 1997.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) Before deducting estimated expenses of the Offering of approximately
$250,000 payable by the Company.
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures,
the Company has agreed to pay to the Underwriters, as compensation for
arranging the investment therein of such proceeds, $ per Preferred
Security (or $ in the aggregate). The managing underwriter
will receive a supplemental financial advisory fee of $25,000 payable upon
consummation of the Offering. See "Underwriting."
(5) The Company has granted the Underwriters a 30 day option to purchase up to
an additional $3,750,000 aggregate liquidation amount of the Preferred
Securities at the Price to Public less Underwriting Discounts and
Commissions, solely to cover over-allotments, if any. If the Underwriters
exercise such option in full, the total Price to Public and Proceeds to
Issuer Trust will be $28,750,000 and $28,750,000, respectively. See
"Underwriting."
The Preferred Securities are offered severally by the Underwriters named
herein, subject to prior sale, when, as and if delivered to and accepted by
the Underwriters. The Underwriters reserve the right to reject orders in whole
or in part and to withdraw, cancel or modify the Offering without notice. It
is expected that delivery of the Preferred Securities will be made in book-
entry form through the book-entry facilities of The Depository Trust Company
on or about , 1997.
ADVEST, INC.
The date of this Prospectus is , 1997
<PAGE>
(cover page continued)
The Issuer Trust exists for the sole purpose of issuing the Trust Securities
and investing the proceeds thereof in % Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures," and together with
the Trust Securities, the "Securities") to be issued by the Company. The
Junior Subordinated Debentures will mature on , , which date may
be shortened (such date, as it may be shortened, the "Stated Maturity") to a
date not earlier than , if certain conditions are met (including
the Company having received the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve"), if then required under
applicable capital guidelines or policies of the Federal Reserve (such
shortening of the maturity date, the "Maturity Adjustment")). The Preferred
Securities will have a preference under certain circumstances over the Common
Securities with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of Preferred
Securities--Subordination of Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust
Company, as depositary ("DTC"). Beneficial interests in the global securities
will be shown on, and transfer thereof will be effected only through, records
maintained by DTC and its participants. Except as described under "Description
of Preferred Securities," Preferred Securities in definitive form will not be
issued and owners of beneficial interests in the global securities will not be
considered holders of the Preferred Securities. Application has been made to
include the Preferred Securities in Nasdaq's National Market. Settlement for
the Preferred Securities will be made in immediately available funds. The
Preferred Securities will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity for the Preferred Securities will therefore
settle in immediately available funds.
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash distributions accumulating from , 1997, and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of
each year commencing , 199 , at the annual rate of % of the
Liquidation Amount of $25 per Preferred Security ("Distributions"). The
Company has the right to defer payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 20
consecutive quarterly periods with respect to each deferral period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. No interest shall be
due and payable during any Extension Period, except at the end thereof. Upon
the termination of any such Extension Period and the payment of all amounts
then due, the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debentures are so deferred, Distributions on the Preferred Securities will
also be deferred and the Company will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to the Company's capital stock or with respect to debt securities of
the Company that rank pari passu in all respects with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Preferred Securities are entitled will
accumulate) at the rate of % per annum, compounded quarterly, and holders
of Preferred Securities will be required to accrue interest income for United
States federal income tax purposes. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guaranteed all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee--Full and Unconditional Guarantee."
The Guarantee of the Company guarantees the payment of Distributions and
payments on liquidation or redemption of the Preferred Securities, but only in
each case to the extent of funds held by the Issuer Trust, as described herein
(the "Guarantee"). See "Description of Guarantee." If the Company does not
make payments on the Junior Subordinated Debentures held by the Issuer Trust,
the Issuer Trust may have insufficient funds to pay Distributions on the
Preferred Securities. The Guarantee does not cover payment of
2
<PAGE>
Distributions when the Issuer Trust does not have sufficient funds to pay such
Distributions. In such event, a holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Preferred Securities."
The obligations of the Company under the Guarantee and the Preferred
Securities are subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of Junior Subordinated Debentures--
Subordination") of the Company.
The Preferred Securities are subject to mandatory redemption (i) in whole,
but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or, at the option of the Company, their earlier redemption in
whole upon the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event (each as defined herein) and (ii) in whole or in part
at any time on or after , contemporaneously with the optional
redemption by the Company of the Junior Subordinated Debentures in whole or in
part. The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after , , in whole at any time or
in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, in each case at a
redemption price set forth herein, which includes the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed
for redemption. The ability of the Company to exercise its rights to redeem
the Junior Subordinated Debentures or to cause the redemption of the Preferred
Securities prior to the Stated Maturity may be subject to prior regulatory
approval by the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Junior
Subordinated Debentures--Redemption" and "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution."
The holders of the outstanding Common Securities have the right at any time
to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to cause the
Junior Subordinated Debentures to be distributed to the holders of the
Preferred Securities and Common Securities in liquidation of the Issuer Trust.
The ability of the Company, as holder of the Common Securities, to dissolve
the Issuer Trust may be subject to prior regulatory approval of the Federal
Reserve, if then required under applicable Federal Reserve capital guidelines
or policies. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law,
the holders of the Preferred Securities will be entitled to receive a
Liquidation Amount of $25 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, subject to certain exceptions,
which may be in the form of a distribution of such amount in Junior
Subordinated Debentures. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Company. See "Description of Junior Subordinated
Debentures--Subordination."
Prospective purchasers must carefully consider the information set forth in
"Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS OF
THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
3
<PAGE>
MAP
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING SHARES OF THE PREFERRED
SECURITIES AND BIDDING FOR AND PURCHASING SUCH SHARES AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
4
<PAGE>
PROSPECTUS SUMMARY
The following Prospectus Summary is qualified in its entirely by, and should
be read in conjunction with, the more detailed information and the consolidated
financial statements and notes thereto included elsewhere in this Prospectus.
Potential investors should read this Prospectus carefully in its entirety.
THE COMPANY
Gold Banc Corporation, Inc. (the "Company") is a multi-bank holding company
that owns and operates four commercial banks and a federal savings bank
(together, the "Banks"). The Banks include: (i) Exchange National Bank
("Exchange Bank"), a national bank headquartered in Marysville, Kansas, the
county seat of Marshall County, that has branch locations in Leawood and
Shawnee, two cities in Johnson County, Kansas; (ii) Citizens State Bank and
Trust Company ("Citizens"), a state bank located in Seneca, Kansas, the county
seat of Nemaha County; (iii) Peoples National Bank ("Peoples"), a national bank
located in Clay Center, Kansas, the county seat of Clay County; (iv) Farmers
National Bank ("Farmers"), a national bank located in Oberlin, Kansas, the
county seat of Decatur County; and (v) Provident Bank, f.s.b. ("Provident
Bank"), a federal savings bank located in St. Joseph, Missouri, the county seat
of Buchanan County. The Banks are community banks providing a full range of
commercial and consumer banking services to small and medium-sized communities
and the surrounding market areas. References to the Company include the Banks
and the assets of the Banks where the context requires. Since December 1978,
the Company has grown internally and through acquisitions from a one bank
holding company with $2.9 million in total assets to a five bank holding
company with total assets as of September 30, 1997 of $411.1 million. The
Company's principal executive offices are located at 11301 Nall Avenue,
Leawood, Kansas 66211, telephone number (913) 451-8050.
COMMUNITY BANKING STRATEGY
The Company's strategy is to maintain responsive community banking offices
with local decision makers. To implement this strategy, the Company allows
senior management at each banking location, within certain limitations, to make
credit and pricing decisions and allows each Bank to retain a local identity
and board of directors intended to foster long-term customer relationships, a
high quality of service and responsiveness to specific customer needs. The
Company serves the needs and caters to the economic strengths of the local
communities in which the Banks are located.
The Company has historically focused its efforts on county seat towns in
rural markets. These towns are generally the focal point of economic activity
in their county. As a result, county seat towns have historically provided a
more stable base of relatively low-cost deposits compared to larger
metropolitan markets with larger competitors. The Company has recently applied
its community banking strategy to two communities in the rapidly developing
Johnson County suburbs southwest of Kansas City. The Company believes the
recent wave of regional bank acquisitions of local banks in those suburban
communities, and the subsequent conversion of some of those acquired banks to
branch locations, has alienated the customers of those locations. This has
created an opportunity for the Company to attract and retain as loan customers
those owner-operated businesses that require flexibility and responsiveness in
lending decisions and desire a more personal banking relationship. See
"BUSINESS--Community Banking Strategy."
ACQUISITIONS AND EXPANSION
The Company's strategy is to operate and continue to acquire banks that
generally have between $25 and $150 million in assets and operate in county
seat towns. The Company believes such banks provide a stable, relatively low-
cost deposit base and have cultures and economic bases similar to those of the
Banks' communities. The Company believes this is a strategic focus shared by
relatively few bank holding companies operating in the Midwest. The Company's
acquisition focus is in the Midwest, primarily in the states of Kansas
5
<PAGE>
and Missouri, but may extend to contiguous states. The Company believes it is
well positioned to acquire and operate profitably community banks because of
its experience in operating community banks, its ability to provide centralized
management to those banks and its access to capital. The Company believes there
are owners of community banks seeking to sell their banks for, among other
reasons, stockholder liquidity, lack of family successor operators and the
burden of compliance with bank regulations.
The Company has recently expanded and diversified its operations by opening
branch offices in the suburban areas of Shawnee and Leawood, Kansas. Management
believes this has allowed the Company to take advantage of growth opportunities
provided by the strong economic and population expansion occurring in those
markets. See "BUSINESS--Growth Strategy." The Company may deviate from the
acquisition parameters described above if it is presented with attractive
candidates that complement its strengths or operations. The size of its
potential targets also may increase as the Company grows.
RECENT ACQUISITIONS
On August 22, 1997, the Company completed the acquisition of Peoples.
Stockholders of Peoples received 493,615 shares of the Company's Common Stock,
valued at approximately $9.3 million, in exchange for all of the outstanding
shares of Peoples. The Company accounted for its acquisition of Peoples using
the pooling of interests method. Accordingly the financial statements, data and
ratios of the Company contained in this Prospectus have been restated to
include the operations of Peoples for all periods presented.
On October 1, 1997, the Company completed the acquisition of Farmers.
Stockholders of Farmers received 273,000 shares of the Company's common stock
and $1.96 million in cash, for a total transaction value of approximately $5.7
million, in exchange for all of the outstanding shares of Farmers. The Company
accounted for its acquisition of Farmers using the purchase method.
Accordingly, the Company's financial statements, data and ratios included in
this Prospectus, except as specifically noted, do not reflect the operations of
Farmers, which will be included in the Company's assets, liabilities and
results of operations from and after the date of acquisition.
On October 16, 1997, the Company completed the acquisition of the operating
assets of Oberlin Insurance Agency, Inc. ("OIA") for $220,000. Although this
acquisition is not financially significant to the Company, the acquisition of
financial services companies other than depository institutions provides the
Company an opportunity to strengthen and develop relationships with customers.
See "BUSINESS --Other Services." The Company accounted for its acquisition of
OIA using the purchase method. Accordingly, the Company's financial statements,
data and ratios included in this Prospectus do not reflect the operations of
OIA, which will be included in the Company's assets, liabilities and results of
operations from and after the date of acquisition.
From time to time, the Company investigates and holds discussions and
negotiations in connection with possible acquisitions of banks and other
financial service entities. At the date hereof, the Company has not entered
into any agreements or understandings with respect to such transactions except
as described herein. While it is anticipated that such transactions may be
entered into in the future, there can be no assurance as to when or if, or the
terms upon which, such transactions may be pursued. Any such transactions would
be subject to regulatory approval and, if required under applicable law, the
approval of the Company's and the other entity's stockholders.
6
<PAGE>
THE BANKS
The Banks are located in Kansas and northwestern Missouri, as shown in the
map on the inside front cover of this Prospectus. Certain information regarding
the Banks as of September 30, 1997 is set forth in the table below (dollars in
millions):
<TABLE>
<CAPTION>
DATE TOTAL TOTAL NO. OF DATE ACQUIRED
FOUNDED ASSETS DEPOSITS LOANS LOCATIONS BY THE COMPANY
------- ------ -------- ------ --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Exchange Bank........ 1870 $199.9 $172.5 $155.0 4 December 1978(1)
Citizens............. 1896 $ 54.8 $ 49.6 $ 32.4 2 September 1985
Provident............ 1889 $ 83.4 $ 63.7 $ 66.1 1 March 1994
Peoples.............. 1885 $ 69.2 $ 58.5 $ 37.5 1 August 1997
Farmers.............. 1886 $ 50.0 $ 42.5 $ 27.0 2 October 1997
------ ------ ------ ---
Totals............. $457.3 $386.8 $318.0 10
</TABLE>
- - --------
(1) Originally acquired as Oketo State Bank, Oketo, Kansas
GBCI CAPITAL TRUST
The Issuer Trust is a statutory business trust formed under Delaware law for
the exclusive purposes of (i) issuing and selling the Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of Preferred
Securities and Common Securities to acquire the Junior Subordinated Debentures
issued by the Company and (iii) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Preferred Securities). The principal executive office of the Issuer Trust
is 11301 Nall Avenue, Leawood, Kansas 66211, and its telephone number is (913)
451-8050.
7
<PAGE>
THE OFFERING
Securities Offered.......... The $25,000,000 aggregate liquidation amount of
Preferred Securities offered hereby represents
preferred undivided beneficial interests in the
Issuer Trust's assets, which will consist solely
of the Junior Subordinated Debentures. The Trust
has granted the Underwriters an option,
exercisable within 30 days after the date of this
Prospectus, to purchase up to an additional
$3,750,000 aggregate liquidation amount of
Preferred Securities at the offering price,
solely to cover over-allotments, if any.
Offering Price.............. $25 per Preferred Security (Liquidation Amount
$25), plus accumulated Distributions, if any,
from , 1997.
Distributions............... The distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the stated liquidation amount per
Preferred Security, will be cumulative, will
accrue from , 1997, the date of issuance of
the Preferred Securities, and will be payable
quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year,
commencing , 199 . See "Description of
Preferred Securities--Distributions."
Junior Subordinated The Issuer Trust will invest the proceeds from
Debentures................. the issuance of the Preferred Securities and
Common Securities in an equivalent amount of %
Junior Subordinated Debentures of the Company.
The Junior Subordinated Debentures will mature on
, subject to the Maturity Adjustment. The
Junior Subordinated Debentures will rank
subordinate and junior in right of payment to all
Senior Indebtedness of the Company. In addition,
the Company's obligations under the Junior
Subordinated Debentures will be structurally
subordinated to all existing and future
liabilities and obligations of its subsidiaries.
Guarantee................... Under the terms of the Guarantee, the Company has
guaranteed the payment of Distributions and
payments on liquidation or redemption of the
Preferred Securities, but only in each case to
the extent of funds held by the Issuer Trust
described herein. The Company and the Issuer
Trust believe that the obligations of the Company
under the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior
Subordinated Indenture taken together, fully,
irrevocably and unconditionally guarantee all of
the Issuer Trust's obligations relating to the
Preferred Securities. The obligations of the
Company under the Guarantee and the Preferred
Securities are subordinate and junior in right of
payment to all Senior Indebtedness. See
"Description of Guarantee."
Right to Defer Interest..... The Company has the right, at any time, to defer
payments of interest on the Junior Subordinated
Debentures for a period not exceeding 20
consecutive quarters; provided that no Extension
Period may extend beyond the Stated Maturity of
the Junior Subordinated Debentures. As a
consequence of the Company's
8
<PAGE>
extension of the interest payment period,
quarterly Distributions on the Preferred
Securities will be deferred (though such
Distribution would continue to accrue with
interest thereon compounded quarterly, since
interest will continue to accrue and compound on
the Junior Subordinated Debentures during any
such Extension Period). During an Extension
Period, the Company will be prohibited, subject
to certain exceptions described herein, from
declaring or paying any cash distributions with
respect to its capital stock or debt securities
that rank pari passu with or junior to the Junior
Subordinated Debentures. Upon the termination of
any Extension Period and the payment of all
amounts then due, the Company may commence a new
Extension Period, subject to the foregoing
requirements. See "Description of Junior
Subordinated Debentures--Option to Extend
Interest Payment Period."
Should an Extension Period occur, Preferred
Security holders will continue to accrue interest
income (and de minimis original issue discount,
if any) for United States federal income tax
purposes. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue
Discount."
Redemption.................. The Preferred Securities are subject to mandatory
redemption (i)
in whole, but not in part, at the Stated Maturity
upon repayment of the Junior Subordinated
Debentures, (ii) in whole, but not in part,
contemporaneously with the optional redemption at
any time by the Company of the Junior
Subordinated Debentures upon the occurrence and
continuation of a Tax Event, Investment Company
Event or Capital Treatment Event and (iii) in
whole or in part at any time on or after
, contemporaneously with the optional
redemption by the Company of the Junior
Subordinated Debentures in whole or in part, in
each case at the applicable Redemption Price. See
"Description of Preferred Securities--
Redemption."
Liquidation of the Issuer The Company, as holder of the Common Securities,
Trust...................... has the right at any time to dissolve the Issuer
Trust and cause the Junior Subordinated
Debentures to be distributed to holders of
Preferred Securities in liquidation of the Issuer
Trust, subject to the Company having received
prior approval of the Federal Reserve to do so if
then required under applicable capital guidelines
or policies of the Federal Reserve. See
"Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
Voting Rights............... Generally, the holders of the Preferred
Securities will not have any voting rights. See
"Description of Preferred Securities--Voting
Rights; Amendment of Trust Agreement" and "Risk
Factors Relating to the Offering--Limited Voting
Rights."
Use of Proceeds............. The proceeds from the sale of the Preferred
Securities offered hereby will be used by the
Issuer Trust to purchase the Junior Subordinated
Debentures issued by the Company. The proceeds
received by the Company from the sale of the
Junior Subordinated
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<PAGE>
Debentures will be used for financing growth,
which may include one or more branch
acquisitions, acquisitions of other financial
institutions, or acquisitions of financial
services companies, and for general corporate
purposes. In addition, a portion of the proceeds
is likely to be contributed to one or more of the
Banks to support internal growth opportunities.
The Trust Securities will qualify as Tier 1 or
core capital of the Company, subject to the 25%
Capital Limitation (as defined herein), under the
risk-based capital guidelines of the Federal
Reserve. The portion of the Trust Securities that
exceeds the 25% Capital Limitation will qualify
as Tier 2 or supplementary capital of the
Company. See "Use of Proceeds."
ERISA Considerations........ Prospective purchasers should consider the
information set forth under "Certain ERISA
Considerations."
Nasdaq National Market Application has been made to have the Preferred
Symbol...................... Securities approved for quotation on the Nasdaq
National Market under the symbol "GLDBP".
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
"RISK FACTORS," BEGINNING ON PAGE 12.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information regarding the Company should be read in
conjunction with the consolidated financial statements of the Company and notes
beginning on page F-1. Consolidated financial and other data regarding the
Company at or for the nine months ended September 30, 1997 and 1996 and for the
year ended December 31, 1994, have been prepared by the Company without audit
and, in the case of interim information, may not be indicative of results of an
annualized basis or any other period. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation for such periods or dates have been made. The
consolidated selected financial data have been restated to include the accounts
and operations of Peoples for all periods.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE
MONTHS ENDED AT OR FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------ ------------------------------
1997 1996 1996 1995 1994(3)
-------- -------- -------- -------- ----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
EARNINGS
Net interest income...... $ 10,784 $ 8,313 $ 11,334 $ 10,547 $ 8,977
Provision for possible
loan losses............. 535 145 (25) 1,334 192
Non-interest income...... 1,917 2,258 2,852 2,315 1,653
Non-interest expense..... 8,147 8,418 11,067 9,790 7,768
-------- -------- -------- -------- --------
Income taxes............. 1,346 678 1,066 520 921
-------- -------- -------- -------- --------
Net income.............. $ 2,673 $ 1,330 $ 2,078 $ 1,218 $ 1,749
======== ======== ======== ======== ========
FINANCIAL POSITION
Total assets............. $411,086 $354,936 $376,858 $332,902 $290,515
Loans, net of unearned
income.................. 294,561 224,060 236,339 193,541 168,231
Allowance for loan
losses.................. 3,613 3,318 2,981 3,252 2,668
Goodwill................. 1,552 1,722 1,678 1,769 1,792
Investment securities.... 81,504 102,282 101,145 102,065 103,322
Deposits................. 344,271 300,237 316,572 285,720 245,861
Long-term Debt........... 1,667 14,523 4,893 12,392 12,833
Stockholders' equity..... 37,065 15,435 34,340 14,887 12,746
SHARE DATA
Net income............... $ 0.56 $ 0.53 $ 0.76 $ 0.48 $ 0.56
Book value............... 7.73 6.19 7.16 5.94 4.99
Cash dividend(2)......... 0.06 0.00 0.00 0.00 0.00
RATIOS
Return on average assets. 0.91% 0.52% 0.60% 0.40% 0.62%
Return on average equity. 9.90% 11.89% 11.19% 8.27% 14.72%
Dividend payout(2)....... 10.21% -- -- -- --
Stockholders' equity to
total assets at period-
end..................... 9.02% 4.35% 9.11% 4.47% 4.39%
Average stockholders'
equity to average total
assets.................. 9.22% 4.38% 5.37% 4.90% 4.19%
CAPITAL RATIOS
Tier 1 risk-based capital
ratio................... 11.98% 7.43% 13.59% 6.93% 7.67%
Total risk-based capital
ratio................... 13.23% 8.69% 14.85% 8.19% 8.94%
Leverage ratio........... 9.11% 4.21% 9.48% 4.36% 3.89%
RATIOS OF EARNINGS TO FIXED
CHARGES(1)
Excluding interest on
deposits................ 4.48% 2.53% 2.82% 2.06% 3.18%
Including interest on
deposits................ 1.34% 1.18% 1.21% 1.13% 1.33%
</TABLE>
- - --------
(1) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, cumulative effect of changes in
accounting principles and fixed charges by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits). There were no amortization of notes and
debentures expense nor any portion of net rental expense which was deemed
to be equivalent to interest on debt. Interest expense (other than on
deposits) includes interest on notes, federal funds purchased and
securities sold under agreements to repurchase, and other funds borrowed.
(2) Prior to the second quarter of 1997, the Company had not paid cash
dividends on shares of its common stock. On each of May 30 and September
12, 1997, the Company paid a cash dividend of $0.03 per share to the
holders of record at May 15 and August 29, 1997.
(3) Peoples was formed in April 1994.
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<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. Certain statements in this
Prospectus and documents incorporated herein by reference are forward-looking
and are identified by the use of forward-looking words or phrases such as
"intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based
on the Company's current expectations. To the extent any of the information
contained in this Prospectus constitutes a "forward-looking statement" as
defined in Section 27A(i)(1) of the Securities Act, the risk factors set forth
below are cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking
statement.
RISK FACTORS RELATING TO THE OFFERING
RANKING AS SUBORDINATED OBLIGATIONS OF THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company for
the benefit of the holders of Preferred Securities and under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior Indebtedness. None of the Junior Subordinated Indenture, the Guarantee
or the Trust Agreement places any limitation on the amount of secured or
unsecured debt, including Senior Indebtedness, that may be incurred by the
Company. See "Description of Guarantee--Status of the Guarantee" and
"Description of Junior Subordinated Debentures--Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the
Junior Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Company has the
right under the Junior Subordinated Indenture to defer the payment of interest
on the Junior Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Debenture Events of Default." As a consequence
of any such deferral, quarterly Distributions on the Preferred Securities by
the Issuer Trust will be deferred during any such Extension Period.
Distributions to which holders of the Preferred Securities are entitled will
accumulate additional Distributions thereon during any Extension Period at the
rate of % per annum, compounded quarterly from the relevant payment date
for such Distributions, computed on the basis of a 360-day year of twelve 30-
day months and the actual days elapsed in a partial month in such period.
Additional Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. The term "Distribution" as
used herein shall include any such additional Distributions. During any such
Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu in all respects
with or junior in interest to the Junior Subordinated Debentures (other than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of
the Company's indebtedness for any
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<PAGE>
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Company may further
defer the payment of interest, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election to begin an Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Property Trustee
will give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. Subject to the foregoing, there is no
limitation on the number of times that the Company may elect to begin an
Extension Period. See "Description of Preferred Securities--Distributions" and
"Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount ("OID")) for
United States federal income tax purposes in respect of its pro rata share of
the Junior Subordinated Debentures held by the Issuer Trust, which will
include a holder's pro rata share of both the stated interest and de minimis
OID, if any, on the Junior Subordinated Debentures. As a result, a holder of
Preferred Securities will include such OID in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Preferred Securities prior to the record date for the payment
of Distributions. See "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount" and "--Sales of Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of his, her or its Preferred Securities
during an Extension Period, therefore, might not receive the same return on
his, her or its investment as a holder that continues to hold its Preferred
Securities. In addition, as a result of the existence of the Company's right
to defer interest payments, the market price of the Preferred Securities
(which represent preferred undivided beneficial interests in the assets of the
Issuer Trust) may be more volatile than the market prices of other securities
on which original issue discount or interest accrues that are not subject to
such deferrals.
TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event, the Company has the right to redeem
the Junior Subordinated Debentures in whole, but not in part, at any time
within 90 days following the occurrence of such Tax Event, Investment Company
Event or Capital Treatment Event and thereby cause a mandatory redemption of
the Preferred Securities. Any such redemption shall be at a price equal to the
liquidation amount of the Preferred Securities, together with accumulated
Distributions to but excluding the date fixed for redemption. The ability of
the Company to exercise its rights to redeem the Junior Subordinated
Debentures prior to the stated maturity may be subject to prior
13
<PAGE>
regulatory approval by the Federal Reserve, if then required under applicable
Federal Reserve capital guidelines or policies. See "Description of Junior
Subordinated Debentures--Redemption" and "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or which pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days of the delivery of such opinion will not be, deductible
by the Company, in whole or in part, for United States federal income tax
purposes or (iii) the Issuer Trust is, or will be within 90 days of the
delivery of the opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
or prospective change becomes effective or would become effective, as the case
may be, on or after the date of the issuance of the Preferred Securities.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
issuance of the Preferred Securities, there is more than an insubstantial risk
that the Company will not be entitled to treat an amount equal to the
Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the
then equivalent thereof) except as otherwise restricted under the 25% Capital
Limitation (as defined herein), for purposes of the risk-based capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable
to the Company.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The
ability of the Company, as holder of the Common Securities, to dissolve the
Issuer Trust may be subject to prior regulatory approval of the Federal
Reserve, if then required under applicable Federal Reserve capital guidelines
or policies. See "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur that would cause
the Issuer Trust to be subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures, a
distribution of the Junior
14
<PAGE>
Subordinated Debentures by the Issuer Trust would be a taxable event to the
Issuer Trust and the holders of the Preferred Securities. See "Certain Federal
Income Tax Consequences--US Holders--Receipt of Junior Subordinated Debentures
or Cash Upon Liquidation of the Issuer Trust."
RIGHTS UNDER THE GUARANTEE
Bankers Trust Company will act as the trustee under the Guarantee and will
hold the Guarantee for the benefit of the holders of the Preferred Securities.
Bankers Trust Company will also act as Debenture Trustee for the Junior
Subordinated Debentures and as Property Trustee under the Trust Agreement.
Bankers Trust (Delaware) will act as Delaware Trustee under the Trust
Agreement. The Guarantee guarantees to the holders of the Preferred Securities
the following payments, to the extent not paid by or on behalf of the Issuer
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Issuer Trust has funds on hand
available therefor at the payment date, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption, to the extent that the
Issuer Trust has funds on hand available therefor at such time, and (iii) upon
a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Preferred Securities on
liquidation of the Issuer Trust. The Guarantee is subordinated as described
under "--Ranking of Subordinated Obligations Under the Guarantee and the
Junior Subordinated Debentures" and "Description of Guarantee--Status of the
Guarantee." The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of the Guarantee or to direct the exercise
of any trust power conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Issuer Trust, the Guarantee
Trustee or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
any amounts payable in respect of the Junior Subordinated Debentures on the
payment date on which such payment is due and payable, then a holder of
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of any amounts payable in
respect of such Junior Subordinated Debentures having a principal amount equal
to the aggregate Liquidation Amount of the Preferred Securities of such holder
(a "Direct Action"). In connection with such Direct Action, the Company will
have a right of set-off under the Junior Subordinated Indenture to the extent
of any payment made by the Company to such holder of Preferred Securities in
the Direct Action. Except as described herein, holders of Preferred Securities
will not be able to exercise directly any other remedy available to the
holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Preferred Securities," "--Debenture Events of Default" and "Description of
Guarantee." The Trust Agreement provides that each holder of Preferred
Securities by acceptance thereof agrees to the provisions of the Guarantee and
the Junior Subordinated Indenture.
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights relating
generally to the modification of the Preferred Securities and the Guarantee
and the exercise of the Issuer Trust's rights as holder of Junior Subordinated
Debentures. Holders of Preferred Securities will not be entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee except upon the
occurrence of certain events specified in the Trust Agreement. The Property
Trustee and the holders of all the Common Securities may, subject to certain
15
<PAGE>
conditions, amend the Trust Agreement without the consent of holders of
Preferred Securities to cure any ambiguity or make other provisions not
inconsistent with the Trust Agreement or to ensure that the Issuer Trust (i)
will not be taxable as a corporation for United States federal income tax
purposes, or (ii) will not be required to register as an "investment company"
under the Investment Company Act. See "Description of Preferred Securities--
Voting Rights; Amendment of Trust Agreement" and "--Removal of Issuer
Trustees; Appointment of Successors."
ABSENCE OF MARKET
The Preferred Securities are a new issue of securities with no established
trading market. Application has been made to list the Preferred Securities in
the Nasdaq National Market, but one of the requirements for initial listing is
the presence of three market makers for the Preferred Securities. Nasdaq
National Market maintenance standards require the existence of two market
makes for continued listing. Advest, Inc. has advised the Company that it
intends to make a market in the Preferred Securities so long as the volume of
trading activity in the Preferred Securities and certain other market making
considerations justify doing so. It is anticipated that the Nasdaq National
Market initial listing requirements will be met, including the presence of
three market makers. There can be no assurance, however, that an established
and liquid trading market will develop or, if developed, will be sustained
following the issuance of the Preferred Securities.
MARKET PRICES
There can be no assurance as to the market prices for Preferred Securities,
or the market prices for Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a liquidation of the
Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Issuer Trust, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See
"Description of Junior Subordinated Debentures."
RISK FACTORS RELATING TO THE COMPANY
STATUS OF THE COMPANY AS A BANK HOLDING COMPANY
The Company is a legal entity separate and distinct from the Banks. The
ability of the Company to pay the interest on, and principal of, the Junior
Subordinated Debentures will be significantly dependent on the ability of the
Banks to pay dividends to the Company in amounts sufficient to service the
Company's debt obligations. Payment of dividends by the Banks is restricted by
various legal and regulatory limitations.
The right of the Company to participate in the assets of any subsidiary upon
the latter's liquidation, reorganization or otherwise (and thus the ability of
the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim.
The Banks are also subject to restrictions under federal law which limit the
transfer of funds by them to the Company, whether in the form of loans,
extensions of credit, investments, asset purchases or otherwise. Such
transfers by the Banks to the Company or any nonbank subsidiary of the Company
are limited in amount to 10% of the bank's capital and surplus and, with
respect to the Company and all its nonbank subsidiaries, to an aggregate of
20% of the bank's capital and surplus. Furthermore, such loans and extensions
of credit are required to be secured in specified amounts. Federal law also
prohibits banks from purchasing "low-quality" assets from affiliates.
16
<PAGE>
COMPETITION AND OTHER RISKS ASSOCIATED WITH EXPANSION STRATEGY
The rural market areas now served by the Company afford limited, if any,
opportunities for growth in such markets. Management believes future growth in
the earnings of the Company will depend in part on consummation of
acquisitions in other markets and growth in Exchange Bank's Johnson County
branches. The Company must compete with a variety of institutions and
individuals for suitable acquisition candidates. This competition is expected
to intensify with the advent of interstate banking and branching. Competition
for acquisitions is expected to include money center banks and major regional
bank holding companies. These same institutions, as well as other financial
institutions, also compete intensely for assets and deposits within the
Company's southwestern Kansas City market. Competition from these institutions
could adversely affect the Company's ability to make acquisitions and to grow
profitably its Kansas City asset and deposit base.
The Company has experienced significant growth through acquisitions of
depository institutions and other financial services companies, and continues
to evaluate other business opportunities as they may arise. In this regard,
the Company may from time to time enter into discussions with additional
acquisition candidates, and such discussions may result in letters of intent
and/or definitive agreements relating to the acquisition of such banks or
other companies. There can be no assurances, however, that any of these
discussions will be successful, that the execution of any letters of intent or
definitive agreements will result in the consummation of the transactions
contemplated thereby, that the Company will acquire any additional businesses,
or that the financial performance of any business acquired by the Company in
the future will justify the investment therein. Moreover, acquisitions may
involve a number of special risks, including adverse short-term effects on the
Company's reported operating results, diversion of management's attention,
dependence on retaining, hiring and training of key personnel, risks
associated with unanticipated problems or legal liabilities, and amortization
of acquired intangible assets, some or all of which could have a material
adverse effect on the Company's operations or financial performance.
LIMITED NUMBER OF BANKS
The Company currently owns four banks and one federal savings bank. Due to
this relatively small existing base of banks, adverse results or events at a
particular Bank could have a more significant impact on the Company's results
of operations or financial condition than would be the case for a company with
a greater number of banks.
GEOGRAPHIC CONCENTRATION; SIGNIFICANCE OF AGRICULTURAL ECONOMY
Approximately 69.7% of the Company's deposits and 68.3% of the Company's
assets at September 30, 1997 were derived from Banks operating in the
relatively rural markets of Marysville, Clay Center and Seneca, Kansas and St.
Joseph, Missouri. Adverse economic changes in these geographic markets may
have a material adverse effect on the Company's results of operations and
financial condition. In the rural Kansas markets served by the Banks, the
predominant economic sector is agriculture. Changes in the agricultural
economy have had, and are expected to continue to have, a significant impact
on the results of operations and financial condition of the Company.
Agriculture in these communities is affected by many factors beyond the
control of the Banks, including weather, governmental policies, fluctuating
commodity prices, demand, production and natural disasters.
CONCENTRATIONS IN REAL ESTATE LENDING AND RELATED RISKS
The Company is dependent to a significant degree on a broad spectrum of
commercial, construction, 1 to 4 family residential and agricultural real
estate loans. Real estate loan origination activity, including refinancings,
generally is greater during periods of declining interest rates and favorable
economic conditions, and has been favorably affected by relatively lower
market interest rates during the past several years. There is no assurance
such favorable conditions will continue.
17
<PAGE>
On September 30, 1997, real estate and real estate construction loans
totaled approximately 60% of the Company's loan portfolio. Real estate loans
are subject to the risk that real estate values in a geographical area or for
a particular type of real estate will decrease, and to the risk that borrowers
will be unable to meet their loan obligations. The Company attempts to
minimize these risks by making real estate loans that are secured by a variety
of different types of real estate, limiting real estate loans to 80% of the
appraised value of the real estate (or, in the case of residential real estate
loans, requiring the borrower to obtain mortgage insurance to the extent the
loan exceeds 80% of the value of the property), limiting the maturity of
commercial real estate loans held in its portfolio to one to five years and,
regardless of collateral, reviewing the potential borrower's ability to meet
debt service obligations. There can be no assurance that any of these or other
measures will reduce the risks associated with real estate lending. See
"BUSINESS--Lending Activities."
COMPETITION WITHIN MARKETS
The Banks operate in a competitive environment, competing for deposits and
loans with commercial banks, thrift institutions and other financial
institutions. Numerous mergers and consolidations involving banks and thrifts
in the geographic market in which the Company operates have occurred recently,
resulting in an intensification of competition. The Banks also compete with
money market mutual funds for funds from depositors. Many of the Banks'
competitors possess greater financial resources or have substantially higher
lending limits than do the Banks. Federal and state legislation and/or
regulations also affect the Company's competitiveness in the financial
services business. It is impossible to predict the competitive impact on the
Company of certain federal and state legislation and/or regulations relating
to the banking industry and interstate banking. See "BUSINESS" and
"SUPERVISION AND REGULATION."
ADEQUACY OF ALLOWANCE FOR LOAN LOSSES
In originating loans, there is a substantial likelihood credit losses will
be experienced. The risk of loss varies with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for the loan. Management maintains an allowance
for loan losses based on, among other things, industry standards, management's
experience, historical experience, an evaluation of economic conditions, and
regular reviews of delinquencies and loan portfolio quality. Based upon such
factors, management makes various assumptions and judgments about the ultimate
collectability of the loan portfolio and provides an allowance for potential
loan losses based upon a percentage of the outstanding balances and for
specific loans when their ultimate collectability is considered questionable.
As of September 30, 1997, the allowance for possible loan losses was $3.6
million, which represented 1.23% of total loans, and loans in non-accrual
status totaled $918,000. The Banks actively manage past due and non-performing
loans in an effort to minimize credit losses and monitor asset quality to
maintain an adequate loan loss allowance. Although management believes its
allowance for loan losses is adequate, there can be no assurance the allowance
will prove sufficient to cover future loan losses. Further, future adjustments
may be necessary if economic conditions differ substantially from the
assumptions used or adverse developments arise with respect to the Banks' non-
performing or performing loans. Accordingly, there can be no assurance the
allowance for loan losses will be adequate to cover loan losses or significant
increases to the allowance will not be required in the future if economic
conditions should worsen. Material additions to the Banks' allowance for loan
losses would result in a decrease in the Company's net income. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--Financial Condition--Allowance for Loan Losses."
SAFETY AND SOUNDNESS REGULATIONS
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by federal law and
regulatory policy that are designed to reduce potential loss exposure
18
<PAGE>
to the depositors of such depository institutions and to the FDIC insurance
funds in the event the depository institution becomes in danger of default or
in default. For example, under a policy of the Federal Reserve with respect to
bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions
and to commit resources to support such institutions in circumstances where it
might not do so otherwise. See "SUPERVISION AND REGULATION." In addition, the
"cross-guarantee" provisions of federal law require insured depository
institutions under common control to reimburse the FDIC for any loss suffered
or reasonably anticipated by the federal deposit insurance funds as a result
of the default of a commonly controlled insured depository institution or for
any assistance provided by the FDIC to a commonly controlled insured
depository institution in danger of default. The FDIC may decline to enforce
the cross-guarantee provision if it determines that a waiver is in the best
interests of the federal deposit insurance funds. The FDIC's claim for a
reimbursement is superior to claims of shareholders of the insured depository
institution or its holding company but is subordinate to claims of depositors,
secured creditors and holders of subordinated debt (other than affiliates) of
the commonly controlled insured depository institution.
The federal banking agencies also have broad powers under current federal
law to take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the institution
in question is "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized," as defined by the law. See "SUPERVISION AND REGULATION."
Each of the Banks are classified as well capitalized, except that Exchange
Bank is classified as "adequately capitalized."
State regulatory authorities also have broad enforcement powers over the
Banks, including the power to impose fines and other civil and criminal
penalties, and to appoint a conservator in order to conserve the assets of any
such institution for the benefit of depositors and other creditors and has the
authority to take possession of a state bank in certain circumstances,
including, among other things, when it appears that such bank has violated its
charter or any applicable laws or is conducting its business in an
unauthorized or unsafe manner, or is in an unsafe or unsound condition to
transact its business or has an impairment of its capital stock.
EFFECT OF INTEREST RATE FLUCTUATIONS
Fluctuations in interest rates are not predictable or controllable. The
Company endeavors to structure its asset and liability management strategies
to mitigate the impact on net interest income of changes in market interest
rates. However, there can be no assurance that the Company will be able to
manage interest rate risk so as to avoid significant adverse effects in net
interest income.
The Company's consolidated results of operations depend to a large extent on
the level of its net interest income, which is the difference between interest
income from interest-earning assets (such as loans and investments) and
interest expense on interest-bearing liabilities (such as deposits and
borrowings). If interest-rate fluctuations cause its cost of funds to increase
faster than the yield on its interest-earning assets, net interest income will
be reduced. The Company measures its interest-rate risk using simulation,
price elasticity and gap analyses. The differences between an institution's
interest-rate sensitive assets and its interest-rate sensitive liabilities at
a point in time is its gap position. At September 30, 1997, the Company had a
one year cumulative negative gap of 22.78%. This negative one year gap
position may have a negative impact on earnings in an increasing interest rate
environment. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Interest Rate Sensitivity Analysis."
GOVERNMENT REGULATION
The Company and the Banks each are subject to extensive state and federal
governmental supervision, regulation and control. Future legislation and
government policy could adversely affect the banking industry and the
operations of the Company and the Bank. See "SUPERVISION AND REGULATION."
19
<PAGE>
KEY PERSONNEL
Continued profitability of the Banks and the Company are dependent on the
retention of a limited number of key persons, including Michael W. Gullion,
the Chairman, President and Chief Executive Officer of the Company, and Keith
E. Bouchey, the Executive Vice President, Secretary and Chief Financial
Officer of the Company. There would likely be a difficult transition period if
the Company lost the services of either or both men. In recognition of this
risk, the Company owns and is the beneficiary of an insurance policy on the
life of Mr. Gullion providing for death benefits of $1.5 million and has
entered into employment agreements with Mr. Gullion and Mr. Bouchey. The
Company also places great value on the experience of Bank and branch
presidents and on their relationships within the communities served by the
Banks. The loss of these key persons could negatively impact the affected
banking locations. See "Management."
GBCI CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a Certificate of Trust with the Delaware Secretary
of State on October 31, 1997. The Issuer Trust will be governed by the Trust
Agreement among the Company, as Depositor, Bankers Trust (Delaware), as
Delaware Trustee, and Bankers Trust Company, as Property Trustee (together
with the Delaware Trustee, the "Issuer Trustees"). Two individuals will be
selected by the holder of the Common Securities to act as administrators with
respect to the Issuer Trust (the "Administrators"). The Company, while holder
of the Common Securities, intends to select two individuals who are employees
or officers of or affiliated with the Company to serve as the Administrators.
See "Description of Preferred Securities--Miscellaneous." The Issuer Trust
exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust.
All the Common Securities will initially be owned by the Company. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities, except that upon the occurrence and during the
continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the rights of the holder of the Common
Securities to payment in respect of Distributions and Payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Preferred Securities. See "Description of Preferred
Securities--Subordination of Common Securities." The Company will acquire
Common Securities in an aggregate liquidation amount equal to 3% of the total
capital of the Issuer Trust. The Issuer Trust has a term of 31 years, but may
terminate earlier as provided in the Trust Agreement. The address of the
Delaware Trustee is Bankers Trust (Delaware), 1101 Centre Road, Suite 200,
Trust Department, Wilmington, Delaware 19805, telephone number (302) 636-3301.
The address of the Property Trustee, the Guarantee Trustee and the Debenture
Trustee is Bankers Trust Company, Four Albany Street, 4th Floor, New York, New
York 10006, telephone number (212) 250-2500.
20
<PAGE>
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred Securities are
expected to qualify as Tier 1 or core capital with respect to the Company
under the risk-based capital guidelines established by the Federal Reserve,
however capital received from the proceeds of the sale of the Preferred
Securities cannot constitute more than 25% of the total Tier 1 capital of the
Company (the "25% Capital Limitation"). Amounts in excess of the 25% Capital
Limitation will constitute Tier 2, or supplementary capital, of the Company.
The net proceeds to be received by the Company from the sale of the Junior
Subordinated Debentures will be used for financing growth, which may include
one or more branch acquisitions, acquisitions of other financial institutions,
acquisitions of other financial services companies, and for general corporate
purposes. In addition, a portion of the proceeds is likely to be contributed
to one or more of the Banks to support internal growth opportunities. Pending
any such use, the net proceeds may be invested in short-to-medium-term
investments. The precise amounts and timing of the application of proceeds
will depend upon the funding requirements of the Company and its subsidiaries
and the availability of other funds.
21
<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of the
Company at September 30, 1997, (ii) the consolidated capitalization of the
Company giving effect to the acquisition of Farmers as if it had been
consummated on September 30, 1997, (iii) the acquisition of Farmers as
described in (ii) and giving effect to the issuance of the Preferred
Securities hereby offered by GBCI Capital Trust, and (iv) the actual and pro
forma capital ratios of the Company. The table assumes application by the
Company of the net proceeds from the corresponding sale of the Junior
Subordinated Debentures to GBCI Capital Trust as if the sale of the Preferred
Securities had been consummated on September 30, 1997, and that the
Underwriters' over-allotment was not exercised.
<TABLE>
<CAPTION>
AS ADJUSTED FOR THE
AS ADJUSTED ACQUISITION OF
FOR THE FARMERS AND
ACQUISITION THE SALE OF
ACTUAL OF FARMERS PREFERRED SECURITIES
------- ----------- --------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Guaranteed preferred beneficial
interests in the Company's
subordinated debt(1)................ $ 0 $ 0 $25,000
STOCKHOLDERS' EQUITY:
Preferred stock no par value,
25,000,000 shares authorized, none
issued............................ 0 0 0
Common stock no par value,
25,000,000 shares authorized;
4,793,615 shares issued and
outstanding (5,066,615 shares as
adjusted for the acquisition of
Farmers).......................... 4,794 5,067 5,067
Additional paid in capital......... 18,784 24,229 24,229
Net unrealized gain on securities
available-for-sale................ 63 63 63
Unearned Compensation.............. (276) (276) (276)
Retained earnings.................. 13,700 13,700 13,700
------- ------- -------
Total stockholders' equity....... 37,065 42,783 42,783
------- ------- -------
Total capitalization............... $37,065 $42,783 $67,783
======= ======= =======
COMPANY CAPITAL RATIOS(2):
Equity to total assets............. 9.02% 9.26% 13.92%
Tier 1 risk-based capital
ratio(3)(4)....................... 11.98% 12.40% 16.53%
Total risk-based capital ratio(4).. 13.23% 13.61% 17.74%
Leverage ratio..................... 9.11% 9.33% 13.34%
</TABLE>
- - --------
(1) Preferred Securities representing beneficial interests in an aggregate
principal amount of $25,000,000 of the % Junior Subordinated
Debentures of the Company (not including the $3,750,000 aggregate
principal amount of Junior Subordinated Debentures to be purchased in the
event the Underwriters exercise their over-allotment option). The Junior
Subordinated Debentures will mature on .
(2) The capital ratios, as adjusted, are computed including the total
estimated proceeds from the sale of the Preferred Securities, in a manner
consistent with Federal Reserve guidelines.
(3) Federal Reserve guidelines for calculation of Tier 1 capital limit the
amount of cumulative preferred stock which can be included in Tier 1
capital to 25% of total Tier 1 capital.
(4) Assumes net proceeds of the offering of the Preferred Securities are
invested in assets with a 0.00% risk weighting under the risk-based
capital rules of the Federal Reserve.
22
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of
the Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial
reporting purposes, Distributions on the Preferred Securities will be recorded
as interest expense in the consolidated statements of earnings of the Company.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's principal asset is its ownership of the Banks. Accordingly, the
Company's net income is dependent upon the combined results of operations of
the Banks. Each Bank conducts a commercial and consumer banking business that
consists of attracting deposits from the general public and redeploying those
funds to earning assets. Each Bank's profitability depends primarily on net
interest income, which is the difference between interest income generated from
interest-earning assets, primarily consisting of loans and investments, and
interest expense incurred on interest-bearing liabilities, primarily consisting
of customer deposits and borrowed funds.
Net interest income is affected by the balances of interest-earning assets
and interest-bearing liabilities and each Bank's interest rate spread, which is
the difference between the average yield earned on its interest-earning assets
and the average rate paid on its interest-bearing liabilities. The interest
rate spread is impacted by, among other factors, changes in interest rates,
deposit flows and loan demand.
The Company's profitability is also affected by the level of non-interest
income of the Banks and non-interest expense of the Company and the Banks. Non-
interest income consists primarily of service fees, other fees and gains on the
sale of secondary mortgage loans and investment securities. Non-interest
expense consists of compensation and benefits, occupancy related expenses,
deposit insurance premiums, expenses of opening branch offices and other
operating expenses. The Company's profitability is further impacted by the
Company's effective tax rate, the Banks' provision for loan losses, and various
extraordinary items.
The Company's financial statements, data and ratios included in this
Prospectus have been restated to reflect the operations of Peoples, acquired on
August 22, 1997 in a pooling transaction, but not Farmers, acquired on October
1, 1997 in a purchase transaction.
On November 22, 1996, the Company completed an initial public offering of
2,000,000 shares of its common stock. The closing with respect to an additional
300,000 shares was completed on December 19, 1996, following the exercise of
the underwriters' over-allotment option. The net proceeds of the sale, after
deducting expenses of the offering, were approximately $18.1 million. The net
proceeds were used to retire approximately $6.6 million in short-term debt, to
make a $5 million capital contribution to Exchange Bank, to retire $2.5 million
of debt assumed in the acquisition of Peoples, $2.2 million for acquisitions,
$500,000 invested in marketable equity securities and the remainder for general
corporate purposes.
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
The Company's net income was $2.6 million for the nine month period ended
September 30, 1997, compared to net income of $1.3 million for the nine month
period ended September 30, 1996 yielding an annualized return on average assets
("ROA") of 0.91% for the nine month period ended September 30, 1997, compared
to 0.52% for the same ended September 30, 1996. Return on average common
stockholders' equity ("ROE") for the nine month periods ended September 30,
1997 and 1996 was 9.90% and 11.89%, respectively. The primary reason for the
earnings increase for the nine month period ended September 30, 1997 over the
same period in 1996 was greater net interest income through an improved net
interest margin coupled with greater loan volume. In addition, 1996 was
negatively impacted by a one-time industry wide Savings Association Insurance
Fund ("SAIF") assessment by the FDIC on SAIF assessable deposits which was paid
in the third quarter of 1996.
Total assets were $411.1 million at September 30, 1997, an increase of $34.2
million from December 31, 1996. Total average assets were $390.6 million for
the nine month period ended September 30, 1997, compared
24
<PAGE>
to $340.5 million for the nine month period ended September 30, 1996. Average
interest-earning assets were $361.1 million for the nine month period ended
September 30, 1997 and $314.3 million for the same period ended September 30,
1996.
The increase in net loans from December 31, 1996 to September 30, 1997 was
funded through increases in deposits of $27.7 million, short-term borrowings
of $6.4 million, liquidation of $19.6 million in investment securities and
draws on existing cash reserves of $5.7 million. The allowance for loan losses
increased to $3.6 million at September 30, 1997 from $3.0 million at December
31, 1996. The allowance represented 1.23% and 1.26% of total loans as of
September 30, 1997 and December 31, 1996, respectively.
COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1995
The Company's net income was $2.1 million for the year ended December 31,
1996, compared to net income of $1.2 million for the year ended December 31,
1995, yielding an ROA of 0.60% for the year ended December 31, 1996, compared
to 0.40% for the year ended December 31, 1995. ROE for 1996 and 1995 was
11.19% and 8.27%, respectively.
Total assets were $376.9 million at December 31, 1996, an increase of $44.0
million or 13.2% from $332.9 million at December 31, 1995. Total average
assets were $345.7 million for the year ended December 31, 1996, compared to
$300.8 million for the year ended December 31, 1995. Average interest-earning
assets were $319.8 million for the year ended December 31, 1996, and $279.4
million for 1995. Assets increased primarily because of the opening of
Exchange Bank's Leawood, Kansas location and growth at its Shawnee, Kansas
location.
The Company's net loans totaled $233.4 million and $190.3 million, as of
December 31, 1996 and 1995, respectively. The increase in total loans of $43.1
million during 1996 compared to 1995 was funded through increases in deposits
of $30.8 million, federal funds purchased of $1.0 million, $3 million from
proceeds of the Company's public stock offering and $4.0 million of available
cash. The allowance for loan losses decreased to $3.0 million at December 31,
1996, from $3.3 million at December 31, 1995. This represented 1.26% and 1.68%
of total loans as of December 31, 1996 and 1995, respectively. See "--
Provision of Loan Losses."
NET INTEREST INCOME
Net interest income is interest earned on interest-earning assets less
interest accrued on interest-bearing liabilities. Interest-earning assets are
categorized as loans, investment securities and other earning assets, which
include Federal Funds sold and certificates of deposit issued from other
financial institutions. Interest-bearing liabilities are categorized as
customer deposits, time and savings deposits and other borrowings including
Federal Funds borrowed, short-term borrowings and long-term debt.
Total interest income for the nine month period ended September 30, 1997 was
$22.6 million, a 15.7% increase over the nine month period ended September 30,
1996. The increase is primarily the result of greater interest income through
a slightly improved yield on earnings assets combined with an increase in
total average earning assets of approximately $46.7 million.
Total interest expense for the nine month period ended September 30, 1997
was 5.3% higher than in the same period in 1996 as a result of an increase of
total interest-bearing liabilities of approximately $25.0 million but was
partially offset by slightly lower interest rates paid. Average total
interest-bearing liabilities increased by $25.7 million or 8.5% during the
nine month period ended September 30, 1997 compared to the same period in
1996, primarily due to the increased volume of deposits originated by Exchange
Bank in connection with the opening of its Leawood location and increased
short-term borrowings to fund loan demand in Johnson County.
Net interest income was $10.8 million for the nine month period ended
September 30, 1997, compared to $8.3 million for the same period in 1996, an
increase of 29.7%. This increase is attributable to significantly greater loan
volumes primarily originated from Exchange Bank's Leawood and Shawnee, Kansas
branches and a net interest margin for the period of 4.06% compared with 3.60%
for the same period in 1996.
25
<PAGE>
Total interest income for the year ended December 31, 1996 was $26.4 million
compared to $23.4 million for 1995, representing a 12.6% increase. Average
total earning assets increased $40.4 million or 14.5% at December 31, 1996,
compared to December 31, 1995. The increase is primarily the result of the
opening of Exchange Bank's office in Leawood, Kansas in the fourth quarter of
1995 as well as the continued growth in loans at Shawnee.
Total interest expense for the year ended December 31, 1996 was $15.1 million
compared to $12.9 million for the same period in 1995, representing a 16.8%
increase. The increase in interest expense reflects an increase in the rate
paid on interest-bearing liabilities. Average total interest-bearing
liabilities increased by $36.9 million or 13.8% during 1996, primarily due to
increased volume of deposits originated by Exchange Bank in connection with the
opening of its Leawood location.
Net interest income was $11.3 million for the year ended December 31, 1996,
compared to $10.6 million for 1995, an increase of 7.5%. The Company believes
this growth would have been greater but for an increase in interest expense
resulting from offering above-market rates on time deposits to promote the
opening of Exchange Bank's Leawood location. Although these deposits are
maturing, a substantial portion of such deposits have been retained. Exchange
Bank continues to offer above-market rates in an effort to attract and retain
deposits. The Company intends to periodically offer above-market in certain
markets in order to gain market share and liquidity.
26
<PAGE>
The following table presents the Company's average balances, interest earned
or accrued, and the related yields and rates on major categories of the
Company's interest-earning assets and interest-bearing liabilities for the
periods indicated:
COMPARATIVE AVERAGE BALANCES, YIELDS AND RATES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------
1997 1996
------------------------- -------------------------
AVERAGE AVERAGE
INTEREST RATE INTEREST RATE
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
-------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Loans, net (1)............. $257,510 $18,170 9.41% $199,860 $14,507 9.68%
Investment securities-
taxable................... 82,589 3,665 5.92 94,700 4,250 5.98
Investment securities-
nontaxable(2)............. 10,265 619 8.03 9,898 547 7.37
Other earning assets....... 10,686 379 4.73 9,877 423 5.71
-------- ------- ---- -------- ------- ----
Total earning assets..... 361,050 22,833 8.43% 314,336 19,727 8.37%
Non-interest-earning
assets.................... 29,552 26,199
-------- --------
Total assets............. $390,602 $340,535
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Savings deposits and
interest-bearing checking. $113,048 $ 3,003 3.54% $ 83,081 $ 2,002 3.21%
Time deposits 185,466 7,682 5.52 189,117 7,932 5.59
Short-term borrowings...... 25,056 952 5.07 17,659 751 5.67
Long-term borrowings....... 3,937 203 6.87 11,980 559 6.25
-------- ------- ---- -------- ------- ----
Total interest-bearing
liabilities............. 327,507 11,840 4.82% 301,837 11,243 4.97%
Non-interest-bearing
liabilities............... 27,094 23,779
Stockholders' equity....... 36,001 14,919
-------- --------
Total liabilities and
stockholders' equity.... $390,602 $340,535
======== ========
Net interest income(3)..... $10,993 $ 8,484
======= =======
Net interest spread........ 3.61% 3.40%
==== ====
Net interest margin(4)..... 4.06% 3.60%
==== ====
</TABLE>
- - --------
(1) Non-accruing loans are included in the computation of average balance.
(2) Yield is adjusted for the tax effect of tax exempt securities. The tax
effects for the nine months ended September 30, 1997 and 1996 were $209
and $171, respectively. The combined marginal rate used was 34%.
(3) The Company includes loan fees in interest income. Such fees totaled $705
and $702 for the nine months ended September 30, 1997 and 1996,
respectively.
(4) The net yield on average earning assets is the net interest income divided
by average interest-earning assets.
27
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995
------------------------- -------------------------
AVERAGE AVERAGE
INTEREST RATE INTEREST RATE
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
-------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Loans, net (1)............. $206,406 $19,796 9.59% $177,712 $17,253 9.71%
Investment securities-
taxable................... 92,422 5,624 6.09 83,485 5,221 6.25
Investment securities-
nontaxable(2)............. 9,927 770 7.76 10,690 755 7.06
Other earning assets....... 11,035 471 4.27 7,464 439 5.88
-------- ------- ---- -------- ------- ----
Total earning assets..... 319,790 26,661 8.34% 279,351 23,668 8.47%
Non-interest-earning
assets.................... 25,957 21,482
-------- --------
Total assets............. $345,747 $300,833
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Savings deposits and
interest-bearing checking. $ 86,334 $ 3,106 3.60% $ 75,169 $ 2,316 3.08%
Time deposits 188,577 10,235 5.43 164,413 8,942 5.44
Short-term borrowings...... 17,696 1,008 5.70 14,343 796 5.55
Long-term borrowings....... 11,048 716 6.48 12,873 840 6.53
-------- ------- ---- -------- ------- ----
Total interest-bearing
liabilities............. 303,655 15,065 4.96% 266,798 12,894 4.83%
Non-interest-bearing
liabilities............... 23,530 19,309
Stockholders' equity....... 18,562 14,726
-------- --------
Total liabilities and
stockholders' equity.... $345,747 $300,833
======== ========
Net interest income(3)..... $11,596 $10,774
======= =======
Net interest spread........ 3.38% 3.64%
==== ====
Net interest margin (4).... 3.63% 3.86%
==== ====
</TABLE>
- - --------
(1) Non-accruing loans are included in the computation of average balance.
(2) Yield is adjusted for the tax effect of tax exempt securities. The tax
effects in 1996 and 1995 were $262 and $227, respectively. The combined
marginal rate used was 34%.
(3) The Company includes loan fees in interest income. Such fees totaled $873
and $671 in 1996 and 1995, respectively.
(4) The net yield on average earning assets is the net interest income divided
by average interest-earning assets.
28
<PAGE>
The following table presents the components of changes in the Company's net
interest income as attributed to volume and rate on a tax-equivalent basis.
The net change attributable to the combined impact of volume and rate has been
solely allocated to the change in rate.
RATE/VOLUME INTEREST ANALYSIS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997
COMPARED TO SEPTEMBER
30, 1996
------------------------
AVERAGE TOTAL
VOLUME RATE CHANGES
------ ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans(1)............................................ $5,579 $(1,916) $3,663
Investment securities-taxable....................... (725) 140 (585)
Investment securities-nontaxable.................... 27 44 71
Other earning assets................................ 46 (90) (44)
------ ------- ------
Total interest income............................. $4,927 $(1,822) $3,105
INTEREST EXPENSE:
Savings deposits and interest-bearing checking...... 963 38 $1,001
Time deposits....................................... (204) (46) (250)
Short-term borrowings............................... 418 (217) 201
Long-term borrowings................................ (500) 144 (356)
------ ------- ------
Total interest expense............................ 677 (81) $ 596
Increase (decrease) in net interest income............ $4,251 $(1,742) $2,509
====== ======= ======
</TABLE>
- - --------
(1) The Company includes loan fees in interest income. Such fees totaled $705
and $702 for the nine months ended September 30, 1997 and 1996,
respectively.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1995 COMPARED TO
1996 COMPARED TO 1995 1994(2)
----------------------- ------------------------
AVERAGE TOTAL AVERAGE TOTAL
VOLUME RATE CHANGES VOLUME RATE CHANGES
------ ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans(1).................... $2,786 $(243) $2,543 $(6,757) $13,285 $6,528
Investment securities-
taxable.................... 559 (156) 403 (1,053) 2,162 1,109
Investment securities-
nontaxable................. (54) 69 15 (12) 494 482
Other earning assets........ 210 (178) 32 76 124 200
------ ----- ------ ------- ------- ------
Total interest income..... $3,501 $(508) $2,993 $(7,746) $16,065 $8,319
INTEREST EXPENSE:
Savings deposits and
interest-bearing checking.. $ 344 $ 446 $ 790 (931) 1,560 629
Time deposits............... 1,314 (21) 1,293 567 3,273 3,840
Short-term borrowings....... 186 26 212 100 304 404
Long-term borrowings........ (119) (5) (124) (59) 321 262
------ ----- ------ ------- ------- ------
Total interest expense.... $1,725 $ 446 $2,171 $ (323) $ 5,458 $5,135
Increase (decrease) in net
interest income.............. $1,776 $(954) $ 822 $(7,423) $10,607 $3,184
====== ===== ====== ======= ======= ======
</TABLE>
- - --------
(1) The Company includes loan fees in interest income. Such fees totaled $873,
$671 and $525 in 1996, 1995 and 1994, respectively.
(2) Information presented does not include Peoples.
29
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the nine month period ended September 30,
1997, was $535,000, an increase of $390,000 over the comparable 1996 period.
This increase reflects the Company's recognition of significant loan growth.
The allowance represented 1.23% and 1.68% of total loans as of September 30,
1997 and September 30, 1996, respectively. The provision for loan losses was
negative $25,000 for the year ended December 31, 1996 compared to $1.33
million for the same period in 1995. The decrease is a result of management's
estimate of the required reserve coupled with unanticipated loan recoveries
realized in the fourth quarter of 1996.
NON-INTEREST INCOME
Non-interest income for the nine month period ended September 30, 1997, was
$1.9 million, a decrease of 15.1% from the same period in 1996. The decrease
is primarily a result of reduced gains on sales of mortgage loans at Provident
Bank, which is consistent with the Company's reduced emphasis on low margin
secondary market mortgage lending. The Company has sold its loan servicing
business and all mortgages sold into the secondary market are sold without
servicing rights retained. The Company does not retain loan brokers.
Non-interest income for the year ended December 31, 1996, was $2.9 million,
an increase of 23.2% from 1995. The increase is primarily a result of
increased service fees, gains on sales of assets in the second half of 1996
and the gain on the sale of loans in the first half of 1996. The Company
incurs periodic gains and losses in connection with the sale of securities to
meet its liquidity needs and in anticipation of changes in interest rates. See
"--Investment Activities."
The following table presents the components of the Company's non-interest
income for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------- --------------
1997 1996 1996 1995
------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Service charges on deposit accounts............ $ 738 $ 687 $1,033 $ 999
Gain on sale of loans.......................... 501 943 1,128 1,058
Gain (loss) on sale of securities.............. 89 20 (11) (92)
Insurance premium income....................... 55 16 22 58
Fiduciary income............................... 119 94 173 125
Other non-interest income...................... 415 498 507 167
------ ------ ------ ------
Total non-interest income...................... $1,917 $2,258 $2,852 $2,315
====== ====== ====== ======
Non-interest income as a percentage of average
total assets................................... 0.65% 0.88% 0.82% 0.77%
====== ====== ====== ======
</TABLE>
NON-INTEREST EXPENSE
Certain savings deposits of two of the Banks are insured by the Savings
Association Insurance Fund ("SAIF"), with the remaining deposits of the Banks
insured by the Bank Insurance Fund ("BIF"). Both SAIF and BIF have had a
designated reserve ratio of 1.25%. On September 30, 1996, the President signed
into law the Deposit Insurance Fund Act of 1996 ("DIFA"). DIFA directed the
FDIC to impose a special assessment on SAIF-assessable deposits insured as of
March 31, 1995. The one-time expense for the Company, incurred in 1996,
totaled $389,100 ($240,000 net after tax). In addition to this special one-
time assessment, the premiums for BIF deposits were increased to 1.29 basis
points per $100 of deposits and for SAIF deposits were decreased to 6.44 basis
points per $100 of deposits. The new premiums, which took effect January 1,
1997, and continue through December 31, 1999, will result, based on the
Company's current deposit base, in a decrease in future FDIC insurance
premiums for the Company.
30
<PAGE>
Non-interest expense decreased slightly by $271,000 for the nine month
period ended September 30, 1997, as compared to the same period in 1996. This
decrease was primarily due to the ongoing centralization of certain
administrative functions, increases in operating officiencies, and the
realization of cost savings, including a 3.9% reduction in salaries and
benefits expenses. In the third quarter of 1996, Provident Bank substantially
altered the manner in which it conducts its mortgage banking business. The
changes included a substantial reduction in personnel that decreased the
Company's salaries and employee benefits expenses. Net occupancy expense
decreased due to rental income associated with Exchange Bank's new Leawood
branch. The Company experienced a significant increase in professional
services expenses as a result of legal and accounting expenses associated with
the Company's recent acquisitions and its obligation to comply for the first
time with the periodic reporting requirements of the Securities and Exchange
Commission imposed on publicly held companies.
Non-interest expense increased by $1.3 million for the year ended December
31, 1996. This increase was primarily due to the addition of employees at the
newly opened Leawood location and Provident Bank's mortgage loan production
office and also was affected by annual increases in salaries and employee
benefits and the addition of two executive positions at the Company. Net
occupancy expense increased due to remodeling projects that were completed in
Shawnee, Kansas and St. Joseph, Missouri and because Exchange Bank's new
Leawood, Kansas location was not open in the first half of 1995. As a
percentage of average assets, non-interest expense was 3.20% and 3.25% as of
December 31, 1996 and 1995, respectively.
The following table presents the components of non-interest expense for the
periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30 DECEMBER 31,
-------------- ---------------
1997 1996 1996 1995
------ ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and employee benefits................. $4,453 $4,628 $ 6,060 $5,332
Net occupancy expense.......................... 928 1,072 1,466 1,287
Deposit insurance expense...................... 76 515 551 400
Professional services.......................... 578 384 510 565
Data processing expense........................ 431 218 306 222
Supplies....................................... 203 229 308 262
Telephone...................................... 105 133 170 150
Postage........................................ 138 140 186 183
Advertising/promotion.......................... 368 336 495 289
Other.......................................... 867 763 1,015 1,100
------ ------ ------- ------
Total non-interest expense................... $8,147 $8,418 $11,067 $9,790
====== ====== ======= ======
Efficiency ratio(1)............................ 66.96% 80.74% 77.88% 84.93%
</TABLE>
- - --------
(1) The efficiency ratio represents total non-interest expense divided by net
interest income after provision for loan losses plus total non-interest
income.
INCOME TAX EXPENSE
Income tax expense for the nine month period ending September 30, 1997 and
September 30, 1996 was $1.3 million and $678,000, respectively. The effective
tax rates for those periods were 33.5% and 33.8%, respectively.
Income tax expense for the years ended December 31, 1996, and December 31,
1995, was $1.1 million and $520,000, respectively. The effective tax rates for
those periods were 33.9% and 30.0%, respectively. The effective tax rate for
1995 differed from the expected rate of 34% primarily because of a greater
percentage of income before taxes come from tax-exempt securities.
Approximately 43.5% of income before taxes in 1995 was derived from tax-exempt
securities compared to only 24.5% in 1996.
31
<PAGE>
ASSET/LIABILITY MANAGEMENT
Asset liability management refers to management's efforts to minimize
fluctuations in net interest income caused by interest rate changes. This is
accomplished by managing the repricing of interest rate sensitive interest-
earning assets and interest-bearing liabilities. An interest rate sensitive
balance sheet item is one that is able to reprice quickly, through maturity or
otherwise. Controlling the maturity or repricing of an institution's
liabilities and assets in order to minimize interest rate risk is commonly
referred to as gap management. Close matching of the repricing of assets and
liabilities will normally result in little change in net interest income when
interest rates change. A mismatched gap position will normally result in
changes in net interest income as interest rates change.
Along with internal gap management reports, the Company and the Banks use an
external asset/liability modeling service to analyze each of the Banks'
current gap position. The system simulates the Banks' asset and liability base
and projects future earnings results under several interest rate assumptions.
The Company strives to maintain an aggregate gap position such that changes in
interest rates within ranges determined by management to be reasonable will
not effect net interest income by more than five percent in any twelve-month
period. The Company has not engaged in derivatives transactions for its own
account.
The following table sets forth the maturities of interest-earning assets and
interest-bearing liabilities outstanding at September 30, 1997.
INTEREST RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
TERM TO REPRICING
-------------------------------------------------
FOUR
MONTHS OVER
ZERO TO TO ONE TO OVER
THREE TWELVE FIVE FIVE
MONTHS MONTHS YEARS YEARS TOTAL
-------- -------- ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans...................... $124,901 $ 60,571 $88,111 $20,978 $294,561
Investment securities...... 12,745 18,334 27,344 23,081 81,504
Other interest-bearing
assets.................... 6,639 -- -- -- 6,639
-------- -------- ------- ------- --------
Total interest-earning
assets.................. 144,285 78,905 115,455 44,059 382,704
INTEREST-BEARING LIABILITIES:
Savings deposits and
interest-bearing checking. 120,757 -- -- -- 120,757
Time deposits.............. 41,149 88,138 66,978 144 196,409
Short-term borrowings...... 17,898 5,711 1,417 25,026
Long-term borrowings....... 144 242 916 365 1,667
-------- -------- ------- ------- --------
Total interest-bearing
liabilities............. 179,948 94,091 69,311 509 343,859
Interest sensitivity gap..... $(35,663) $(15,186) $46,144 $43,550 $ 38,845
Cumulative gap............... $(35,663) $(50,849) $(4,705) $38,845
Cumulative ratio of interest-
earning assets to interest-
bearing liabilities......... 80.18 % 81.44 % 98.63 % 111.30%
Ratio of cumulative gap to
interest-earning assets..... (24.72)% (22.78)% (1.39)% 10.15%
</TABLE>
The cumulative gap value indicated above for the zero to five year time
period indicates that a rise in interest rates would have a negative effect on
net interest income. The Company has the ability to reprice the rates on
savings deposits and interest bearing checking. Historically the rates on
these deposits have not been repriced when rates have had small movements.
32
<PAGE>
FINANCIAL CONDITION
LENDING ACTIVITIES
Real Estate Loans. Real estate loans represent the largest class of loans of
the Company. The Company categorizes real estate loans as follows:
i) Commercial. Commercial real estate loans increased from December 31,
1995, to September 30, 1997, due primarily to increased lending activity in
the Johnson County suburbs southwest of Kansas City.
ii) Construction. Construction lending consists primarily of single
family construction in Johnson County, Kansas. The Company has experienced
steady growth in the suburban Kansas City market place. The September 30,
1997 balance reflects continued, although seasonal, growth in the Johnson
County market.
iii) 1 to 4 Family Residential. Loans in this category consist primarily
of owner-occupied residential loans. Since December 31, 1995, the mix of
loans has begun to shift from fixed rate loans to variable rate products.
The Company has elected to portfolio selected variable rate real estate
loans, which has resulted in the loan growth in this category.
iv) Agricultural. This category consists of loans secured by agricultural
real estate. The demand for agricultural real estate loans has remained
flat due to an historically low turnover of farm property.
v) Held for Sale. Loans held for sale represent residential loans
intended to be sold to secondary market investors and in the process of
being delivered.
Commercial Loans. Loans in this category include loans to service, retail,
wholesale and light manufacturing businesses, including agricultural service
businesses. Commercial loans increased $29.6 million or 68.9% from December
31, 1995, to September 30, 1997. This loan growth is attributable to Exchange
Bank's expanding business development in Shawnee, Kansas and the opening of
Exchange Bank's location in Leawood, Kansas. Provident Bank has also increased
its commercial loan portfolio.
Consumer and Other Loans. Loans classified as consumer and other loans
include automobile, residential, other personal loans and credit card loans.
The majority of these loans are installment loans with fixed interest rates.
Consumer and other loans increased 22.1% from December 1996, which was
proportional to the increase in total loans. The Company issues credit cards
to its existing customers.
Agricultural Loans. Agricultural loans are typically made to farmers, small
corporate farms and feed and grain dealers. Agricultural loans were $21.1
million as of September 30, 1997, or 7.1% of total loans. Agricultural loan
demands has remained stable, due in general to a very stable agricultural
economy. Agricultural loans as a percentage of total loans continues to
decrease slightly, due to overall loan growth in other areas.
33
<PAGE>
The following table presents the balance of each major category of the
Company's loans at the dates indicated.
LOAN PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------------
1997 1995 1995
--------------- --------------- ---------------
AMOUNT % AMOUNT % AMOUNT %
-------- ------ -------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial.................. $ 72,642 24.66% $ 52,524 22.22% $ 43,018 22.23%
Real Estate Construction.... 40,431 13.73 28,672 12.13 19,987 10.33
Real Estate(1).............. 137,135 46.56 114,990 48.65 87,220 45.07
Loans held for sale......... 2,872 0.98 2,182 0.92 6,665 3.44
Consumer and Other.......... 20,344 6.91 16,668 7.05 16,193 8.37
Agricultural................ 21,137 7.18 21,303 9.01 20,458 10.57
-------- ------ -------- ------ -------- ------
Total loans................. 294,561 100.00% 236,339 100.00% 193,541 100.00%
Less allowance for loan
losses...................... 3,613 2,981 3,252
-------- -------- --------
Total..................... $290,948 $233,358 $190,289
======== ======== ========
</TABLE>
- - --------
(1) Includes commercial real estate loans, agriculture real estate loans and 1
to 4 family residential real estate loans.
The following table sets forth the repricing of portfolio loans outstanding
at September 30, 1997.
LOAN REPRICING SCHEDULE
<TABLE>
<CAPTION>
AFTER AFTER ONE
IN THREE FOUR MONTHS YEAR BUT
MONTHS BUT BEFORE BEFORE AFTER
OR LESS ONE YEAR FIVE YEARS FIVE YEARS TOTAL
-------- ----------- ---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LOAN CATEGORY:
Commercial............... $ 44,114 $12,541 $13,919 $ 2,068 $ 72,642
Real Estate Construction. 37,584 1,230 1,617 -- 40,431
Real Estate.............. 25,724 31,977 61,204 18,230 137,135
Loans Held for Sale...... 2,872 -- -- -- 2,872
Agricultural............. 8,288 9,921 2,655 273 21,137
Consumer and other....... 6,319 4,902 8,716 407 20,344
-------- ------- ------- ------- --------
Total loans............ $124,901 $60,571 $88,111 $20,978 $294,561
======== ======= ======= ======= ========
</TABLE>
As of September 30, 1997, loans repricing after one year include
approximately $66.1 million in fixed rate loans and $42.9 million in floating
or adjustable rate loans.
ASSET QUALITY
The Company's asset quality compares favorably to its peer institutions. The
Company follows regulatory guidelines in placing loans on a non-accrual basis
and places loans with doubtful principal repayment on a non-accrual basis,
whether current or past due. The Company considers non-performing assets to
include all non-accrual loans, other loans past due 90 days or more as to
principal and interest (with the exception of those loans which in
management's opinion are well collateralized or exhibit other characteristics
suggesting they are collectable), other real estate owned ("OREO") and
repossessed assets. The Company does not return a loan to accrual status until
it is brought current with respect to both principal and interest and future
principal payments are no longer in doubt. When a loan is placed on non-
accrual status, any previously accrued and uncollected interest is reversed.
34
<PAGE>
Restructured and impaired loans are considered insignificant for all periods
presented. The Company recorded interest income on non-accrual loans in the
amounts of $4,000, $23,000 and $172,000 for the nine months ended September
30, 1997 and the years ended December 31, 1996 and 1995, respectively. The
Company would have recorded additional interest in the amounts of $79,000,
$23,000 and $27,000 for each of the foregoing periods, respectively if non-
accrual loans had been current during these periods.
Non-performing assets are summarized in the following table:
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
AT
DECEMBER 31,
SEPTEMBER 30, --------------
1997 1996 1995
------------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Loans:
Loans 90 days or more past due but still
accruing...................................... $ 14 $ 5 $ 4
Non-accrual loans.............................. 918 324 1,762
------ ----- -------
Non-performing loans........................... 932 329 1,766
Other assets..................................... 4 -- --
OREO............................................. 150 70 149
------ ----- -------
Non-performing assets.......................... $1,086 $ 399 $ 1,915
====== ===== =======
Non-performing loans as a percentage of total
loans........................................... 0.32% 0.14% 0.91%
Non-performing assets as a percentage of total
assets.......................................... 0.26% 0.11% 0.58%
</TABLE>
ALLOWANCE FOR LOAN LOSSES
The success of a bank depends to a significant extent upon the quality of
the assets, particularly loans. In the case of the Company, this is
highlighted by the fact that as of September 30, 1997, net loans represented
approximately 70.78% of its total assets. In originating loans, there is a
substantial likelihood that credit losses will be experienced. The risk of
loss will vary with, among other things, general economic conditions, the type
of loan being made, the creditworthiness of the borrower over the term of the
loan and, in the case of a collateralized loan, the quality of the collateral
for the loan. Management maintains an allowance for loan losses based on,
among other things, industry standards, management's experience, historical
experience, an evaluation of economic conditions, and regular reviews of
delinquencies and loan portfolio quality. Based upon such factors, management
makes various assumptions and judgments about the ultimate collectability of
the loan portfolio and provides an allowance for potential loan losses based
upon a percentage of the outstanding balances and for specific loans when
their ultimate collectability is considered questionable. Since certain
lending activities involve greater risks, the percentage applied to specific
loan types may vary.
The Company actively manages its past due and non-performing loans in each
Bank in an effort to minimize credit losses and monitor asset quality to
maintain an adequate loan loss allowance. Although management believes that
its allowance for loan losses is adequate for each Bank and collectively,
there can be no assurance that the allowance will prove sufficient to cover
future loan losses. Further, although management uses the best information
available to make determinations with respect to the allowance for loan
losses, future adjustments may be necessary if economic conditions differ
substantially from the assumptions used or adverse developments arise with
respect to the organization's non-performing or performing loans. Accordingly,
there can be no assurance that the allowance for loan losses will be adequate
to cover loan losses or that significant increases to the allowance will not
be required in the future if economic conditions should worsen. Material
additions to the allowance for loan losses would result in a decrease of the
Company's net income and capital and could result in the inability to pay
dividends, among other adverse consequences.
The allowance for loan losses at September 30, 1997 totaled $3.6 million, a
$632,000 increase over December 31, 1996 resulting from charge-offs of
$300,000, recoveries of $397,000 and provisions of $535,000.
35
<PAGE>
The allowance for loan losses on December 31, 1996 totaled $3.0 million, a
slight decrease over December 31, 1995 resulting from charge-offs of $501,000,
recoveries of $255,000 and provisions of ($25,000). The allowance for loan
losses totaled $3.3 million as of December 31, 1995. The allowance increased
during 1995 by $584,000 which resulted from a combination of additional
provisions of $1.3 million and net charge-offs of $750,000.
The following table sets forth activity in the Company's allowance for loan
losses during the periods indicated:
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, ------------------
1997 1996 1995
------------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Total net loans outstanding at the end of
period....................................... $290,948 $233,358 $190,290
Average net loans outstanding during the
period....................................... $257,510 $206,406 $177,712
Allowance for loan losses, beginning of
period....................................... $ 2,981 $ 3,252 $ 2,668
CHARGE-OFFS:
Real Estate Construction................... -- 24 --
Real Estate................................ 102 2 12
Commercial................................. 146 304 542
Consumer and other......................... 51 72 89
Agricultural............................... 1 99 260
-------- -------- --------
Total charge-offs........................ 300 501 903
RECOVERIES OF LOANS PREVIOUSLY CHARGED OFF:
Real Estate Construction................... -- 11 --
Real Estate................................ 34 107 57
Commercial................................. 325 90 10
Consumer and other......................... 35 20 28
Agricultural............................... 3 27 58
-------- -------- --------
Total recoveries......................... 397 255 153
Net charge-offs (recoveries)................. (97) 246 750
Provision charged to operations.............. 535 (25) 1,334
-------- -------- --------
Allowance for loan losses, end of period..... $ 3,613 $ 2,981 $ 3,252
RATIOS:
Net charge-offs to average loans outstanding. (0.04)% 0.12% 0.42%
Allowance for loan losses to loans, end of
period....................................... 1.23% 1.26% 1.68%
Allowance for loan losses to non-performing
loans........................................ 387.66% 906.08% 184.14%
</TABLE>
36
<PAGE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSS
AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PERCENT OF
LOANS IN EACH
CATEGORY
AMOUNT TO TOTAL LOANS
------ --------------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Real Estate Construction........................... $ 404 11.19%
Real Estate........................................ 1,023 28.31%
Commercial......................................... 726 20.09%
Agricultural....................................... 211 5.84%
Consumer and Other................................. 237 6.56%
Unallocated........................................ 1,012 28.01%
------ ------
Total............................................ $3,613 100.00%
====== ======
</TABLE>
INVESTMENT ACTIVITIES
The Company's investment portfolio serves three important functions: first,
it enables the adjustment of the balance sheet's sensitivity to changes in
interest rate movements; second, it provides an outlet for investing excess
funds; and third, it provides liquidity. The investment portfolio is
structured to maximize the return on invested funds within conservative risk
guidelines.
The portfolio is comprised of U.S. Treasury securities, U.S. government
agency obligations, state municipal obligations, Federal Reserve Bank stock,
FNMA stock, and FHLB stock. The U.S. government agency obligations include
Federal Home Loan Mortgage Corporation ("FHLMC"), FNMA notes and mortgage-
backed securities, FHLB notes and Government National Mortgage Association
("GNMA") mortgage-backed securities. As of September 30, 1997, the portfolio
includes approximately $11.1 million of standard collateralized mortgage
obligations, all of which are rated AA or better. Federal Funds sold are not
classified as investment securities.
The investment portfolio decreased $920,000 or 0.90% during the year ended
December 31, 1996 and $19,641,000 or 19.42% for the period ending September
30, 1997. The decreases are primarily due to a strong loan demand.
The composition of the investment portfolio as of September 30, 1997, was
28.59% U.S. Treasury notes, 22.96% U.S. government obligations, 32.25%
mortgage-backed securities, 12.13% state and municipal securities and 4.07%
other securities. The comparable distribution for December 31, 1996, was
29.69% U.S. Treasury notes, 20.24% U.S. government obligations, 36.57%
mortgage-backed securities, 10.77% state and municipal securities, and 2.73%
other securities. The estimated maturity of the investment portfolio on
September 30, 1997, was two years and eight months. The average balance of the
investment portfolio as of September 30, 1997, represented 25.72% of average
earning assets as compared to 32.01% on December 31, 1996. No change in
investment strategy was made during 1997.
The Company periodically changes its balance sheet strategy to accommodate a
new interest rate environment when, in management's opinion, economic and
policy signals indicate a changing trend in interest rates. Accordingly, in
the first half of 1995 the Company sold bonds in anticipation of an increase
in interest rates.
37
<PAGE>
The following table sets forth the composition of the Company's investment
portfolio at the dates indicated:
INVESTMENT SECURITIES PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
SEPTEMBER 30, -----------------
1997 1996 1995
------------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
SECURITIES HELD TO MATURITY: (1)
U.S. Treasury and other U.S. agencies and
corporations.................................. $ 76 $ 77 $ 74
Obligations of states and political
subdivisions.................................. 25 25 25
------- -------- --------
Total........................................ $ 101 $ 102 $ 99
------- -------- --------
SECURITIES AVAILABLE FOR SALE: (2)
U.S. Treasury and other U.S. agencies and
corporations................................... $41,943 $ 50,424 $ 53,525
Obligations of states and political
subdivisions................................... 9,915 10,872 9,652
Mortgage-backed securities..................... 26,230 36,986 36,027
Other (3)...................................... 3,315 2,761 2,762
------- -------- --------
Total........................................ $81,403 $101,043 $101,966
------- -------- --------
Total investment securities................ $81,504 $101,145 $102,065
======= ======== ========
</TABLE>
- - --------
(1) Securities held to maturity are carried on the Company's books at
amortized cost.
(2) Securities available for sale are carried on the Company's books at fair
value.
(3) Includes FHLB stock, Federal Reserve stock and FNMA stock.
The following table sets forth a summary of maturities in the investment
portfolio at September 30, 1997:
MATURITY SCHEDULE OF SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
1997 (AT MARKET
VALUE) OVER 5
OVER ONE YEAR YEARS THROUGH
ONE YEAR OR LESS THROUGH 5 YEARS 10 YEARS OVER 10 YEARS TOTAL
---------------- ---------------- ---------------- --------------- ----------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------- -------- ------- -------- ------- -------- ------ -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other
U.S. agencies and
corporations........... $18,985 5.40% $17,977 5.75% $ 3,919 -- $1,062 -- $41,943 5.57%
Obligations of states
and political
subdivisions........... 1,077 8.55% 5,411 7.62% 2,970 7.72% 457 -- 9,915 7.76%
Mortgage-backed
securities............. 1,204 5.00% 20,336 6.00% 4,331 7.13% 359 7.69% 26,230 6.19%
Other................... 3,315 5.12% -- -- -- -- 3,315 5.12%
------- ------- ------- ------ -------
Total................... $24,581 $43,724 $11,220 $1,878 $81,403 6.02%
======= ======= ======= ====== ======= ====
</TABLE>
DEPOSIT ACTIVITIES
Deposits are the major source of the Banks' funds for lending and other
investment purposes. In addition to deposits, the Banks derive funds from
interest payments, loan principal payments, loan and securities sales, and
funds from operations. Scheduled loan repayments are a relatively stable
source of funds, while deposit inflows are significantly influenced by general
interest rates and money market conditions. The Banks may use borrowings on a
short-term basis if necessary to compensate for reductions in the availability
of other sources of funds, or borrowings may be used on a longer term basis
for general business purposes.
38
<PAGE>
Deposits are attracted principally from within the Banks' primary market
area through the offering of a broad variety of deposit instruments, including
checking accounts, money market accounts, savings accounts, certificates of
deposit (including jumbo certificates in denominations of $100,000 or more),
and retirement savings plans. The Banks have aggressively attempted to obtain
large denomination, high interest-bearing deposits in selected markets to
increase market share or meet particular liquidity needs. The Company has not
used brokered deposits and has not sought to attract deposits outside its
market areas.
Maturity terms, service fees and withdrawal penalties are established by the
Banks on a periodic basis. The determination of rates and terms is predicated
on funds transaction and liquidity requirements, rates paid by competitors,
growth goals and federal regulations.
The growth in deposits is primarily the result of the Company's new
locations in Shawnee and Leawood, Kansas. During 1997 the Company experienced
an increase in savings and interest-bearing transaction accounts with balances
of less than $100,000. The non-interest-bearing account balance as of
September 30, 1997, showed a $27.1 million or 25.4% increase from the balance
as of September 30, 1996. The average balance increased accordingly by $4.4
million or 21.4% primarily as a result of growth at the Company's Shawnee and
Leawood, Kansas locations.
The following table sets forth the average balances and weighted average
rates for the Company's categories of deposits at the dates indicated.
AVERAGE DEPOSIT BALANCES AND RATES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ---------------------------------------------------
SEPTEMBER 30, 1997 1996 1995
------------------------- ------------------------- -------------------------
% OF % OF % OF
AVERAGE AVERAGE TOTAL AVERAGE AVERAGE TOTAL AVERAGE AVERAGE TOTAL
BALANCE RATE DEPOSITS BALANCE RATE DEPOSITS BALANCE RATE DEPOSITS
-------- ------- -------- -------- ------- -------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest checking... $ 25,099 0.00% 8% $ 22,623 0.00% 8% $ 17,966 0.00% 7%
Savings deposits and
interest-bearing
checking............... 113,048 3.54% 35% 86,334 3.60% 29% 75,169 3.08% 29%
Certificates of deposit 185,466 5.52% 57% 188,577 5.43% 63% 164,413 5.44% 64%
-------- --- -------- --- -------- ---
Total................. $323,613 100% $297,534 100% $257,548 100%
</TABLE>
The Company does not have a concentration of deposits from any one source,
the loss of which would have a material adverse effect on its business.
Management believes that substantially all the Banks' depositors are residents
in their respective primary market area.
The following table sets forth a summary of the deposits of the Company at
the dates indicated:
DEPOSIT COMPOSITION
<TABLE>
<CAPTION>
DECEMBER 31
SEPTEMBER 30, -----------------
1997 1996 1995
------------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Non-interest-bearing........................... $ 27,105 $ 27,092 $ 24,427
Interest-bearing:
Savings and NOW accounts..................... 120,757 96,025 73,114
Time accounts less than $100,000............. 159,683 151,725 154,979
Time accounts greater than $100,000.......... 36,726 41,730 33,200
-------- -------- --------
Total deposits............................. $344,271 $316,572 $285,720
</TABLE>
39
<PAGE>
The following table summarizes at September 30, 1997, the Company's
certificates of deposit of $100,000 or more by time remaining until maturity:
<TABLE>
<CAPTION>
CERTIFICATES OF DEPOSIT
$100,000 OR GREATER
-----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Maturity Period:
Less than three months.......................... 15,532
Over three months through six months............ 7,054
Over six months through twelve months........... 7,863
Over twelve months.............................. 6,277
-------
Total......................................... $36,726
=======
</TABLE>
The Company has no other time deposits in excess of $100,000.
CAPITAL AND LIQUIDITY
Sources of Liquidity. Liquidity defines the ability of the Company and the
Banks to generate funds to support asset growth, satisfy other disbursement
needs, meet deposit withdrawals and other fund reductions, maintain reserve
requirements and otherwise operate on an ongoing basis. The immediate
liquidity needs of the Banks are met primarily by federal funds sold, short-
term investments, deposits and the generally predictable cash flow (primarily
repayments) from each Bank's assets. Intermediate term liquidity is provided
by the Banks' investment portfolios. The Banks also have established a credit
facility with the FHLB under which the Banks are eligible for short or
advances secured by real estate loans or mortgage-related investments. The
Company's liquidity needs and funding are provided through non-affiliated bank
borrowing, cash dividends and tax payments from its subsidiary banks. The
Company has a pre-approved $10.0 million line of credit with a non-affiliated
correspondent bank.
Capital. The Company and the Banks actively monitor their compliance with
regulatory capital requirements. The elements of capital adequacy standards
include strict definitions of core capital and total assets, which include
off-balance sheet items such as commitments to extend credit. Under the risk-
based capital method of capital measurement, the ratio computed is dependent
on the amount and composition of assets recorded on the balance sheet and the
amount and composition of off-balance sheet items, in addition to the level of
capital. Historically, the Banks have increased core capital through the
retention of earnings or capital infusions. Each Bank's ability to incur
additional indebtedness or to issue or pay dividends on common or preferred
stock may be limited by regulatory policies and the terms of the outstanding
securities.
At September 30, 1997, the Company's Tier 1 risk-based capital, total risk-
based capital and leverage ratios were 11.98%, 13.23% and 9.11%, respectively,
compared to minimum required levels of 4%, 8% and 4%, respectively (subject to
change and the discretion of regulatory authorities to impose higher standards
in individual cases). On October 30, 1997, the Company's Board of Directors
declared a quarterly cash dividend for the third quarter of 1997 in the amount
of $.03 per common share payable to stockholders as of November 14, 1997. The
Company's Board of Directors expects for the foreseeable future to consider
declaration of a comparable dividend at each of its quarterly meetings.
Impact of Inflation and Changing Prices
The primary impact of inflation on the operations of the Company is
reflected in increased operating costs. Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are
monetary in nature. As a result, changes in interest rates have a more
significant impact on the performance of a financial institution than do the
effects of changes in the general rate of inflation and changes in prices.
Interest rate
40
<PAGE>
changes do not necessarily move in the same direction or have the same
magnitude as changes in the prices of goods and services.
Accounting and Financial Reporting
The Financial and Accounting Standards Board (the "FASB") issued Statement
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities" in June 1996 and Statement 127 "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125" in December
1996. These statements provide accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities. The Company will adopt or already has adopted these statements as
required in 1997 and 1998. The adoption is not expected to have a significant
impact on its financial condition or results of operation.
SFAS No. 128, "Earnings Per Share" is effective for the fiscal year ending
December 31, 1997, with earlier adoption prohibited. SFAS No. 128 supersedes
APB Opinion No. 15 (APB No. 15) and specifies the computation, presentation,
and disclosure requirements for earnings per share ("EPS") for entities with
publicly held common stock. SFAS No. 128 was issued to simplify the
computation of EPS and to make the U.S. standard more compatible with the EPS
standards of other countries and the International Accounting Standards
Committee. It replaces the presentation of primary EPS with a presentation of
basic EPS and fully diluted EPS with diluted EPS. Basic EPS, unlike primary
EPS, excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Diluted EPS is computed similarly
to fully diluted EPS under APB No. 15. Retroactive application will be
required.
41
<PAGE>
THE COMPANY
The Company is a multi-bank holding company that owns and operates four
commercial banks and a federal savings bank. The Banks are community banks
providing a full range of commercial and consumer banking services to small
and medium-sized communities and the surrounding market areas. Since December
1978, the Company has grown internally and through acquisitions from a one
bank holding company with $2.9 million in total assets to a five bank holding
company with total assets as of September 30, 1997 of $411.1 million. The
Company's principal executive offices are located at 11301 Nall Avenue,
Leawood, Kansas 66211, telephone number (913) 451-8050.
THE BANKS
Exchange Bank. Exchange Bank has four locations and is headquartered in
Marysville, Kansas. The two Marysville location's loan portfolio as of
September 30, 1997 consisted primarily of agricultural, commercial and
industrial loans and residential real estate loans. Since April 1992 and
October 1995, Exchange Bank has been operating branches in Shawnee and
Leawood, Kansas, respectively. These branches are located in Johnson County,
the rapidly developing suburbs southwest of Kansas City, Missouri. Exchange
Bank expects to open a new Shawnee branch in the second quarter of 1998. The
two Johnson County, Kansas branches of Exchange Bank's loan portfolio as of
September 30, 1997 consisted primarily of commercial, real estate construction
and residential real estate loans. As of September 30, 1997, Exchange Bank had
assets of $199.9 million.
Provident Bank. Provident Bank, a federally chartered savings and loan has
one location in the city of St. Joseph, Missouri. The Bank's loan portfolio as
of September 30, 1997 consisted primarily of real estate loans. As of
September 30, 1997, Provident Bank had assets of $83.4 million.
Citizens. Citizens has two locations in the town of Seneca, Kansas. As of
September 30, 1997 the Bank's loan portfolio consisted primarily of the
agricultural sector, including farm real estate, agricultural production and
agricultural industrial and residential home loans. As of September 30, 1997,
the Bank had assets of $54.8 million.
Peoples. Peoples has one location in the town of Clay Center, Kansas. As of
September 30, 1997, the Bank's loan portfolio consisted primarily of real
estate and agricultural loans. As of September 30, 1997, the Bank had assets
of $69.2 million.
Farmers. Farmers has two locations and is headquartered in Oberlin, Kansas.
As of September 30, 1997, the Bank's loan portfolio consisted primarily of
agricultural and real estate loans. As of September 30, 1997, the Bank had
assets of $50.0 million.
42
<PAGE>
BUSINESS
COMMUNITY BANKING STRATEGY
The Company serves the needs and caters to the economic strengths of the
local communities in which the Banks are located. Through the Banks and their
employees, the Company strives to provide a high level of personal and
professional customer service. Employee participation in community affairs is
encouraged in order to build long-term banking relationships with established
businesses and individual customers in these market areas.
The Company believes its Marysville, Seneca, Clay Center and Oberlin, Kansas
locations, together with the other communities in their respective counties
that comprise their market area, provide a stable base of relatively low-cost
deposits compared to larger metropolitan markets with larger competitors. The
Company believes that, through good management, community banks such as the
Banks can maximize earnings by attracting relatively low cost core deposits
and investing those funds in loans and other high yielding investments, while
maintaining risk at an acceptable level.
Recently the Company has applied its community banking strategy to two
affluent communities in the rapidly developing Johnson County suburbs
southwest of Kansas City. The Company believes the recent wave of regional
bank acquisitions of local banks in those suburban communities, and the
subsequent conversion of some of those acquired banks to branch locations, has
alienated the customers of those locations. This has created an opportunity
for the Company to attract and retain as loan customers those owner-operated
businesses that require flexibility and responsiveness in lending decisions
and desire a more personal banking relationship. The Company believes that it
has been able to meet these customers expectations without compromising credit
standards. The success of this strategy is reflected in the Company's growth
and ability to attract significant levels of non-interest bearing deposits in
the suburban communities of Leawood and Shawnee, Kansas.
OPERATING STRATEGY
The Company's operating strategy is to provide in each market that it
operates a full range of financial products and services to small and medium-
sized businesses and to consumers. The Company emphasizes personal
relationships with customers, involvement in local community activities and
responsive lending decisions. The Company strives to maintain responsive
community banking offices with local decision makers, allowing senior
management at each banking location, within certain limitations, to make its
own credit and pricing decisions and retaining at each Bank a local identity
and board of directors. The Company's goals include long-term customer
relationships, a high quality of service and responsiveness to specific
customer needs. The principal elements of the Company's operating strategy
are:
Emphasize Personalized Customer Service and Community Involvement. The
Company believes that, in most of its market areas, customer loyalty and
service are the most important competitive factors. The Banks have experienced
low turnover in their management and lending staffs, enabling them to provide
continuity of service by the same staff members, leading to long-term customer
relationships, high quality service and quick response to customer needs. The
Banks' management and other employees participate actively in a wide variety
of community activities and organizations in order to develop and maintain
customer relationships. The Banks seek to recruit the best available banking
talent to deliver the quality of personal banking services required to meet
customer expectations and to permit the Company to meet its goals for long-
term profitable growth.
Capitalize on Changing Market Conditions. The Company's management
continually monitors economic developments in its market areas in order to
tailor its operations to the evolving strengths and needs of the local
communities. For example, Exchange Bank has opened branch locations in the
high growth areas of Shawnee and Leawood, Kansas to fill the void of community
banks that management believes has been created by the recent transaction
activity of regional banking institutions and to deploy excess low-cost funds
derived from its rural northeastern Kansas market.
43
<PAGE>
Centralize and Streamline Operations to Achieve Economies. While each of the
Banks presently operates autonomously, the Company, in order to minimize
duplication of functions, is centralizing certain management and
administrative functions, including data processing, human resources and
regulatory administration, that can better and more efficiently be performed
by the Company. Such centralization will help to reduce operating expenses and
enable the Bank personnel to focus on customer service and community
involvement. The Company believes it has acquired the personnel necessary to
make implementation of these operating efficiencies possible. The Company also
provides overall direction in areas of budgets, asset/liability and investment
portfolio management and credit review.
ACQUISITION/GROWTH STRATEGY
Transactions. Management believes that the Company is well positioned to
acquire and profitably operate community banks because of its experience in
operating community banks, its ability to provide centralized management
assistance to those banks and its access to capital. Management of the Company
believes there are owners of community banks who may be willing to sell their
banks in the future for, among other reasons, stockholder liquidity, to
diversify their own investment portfolios, lack of family successor operators
and the burden of compliance with bank regulations. In addition, management
believes there are individual community bank owners in the targeted regions
who are interested in selling their banks to an organization that has a strong
capital base and management that has demonstrated a commitment to maintaining
local bank identity. The Company's goal is to acquire banks with strong
existing management such that the Company's strategies can be implemented
while retaining the individual identity of the banks through the continuation
of the existing management, boards of directors and bank charters.
The Company is generally targeting profitable community banks in county seat
towns of 2,000 persons or more. Market factors to be considered by the Company
include the size and long-term viability of the community and market area
served by the target bank, the position of the transaction target in the
market and the proximity of other banks owned by the Company. Generally, the
bank target must be among the top three financial institutions in its market
in terms of deposit share. Financial criteria include historical performance,
comparison to peers in terms of key operating performance and capital ratios,
loan asset quality, operating procedures and deposit structure. Also of
significant financial importance is the investment required for, and
opportunity costs of, the transaction. Non-financial considerations in
evaluating an transaction prospect include the quality of the target's
management and the demand on the Company resources to integrate the target
institution.
Because of the large number of county seat towns and banks and its
familiarity with the market place, the Company's transaction focus is the
Midwest and primarily in the States of Kansas and Missouri, but it will also
consider institutions in other contiguous states. Kansas is perceived by
management to be the Company's best market for bank transactions because only
recently have state banking laws permitted the large regional banking
institutions based in Missouri to conduct branching activities in the State of
Kansas.
Internal Growth. The recent wave of regional bank transactions of community
banks in the Midwest has created what management of the Company perceives to
be a void in the community banking market. It is management's belief that it
has been the practice of regional banking institutions to convert the banks
they acquire into branches of the acquiring institution. Management of the
Company believes this practice detracts from the delivery of quality
personalized services to the existing customer base of those branches. The
Company entered the Kansas City suburban community market by acquiring the
deposits of a failed thrift in Shawnee, Kansas in 1992. Exchange Bank expects
to open in 1998 another branch location in a rapidly developing part of
Shawnee, Kansas that presently has few other lending institutions in the
immediate area. In October 1995, Exchange Bank further expanded its presence
in the suburban Johnson County communities of Kansas City by opening a branch
location in Leawood, Kansas, another rapidly growing residential and small
business community. Management of the Company believes its branching
activities are distinguished from those of regional banking institutions by
the high degree of autonomy given each branch location.
The Company's expansion activity also has allowed it to diversify its loan
portfolio, which was previously dominated by loans related to the agricultural
industry. Further, the loan demand in these suburban Johnson
44
<PAGE>
County communities, due to heavy residential and small business development,
is greater than that experienced in the Company's rural market areas.
The Company expects it will continue to expand in the suburban Johnson
County communities west of Kansas City through growth in the assets and loan
portfolios of existing branches and to a limited extent through additional
branching activities.
LENDING ACTIVITIES
General. The Company strives to provide in each market area it serves a full
range of financial products and services to small and medium-sized businesses
and to consumers. The Company targets owner-operated businesses and emphasizes
the use of Small Business Administration and Farmers Home Administration
lending. The Banks participate in credits originated within the organization
but generally do not participate in loans from non-affiliated lenders. Each
Bank has an established loan committee which has authority to approve credits,
within established guidelines, of up to $200,000. Concentrations in excess of
$200,000 must be approved by an executive loan committee comprised of the
Chief Executive Officer and the Vice President of the Company and the local
Bank's president and senior lending officer. When lending to an entity, the
Company generally obtains a guaranty from the principals of the entity. The
loan mix within the individual Banks is subject to the discretion of the Bank
board of directors and the demands of the local marketplace.
Residential loans are priced consistently with the secondary market, and
commercial and consumer loans generally are issued at or above the prime rate.
The Company has no potential negative amortization loans. The following is a
brief description of each major category of the Company's lending activity.
Real Estate Lending. Commercial, residential and agricultural real estate
loans represent the largest class of loans of the Company. As of September 30,
1997, real estate and real estate construction loans totaled $137.1 million
and $40.4 million, respectively or 46.56% and 13.73% of all loans,
respectively. One to four family residential loans at September 30, 1997 made
up approximately 50.90% of real estate loans, followed by commercial 39.14%,
and agricultural 9.9%. Generally, residential loans are written on a variable
rate basis with terms of five years or less and amortized over either 15 or 30
years. The Company retains in its portfolio some adjustable rate mortgages
having an adjustment period of five years or less. Agricultural and commercial
real estate loans are amortized over 15 or 20 years. The Company also
generates long-term fixed rate residential real estate loans which it sells in
the secondary market. The Company takes a security interest in the real
estate. Commercial real estate, construction and agricultural real estate
loans are generally limited, by policy, to 80% of the appraised value of the
property. Commercial real estate and agricultural real estate loans also are
supported by an analysis demonstrating the borrower's ability to repay.
Residential loans that exceed 80% of the appraised value of the real estate
generally are required, by policy, to be supported by private mortgage
insurance, although on occasion the Company will retain non-conforming
residential loans to known customers at premium pricing.
Commercial Lending. Loans in this category principally include loans to
service, retail, wholesale and light manufacturing businesses, including
agricultural service businesses. Commercial loans are made based on the
financial strength and repayment ability of the borrower, as well as the
collateral securing the loans. As of September 30, 1997, commercial loans
represented the second largest class of loans at $72.6 million, or 24.66% of
total loans. The Company targets owner-operated businesses as its customers
and makes lending decisions based upon a cash flow analysis of the borrower as
well as the accounts receivable, inventory and equipment of the borrower.
Accounts receivable loans and loans for inventory purchases are generally of a
one-year renewable term and those for equipment generally have a term of seven
years or less. The Company generally takes a blanket security interest in all
assets of the borrower. Equipment loans are generally limited to 75% of the
cost or appraised value of the equipment. Inventory loans are limited to 50%
of the value of the inventory, and accounts receivable loans are limited to
75% of a pre-determined eligible base. Each of the Banks is approved to make
loans under the Small Business Administration program.
Agricultural Lending. The Company provides short-term credit for operating
loans and intermediate-term loans for farm product, livestock and machinery
purchases and other agricultural improvements. Agricultural
45
<PAGE>
loans were $21.1 million as of September 30, 1997, or 7.18% of total loans.
Farm product loans have generally a one-year term and machinery and equipment
and breeding livestock loans generally have five to seven-year terms.
Extension of credit is based upon the ability to repay, as well as the
existence of federal guarantees and crop insurance coverage. Farmers Home
Administration guarantees are pursued wherever possible. Exchange Bank and
Citizens hold "Preferred Lender Status" from the Farmers Home Administration,
a guarantee program similar to the Small Business Administration, that
minimizes the credit exposure of the Banks through partial transfer of the
credit risk to the federal government. Preferred Lender Status expedites the
processing of loan applications. These loans are generally secured by a
blanket lien on livestock, equipment, feed, hay, grain and growing crops.
Equipment and breeding livestock loans are limited to 75% of appraised value.
Consumer and Other Lending. Loans classified as consumer and other loans
include automobile, credit card, boat, home improvement and home equity loans,
the latter two secured principally through second mortgages. The Company
generally takes a purchase money security interest in goods for which it
provides the original financing. The terms of the loans range from one to five
years, depending upon the use of the proceeds, and range from 75% to 90% of
the value of the collateral. The majority of these loans are installment loans
with fixed interest rates. As of September 30, 1997, consumer and other loans
amounted to $20.3 million, or 6.91% of total loans. The Company implemented a
credit card program in late 1994 and targeted the Banks' existing customer
base as potential consumers. As of September 30, 1997, the Company had issued
2,128 cards having an aggregate outstanding balance of $1.66 million in credit
card receivables. The Company has not marketed credit cards to persons other
than existing customers.
LOAN ORIGINATION AND PROCESSING
Loan originations are derived from a number of sources. Residential loan
originations result from real estate broker referrals, mortgage loan brokers,
direct solicitation by the Banks' loan officers, present savers and borrowers,
builders, attorneys, walk-in customers and, in some instances, other lenders.
Residential loan applications, whether originated through the Banks or through
mortgage brokers, are underwritten and closed based on the same standards,
which generally meet FNMA underwriting guidelines. Consumer and commercial
real estate loan originations emanate from many of the same sources. The
average loan is less than $500,000. From time to time, loans may be
participated among the Banks.
The loan underwriting procedures followed by the Banks conform to regulatory
specifications and are designed to assess both the borrower's ability to make
principal and interest payments and the value of any assets or property
serving as collateral for the loan. Generally, as part of the process, a loan
officer meets with each applicant to obtain the appropriate employment and
financial information as well as any other required loan information. The Bank
then obtains reports with respect to the borrower's credit record, and orders
and reviews an appraisal of any collateral for the loan (prepared for the Bank
through an independent appraiser). The loan information supplied by the
borrower is independently verified.
Loan applicants are notified promptly of the decision of the Bank by
telephone and a letter. If the loan is approved, the commitment letter
specifies the terms and conditions of the proposed loan including the amount
of the loan, interest rate, amortization term, a brief description of the
required collateral, and required insurance coverage. Prior to closing any
long-term loan, the borrower must provide proof of fire and casualty insurance
on the property serving as collateral, and such insurance must be maintained
during the full term of the loan. Title insurance is required on loans
collateralized by real property. Interest rates on committed loans are
normally locked in at the time of application or for a 30 to 45-day period.
MORTGAGE BANKING DIVISION OPERATIONS
The mortgage banking division of Provident Bank is engaged in the business
of originating and selling principally first-lien mortgages secured by single
family residences. Loans originated through Provident Bank's mortgage banking
division were $83.1 million and $83.3 million in 1996 and 1995, respectively,
however, as a result of a change in Company strategy, mortgage loans generated
by Provident Bank are expected to decrease
46
<PAGE>
significantly from these historical levels. The mortgage banking division's
principal sources of revenue consist of loan origination fees and gain or loss
on the sale of mortgage loans. Mortgage loans are originated primarily in St.
Joseph, Missouri, Johnson County, Kansas and throughout the metropolitan
Kansas City area. Loans usually are purchased by Provident Bank for investment
pending resale into the secondary market. Loans usually are sold to investment
banking firms and other investors as whole loans, without retaining servicing
rights. The Company only originates mortgage loans against loan purchase
commitments from third parties.
Mortgage loans are originated primarily through loan originators and from
referrals from real estate brokers, builders, developers and prior customers.
The origination of a loan from the date of initial application to a loan
closing normally takes three to eight weeks. It involves processing the
borrower's loan application, evaluating the borrower's credit and other
qualifications consistent with underwriting criteria established by private
institutional investors and insuring or guaranteeing agencies, obtaining
investor approvals, property appraisals, and title insurance, arranging for
hazard insurance and handling various other matters customarily associated
with the closing of a residential loan. For this service, the division
typically collects an origination fee of one percent of the principal amount
of the loan. Costs that are incurred in originating mortgage loans include:
overhead, origination commissions paid to the originators, certain out-of-
pocket costs and, in some cases, commitment fees where the loans are made
subject to a purchase commitment from wholesale lenders, private investors or
other intermediaries. In the third quarter of 1996, Provident Bank
substantially reduced the resources committed to its mortgage banking
operations.
OTHER SERVICES
The Company provides trust and insurance agency services. Although these
businesses are not of financial significance to the Company, management
believes these services are important to certain of the Banks' customers,
provide an opportunity to strengthen and develop relationships with customers,
and further the Company's objective of becoming a complete financial services
provider.
INVESTMENT PORTFOLIO
The Banks' investment portfolio is used to meet the Banks' liquidity needs
while endeavoring to maximize investment income. Additionally, management
augments the quality of the loan portfolio by maintaining a high quality
investment portfolio oriented toward U.S. government and U.S. government
agency securities. The portfolio is comprised of U.S. Treasury securities,
U.S. government agency instruments and a modest amount of investment grade
obligations of state and political subdivisions. In managing its interest rate
exposure, the Company also invests in mortgage-backed securities and
collateralized mortgage obligations. Federal funds sold and certificates of
deposit are additional investments that are not classified as investment
securities. Investment securities were $81.5 million, or 19.82% of total
assets, at September 30, 1997. As of September 30, 1997, the investment
portfolio included approximately $660,000 of equity securities of other
publicly held bank holding companies.
DEPOSITS AND BORROWINGS
Deposits are the major source of the Banks' funds for lending and other
investment purposes. In addition to deposits, including local public fund
deposits and demand deposits of commercial customers, the Banks derive funds
from loan principal repayments, maturing investments, Federal Funds borrowings
from commercial banks, borrowings from the Federal Reserve Bank of Kansas City
and the Federal Home Loan Bank ("FHLB") and from repurchase agreements. Loan
repayments and maturing investments are a relatively stable source of funds,
while deposit inflows are significantly influenced by general interest rates
and money market conditions. Borrowings may be used on a short-term basis to
compensate for reductions in the availability of funds from other sources.
They also may be used on a long-term basis for funding specific loan
transactions and for general business purposes.
The Banks offer a variety of accounts for depositors designed to attract
both short-term and long-term deposits. These accounts include certificates of
deposit savings accounts, money market accounts, checking and
47
<PAGE>
individual retirement accounts. Deposit accounts generally earn interest at
rates established by management based on competitive market factors and
management's desire to increase or decrease certain types or maturities of
deposits. The Company has not sought brokered deposits and does not intend to
do so in the future.
COMPETITION
The deregulation of the banking industry, the widespread enactment of state
laws permitting multi-bank holding companies, and the availability of
nationwide interstate banking has created a highly competitive environment for
financial services providers, particularly for institutions in suburban areas,
such as Exchange Bank's Shawnee and Leawood branches. These branches compete
with other commercial banks, savings and loan associations, credit unions,
finance companies, mutual funds, insurance companies, brokerage and investment
banking companies and other financial intermediaries. Some of these
competitors have substantially greater resources and lending limits and may
offer certain services that these branches do not currently provide. In
addition, some of the non-bank competitors are not subject to the same
extensive federal regulations that govern these branches.
Management believes the Banks have generally been able to compete
successfully in their respective communities because of the Company's emphasis
on local control and the autonomy of Bank management, allowing the Banks to
meet what is perceived to be the preference of community residents and
businesses to deal with "local" banks. While management believes the Banks
will continue to compete successfully in their communities, there is no
assurance future competition will not adversely affect the Banks' earnings.
EMPLOYEES
The Company maintains a corporate staff of 7 persons. At September 30, 1997,
the Banks had 146 full-time equivalent employees. None of the employees of the
Company or the Banks are covered by a collective bargaining agreement. The
Company and the Banks believe their employee relations are good.
PROPERTY OF THE COMPANY
The Company or the Banks own each of their banking facilities. The Company
believes each of the facilities is in good condition, adequately covered by
insurance and sufficient to meet the needs at that location for the
foreseeable future. The Company's headquarters and Exchange Bank's Leawood,
Kansas location are contained in a new 25,000 square foot building, 60% of
which is leased to third parties.
LEGAL PROCEEDINGS INVOLVING THE COMPANY
Exchange Bank, along with approximately 24 other persons and entities
including a number of depository institutions, is a named defendant in a case
filed in the United States District Court for the District of Kansas on
September 11, 1997 on behalf of a putative class of over 2,400 persons who
allegedly invested at least $14,900 each in entities known as Parade of Toys
and Bandero Cigar Company. The complaint alleges violations of the Racketeer
Influenced Corrupt Organizations ("RICO") statute (18 U.S.C. (S) 1962(c)),
conspiracy to violate RICO, negligent misrepresentation, fraud, civil
conspiracy and negligence on the part of the defendants. The plaintiffs
contend that the defendants, including Exchange Bank, were listed in trade
reference sheets provided to plaintiffs by Parade of Toys and Bandero Cigar
Company and that the defendants made false and misleading representations on
which they relied to their detriment. In each count, the plaintiffs have
sought actual damages in an amount in excess of $75,000 each, treble damages
under RICO, and punitive damages. Exchange Bank denies liability and is in the
process of vigorously defending this claim.
The Company is from time to time involved in routine litigation incidental
to the conduct of its business. The Company believes that no pending
litigation to which it is a party will have a material adverse effect on its
liquidity, financial condition or results of operations.
48
<PAGE>
MANAGEMENT
MANAGEMENT OF THE COMPANY
The directors and executive officers of the Company and certain senior
officers of the Company are as set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND FIVE-YEAR EMPLOYMENT
NAME AGE HISTORY
---- --- ------------------------------------------------
<S> <C> <C>
Michael W. Gullion......... 43 Mr. Gullion has served as Chairman of the Board
of Directors, President and Chief Executive
Officer of the Company since inception of the
Company. His term of office as a director
expires at the annual meeting of stockholders to
be held in 1999. Mr. Gullion is the son-in-law
of William Wallman.
Keith E. Bouchey........... 46 Mr. Bouchey was elected to the Board of
Directors of the Company on May 30, 1996. His
term of office as a director expires at the
annual meeting of stockholders to be held in
2000. He has served as the Executive Vice
President, Chief Financial Officer and Corporate
Secretary of the Company since joining the
Company in November 1995. Prior to joining the
Company, Mr. Bouchey had been, since August
1977, a principal of GRA, Thompson, White &
Company, P.C., a regional bank accounting and
consulting firm, where he served on the
executive committee and as the managing director
of the firm's regulatory services practice.
William F. Wright.......... 55 Mr. Wright was elected as a director of the
Company on May 30, 1996. His term of office as a
director expires at the annual meeting of
stockholders to be held in 2000. Mr. Wright has
served as the Chairman of the Board and the
Chief Executive Officer of Amcon Corporation, a
wholesale distributor of beer and wine, since
1978.
D. Michael Browne.......... 44 Mr. Browne has served as a director of the
Company since November 1989. His term of office
as a director expires at the annual meeting of
stockholders to be held in 1998. He has been the
Chairman and Chief Executive Officer of Mike
Browne International LTD, a direct marketing
advertising agency, since 1987.
William Wallman............ 73 Mr. Wallman was first elected to the Board of
Directors of the Company in November 1989. His
term of office as a director expires at the
annual meeting of stockholders to be held in
1999. For more than five years Mr. Wallman has
been the President and owner of Wallman
Chrysler-Plymouth, Inc., a car dealership
located in Beatrice, Nebraska. Mr. Wallman is
the father-in-law of Mr. Gullion.
Allen D. Petersen.......... 56 Mr. Petersen was appointed to the Board of
Directors of the Company on July 31, 1997. His
term of office as a director expires at the
annual meeting of stockholders to be held in
1998. Mr. Petersen previously served in an
advisory capacity to the Board of Directors. For
more than five years Mr. Petersen has been the
Chairman and Chief Executive Officer of American
Tool Companies located in Chicago, Illinois.
</TABLE>
49
<PAGE>
Information Concerning Senior Officers
The following table describes the persons who are the senior officers of the
Banks.
<TABLE>
<CAPTION>
NAME AGE
---- ---
<S> <C> <C>
Marc J. Degenhardt......... 36 Mr. Degenhardt has served as President of
Exchange Bank since September 1996. Prior to his
appointment as President, Mr. Degenhardt was the
Executive Vice President of Exchange Bank, a
position he held since 1991. He was Senior Vice
President of Exchange Bank of Schmidt and
Koester immediately prior to its participation
in the merger which formed Exchange Bank in
November 1991.
Richard B. Erwin........... 51 Mr. Erwin joined Citizens in 1982 and has served
as the President of that bank since June 1988.
John R. Wray............... 54 Mr. Wray has served as the President and Chief
Financial Officer of Provident Bank since April
1996. He served as Vice Chairman of Provident
Bank from October 1995 to March 1996. Prior to
his affiliation with the Company, Mr. Wray was
the President of St. Joseph Banking Center,
First Bank of Missouri where he had served since
December 1993 and the President and Chief
Executive Officer of the Bank of St. Joseph from
October 1987 through December 1993.
John C. Waters............. 52 Mr. Waters has served as the Executive Vice
President of the Exchange Bank--Shawnee branch
location since February 1995. He was Vice
Chairman of the Board of Mark Twain Bank of
Kansas from 1993 through February 1995. Mr.
Waters was the President of First National Bank,
Shawnee, Kansas from 1986 through 1993.
Charles N. Van Zante....... 51 Mr. Van Zante has served as the Executive Vice
President of the Exchange Bank--Leawood branch
location since June 1996. Prior to that time,
Mr. Van Zante was involved in the commercial
lending and administrative activities at the
Mercantile Bank organization in Kansas, and at
the Mid-American Bank from 1989 until its
acquisition by Mercantile Bank. Earlier, he
served as President and Chief Executive Officer
of United Missouri Bank South for seven years.
John R. Price.............. 40 Mr. Price has served as a Vice President of the
Company and Senior Vice President of Exchange
Bank since November 1992. Prior to joining the
Company, Mr. Price was employed by the Farmers
Home Administration division of the United
States Department of Agriculture, where he
served as the Kansas State Director since
November 1989.
James P. Fawcett........... 51 Mr. Fawcett has served as the President of
Peoples since July 1990.
Russell J. Mullikin........ 63 Mr. Mullikin has served as President of Farmers
since May 1994. Prior to joining Farmers, Mr.
Mullikin was the President of First National
Bank of Harper, located in Harper, Kansas from
May 1992 until May 1994.
</TABLE>
50
<PAGE>
EXECUTIVE COMPENSATION OF THE COMPANY
The table below sets forth information concerning the annual and long-term
compensation paid to the Chief Executive Officer and all other employees of
the Company whose compensation exceeded $100,000 during the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
NAME AND ------------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
------------------ ---- --------- -------- ------------------
<S> <C> <C> <C> <C>
Michael W. Gullion.............. 1996 $186,000 $165,000 $15,923
President and Chief Executive
Officer 1995 $156,000 $165,000 $ 9,587
1994 $150,000 $150,000 $ 4,670
Keith E. Bouchey................ 1996(2) $156,000 -0- $ 3,933
Executive Vice President, Chief
Financial Officer, Treasurer and
Corporate Secretary
</TABLE>
- - --------
(1) Consists of contributions to the Company's Employee Stock Ownership Plan,
personal use of Company-owned automobile, and country club membership
dues.
(2) Mr. Bouchey became an executive officer of the Company in November 1995.
EMPLOYMENT CONTRACTS
Messrs. Gullion and Bouchey (the "Executives") have entered into employment
agreements with the Company (each an "Agreement"). The terms of the Agreements
are three years (automatically renewed on the anniversary date of the
Agreements unless either party gives notice of its intention not to renew) and
provide that Mr. Gullion will be the Chairman, Chief Executive Officer and
President and Mr. Bouchey will be Executive Vice President, Chief Financial
Officer and Corporate Secretary of the Company. Throughout the employment
period, each of the Executives will be nominated by the Board of Directors for
directorships and the base compensation of the Executives and their
opportunity to earn incentive compensation will be at least as great as in
existence prior to the effectiveness of the Agreements. An Executive may be
terminated for "cause" only (as defined in the Agreement). An Executive may
terminate the Agreement for "good reason" which is defined as a material
breach of the Agreement by the Company. The death or disability of an
Executive automatically terminates the Agreement.
If the Company terminates the Agreement for cause or the Executive
terminates without good reason, neither the Company nor the Executive has any
further obligations to the other. If the Company terminates an Executive
without cause (as defined in the Agreement), an Executive terminates for good
reason (as defined in the Agreement), or a Change in Control (as defined
below) of the Company occurs, the Company is obligated to pay the Executive
three times the present value of the Executive's long and short-term
compensation in place immediately prior to the termination or Change in
Control, provided that such benefits cannot exceed an amount that would be
subject to federal excise taxes.
A Change in Control of the Company will be deemed to occur upon (i) the
hostile replacement of at least the majority of the Board of Directors, (ii) a
person acquiring 25% or more of the shares or voting power of the stock of the
Company, provided such person is not an existing director or Executive or
relative of such a person or does not acquire such shares or voting rights
pursuant to an agreement to which the Executive is a party, or as a result of
the transaction does not become the largest stockholder of the Company, (iii)
a merger or sale of substantially all of the assets of the Company or (iv) the
occurrence of any other event the Board of Directors determines to be a Change
in Control.
51
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive $5,000 annually and $500 per
board meeting or committee meeting for serving on the Board of Directors. In
addition, the Company reimburses directors for expenses incurred in connection
with attendance at meetings of the Board of Directors and committees thereof.
Employees of the Company receive no additional compensation for serving as a
director.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Amended and Restated Articles of Incorporation of the Company require it
to indemnify its directors and officers against liabilities, fines, penalties,
settlements, claims and reasonable expenses incurred by them in connection
with any proceeding to which they may be made a party by reason of their
service in those capacities to the fullest extent permitted by the Kansas
General Corporation Code (the "KGCC"). The KGCC permits a corporation to
indemnify its present and former directors and officers if ordered to do so by
a court or after a determination by its independent counsel, stockholders or a
majority of its disinterested directors that the person to be indemnified
acted in good faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
52
<PAGE>
SECURITY OWNERSHIP OF THE COMPANY COMMON STOCK
The following table sets forth information as of October 20, 1997,
concerning the shares of the Company's common stock beneficially owned by (i)
each person known by the Company to be the beneficial owner of 5% or more of
the Company's common stock, (ii) each of the directors of the Company, and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise indicated, the named beneficial owner has sole voting and investment
power over the shares listed.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNED
------------------------------------ ------------ ------------
<S> <C> <C>
Michael W. Gullion(1)................................. 976,181 19.26%
11301 Nall Avenue
Leawood, Kansas 66221
Estate of Betty J. Dam(2)............................. 262,974 5.19%
1506 Calhoun
Marysville, Kansas 66508
William Wallman(3).................................... 215,901 4.26%
538 W. Mary
Beatrice, Nebraska 68310
Allen D. Petersen(4).................................. 172,828 3.41%
1220 W. County Line Road
Barrington Hills, Illinois 60010
The Lifeboat Foundation(4)............................ 171,828 3.39%
2800 W. Higgins Road, Suite 835
Hoffman Estates, Illinois 60195
William F. Wright(3).................................. 172,826 3.41%
1431 Stratford Court
Del Mar, California 92014
Keith E. Bouchey(5)................................... 41,558 *
11301 Nall Avenue
Leawood, Kansas 66211
D. Michael Browne(6).................................. 28,753 *
6450 Campbell Drive
Lincoln, Nebraska 68510
Directors and executive officers as a group........... 1,046,492 20.65%
</TABLE>
- - --------
* Less than 1%.
(1) Includes 561,555 shares for which Mr. Wallman, Mr. Peterson, Mr. Wright or
The Lifeboat Foundation are the record owners and that are subject to the
terms of an agreement granting Mr. Gullion voting control over such
shares; 31,888 shares held by the Gold Banc Corporation, Inc. Employee
Stock Ownership Plan and Trust that are not allocated to individual
accounts and over which Mr. Gullion, as Plan Administrator, has voting
control; and 35,000 shares that can be acquired pursuant to options that
are presently exercisable.
(2) Includes the 179,516 shares owned by B.J. Dam Investment Company ("BJDIC")
over which the Estate of Ms. Dam claims beneficial ownership and 38,350
shares held in the Betty J. Dam Trust #1. BJDIC previously entered into
certain written commitments with the Federal Reserve intended to limit
BJDIC's ownership interests in the Company, and limit the ability of
BJDIC, directly or indirectly, to control or exercise a controlling
influence over the management or policies of the Company or its
subsidiaries. Included among these commitments is an agreement of BJDIC
not to dispose of its shares of the Company's common stock without first
offering such shares to the Company at the same price and on the same
terms as the shares may otherwise be offered to any third party. These
commitments remain outstanding.
53
<PAGE>
(3) Subject to the terms of an agreement granting Mr. Gullion voting control
over such shares; includes 1,000 shares that may be acquired pursuant to
options that are presently exercisable.
(4) 171,828 of these shares are owned by The Lifeboat Foundation. Mr. Petersen
is one of three directors of The Lifeboat Foundation. The Lifeboat
Foundation has granted Mr. Gullion an irrevocable proxy to vote each of
these shares. Mr. Petersen disclaims beneficial ownership of these shares.
Also includes 1,000 shares that may be acquired pursuant to options that
are presently exercisable.
(5) Includes 23,338 shares held in the name of Holyrood Bancshares, Inc. Mr.
Bouchey is a director, officer and stockholder of Holyrood Bancshares,
Inc.; 720 shares owned by children of Mr. Bouchey (Mr. Bouchey disclaims
beneficial ownership of 120 shares owned by his adult daughter); and
12,500 shares that may be acquired pursuant to options that are presently
exercisable.
(6) Includes 1,000 shares that may be acquired pursuant to options that are
presently exercisable.
Mr. Gullion has entered into an agreement with Mr. Wallman pursuant to which
Mr. Wallman has granted to Mr. Gullion an irrevocable proxy to vote all shares
of the Company's common stock (other than any director qualifying shares)
owned or subsequently acquired by Mr. Wallman. The agreement also grants to
Mr. Gullion: (i) a 180-day first right of refusal in the event Mr. Wallman
receives a bona fide offer from a third party to purchase some or all of the
shares of the Company's common stock held by Mr. Wallman or certain permitted
transferees to whom Mr. Wallman may transfer shares; and (ii) in the event Mr.
Wallman dies, a 180-day option to purchase some or all of the shares of the
Company's common stock held by Mr. Wallman or certain permitted transferees to
whom Mr. Wallman may transfer shares. This agreement terminates on the earlier
to occur of: (i) the date Mr. Gullion ceases to be President, Chairman and/or
Chief Executive Officer of the Company; or (ii) six months after Mr. Wallman's
death.
Mr. Gullion has also entered into an agreement with Mr. Wright, Mr. Petersen
and the Lifeboat Foundation pursuant to which Mr. Wright, Mr. Petersen and the
Lifeboat Foundation have granted to Mr. Gullion an irrevocable proxy to vote
all shares of the Company's common stock owned or subsequently acquired by Mr.
Wright, Mr. Petersen or the Lifeboat Foundation. Such proxy continues until
the earlier of: (i) the death of Mr. Gullion; (ii) the date Mr. Gullion ceases
to be President, Chairman and/or Chief Executive Officer of the Company; or
(iii) termination of the agreement as described below. The agreement grants to
Mr. Gullion a 90 day first right of refusal in the event Mr. Wright, Mr.
Petersen or the Lifeboat Foundation receives a bona fide offer from a third
party to purchase, or proposes to sell on the public market, some or all of
the shares of the Company's common stock held by such person or by certain
permitted transferees to whom such shares may be transferred. The agreement
also grants to Mr. Wright , Mr. Petersen and the Lifeboat Foundation a 90 day
first right of refusal in the event Mr. Gullion receives a bona fide offer
from a third party to purchase, or proposes to sell on the public market, some
or all of the shares of the Company's common stock held by Mr. Gullion or
certain permitted transferees to whom Mr. Gullion may transfer shares. The
agreement terminates in 2006.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's subsidiaries have made, and expect to make in the future, to
the extent permitted by applicable federal and state banking laws, bank loans
in the ordinary course of business to directors and officers of the Company
and its subsidiaries, and their affiliates and associates, on substantially
the same terms, including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons. In the opinion of
the Company, such loans do not involve more than a normal risk of
collectability or present other unfavorable features. In addition, the
Company's banking subsidiaries have engaged, and in the future may engage, in
transactions with such persons and their affiliates and associates as a
depositary of funds, transfer agent, registrar, fiduciary and provider of
other similar services.
54
<PAGE>
SUPERVISION AND REGULATION
INTRODUCTION
Bank holding companies and banks are extensively regulated under both
federal and state law. The following information describes certain aspects of
that regulation applicable to the Company and the Banks, and does not purport
to be complete. The discussion is qualified in its entirety by reference to
all particular statutory or regulatory provisions.
The Company is a legal entity separate and distinct from the Banks.
Accordingly, the right of the Company, and consequently the right of creditors
and shareholders of the Company, to participate in any distribution of the
assets or earnings of the Banks is necessarily subject to the prior claims of
creditors of the Banks, except to the extent that claims of the Company in its
capacity as creditor may be recognized. The principle source of the Company's
revenue and cash flow is dividends from the Banks. There are, however, legal
limitations on the extent to which a subsidiary bank can finance or otherwise
supply funds to its parent holding company.
THE COMPANY
The Company is a bank holding company within the meaning of Bank Holding
Company Act of 1956, as amended (the "BHCA").
The BHCA. Under the BHCA, the Company is subject to periodic examination by
the Board of Governors of the Federal Reserve System and is required to file
periodic reports of its operations and such additional information as the
Federal Reserve may require. The Company's and the Banks' activities are
limited to banking, managing or controlling banks, furnishing services to or
performing services for its subsidiaries, or engaging in any other activity
the Federal Reserve determines to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. Some of the
activities the Federal Reserve has determined by regulation to be proper
incidents to the business of banking include making or servicing loans and
certain types of leases, engaging in certain insurance and discount brokerage
activities, performing certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial advisor, owning
savings associations, and making investments in certain corporations or
projects designed primarily to promote community welfare.
With certain limited exceptions, the BHCA requires every bank holding
company to obtain the prior approval of the Federal Reserve before (i)
acquiring substantially all of the assets of any bank, (ii) acquiring direct
or indirect ownership or control of any voting shares of any bank if after
such transaction it would own or control more than 5% of the voting shares of
such bank (unless it already owns or controls the majority of such shares), or
(iii) merging or consolidating with another bank holding company.
In addition, and subject to certain exceptions, the BHCA and the federal
Change in Bank Control Act, together with the regulations thereunder, require
Federal Reserve approval (or, depending on the circumstances, no notice of
disapproval) prior to any person or company acquiring "control" of a bank
holding company, such as the Company. Control is conclusively presumed to
exist if any individual or company acquires 25% or more of any class of voting
securities of the bank holding company. With respect to corporations with
securities registered under the Securities Exchange Act of 1934, such as the
Company, control will be rebuttably presumed to exist if a person acquires at
least 10% of any class of voting securities of the corporation.
In accordance with Federal Reserve policy, the Company is expected to act as
a source of financial strength for and commit resources to support the Banks.
Under the BHCA, the Federal Reserve may require a bank holding company to
terminate any activity or relinquish control of a non-bank subsidiary (other
than a non-bank subsidiary of a bank) upon the Federal Reserve Board's
determination that such activity or control constitutes a serious risk to the
financial soundness or stability of any subsidiary depository institution of
the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of
any bank or non-bank subsidiary if the agency determines that divestiture may
aid
55
<PAGE>
the depository institution's financial condition. The Company currently does
not have any subsidiaries other than the Banks.
THE BANKS
Exchange Bank, Peoples and Farmers. Exchange Bank, Peoples and Farmers
operate as national banking associations organized under the laws of the
United States and are subject to examination by the Office of the Comptroller
of the Currency (the "OCC"). Deposits are insured by the Federal Deposit
Insurance Corporation (the "FDIC") up to a maximum amount (generally $100,000
per depositor, subject to aggregation rules). The OCC and the FDIC regulate or
monitor all areas of their operations, including security devices and
procedures, adequacy of capitalization and loss reserves, loans, investments,
borrowings, deposits, mergers, issuances of securities, payment of dividends,
interest rate risk management, establishment of branches, corporate
reorganizations, maintenance of books and records, and adequacy of staff
training to carry on safe lending and deposit gathering practices. The OCC
requires these Banks to maintain certain capital ratios and imposes
limitations on its aggregate investment in real estate, bank premises, and
furniture and fixtures. These Banks are currently required by the OCC to
prepare quarterly reports on its financial condition and to conduct an annual
audit of their financial affairs in compliance with minimum standards and
procedures prescribed by the OCC.
Citizens. Citizens operates under a Kansas state bank charter and is subject
to regulation by the Kansas Banking Department and the FDIC. The Kansas
Banking Department and FDIC regulate or monitor all areas of Citizen's
operations, including capital requirements, issuance of stock, declaration of
dividends, interest rates, deposits, record keeping, establishment of
branches, transactions, mergers, loans, investments, borrowing, security
devices and procedures and employee responsibility and conduct. The Kansas
Banking Department places limitations on activities of Citizens including the
issuance of capital notes or debentures and the holding of real estate and
personal property and requires Citizens to maintain a certain ratio of
reserves against deposits. The Kansas Banking Department requires Citizens to
file a report annually showing receipts and disbursements of the bank, in
addition to any periodic report requested. Citizens is examined by the Kansas
Banking Department at least once every 18 months and at any other time deemed
necessary. The FDIC insures deposits held in Citizens up to a maximum amount,
which is generally $100,000 per depositor.
Provident Bank. Provident Bank operates as a federal savings bank and
provides full savings bank services. As a savings institution, Provident Bank
is subject to regulation by the OTS. The OTS regulates or monitors all areas
of Provident Bank's operations, including capital requirements, loans,
investments, establishment of branch offices, mergers, conversions,
dissolutions, transactions, borrowing, management, record keeping, security
devices and procedures and offerings of securities. The OTS requires Provident
Bank to file annual current reports in compliance with OTS procedures, as well
as periodic reports upon the request of the director of OTS. Provident Bank
must also prepare a statement of condition report showing the savings
association's assets, liabilities and capital at the end of each fiscal year.
The OTS may require an independent audit of financial statements by a
qualified independent public accountant when needed for safety and soundness
purposes. With some exceptions, an appraisal by a state certified or licensed
appraiser is required for all real estate related financial transactions.
All savings associations, including Provident Bank, are required to meet the
QTL test to avoid certain restrictions on their operations. This test requires
a savings association to have at least 65% of its portfolio assets (as defined
by regulation) in qualified thrift investments on a monthly average for nine
out of every 12 months on a rolling basis. Such assets primarily consist of
residential housing related loans and investments.
Any savings association that fails to meet the QTL test must convert to a
national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If such an association has not yet requalified or converted to a national
bank, its new investments and activities are limited to those permissible for
both a savings association and a national bank, and it is limited to national
bank branching rights in its home state. In addition, the association is
immediately ineligible to receive any new FHLB borrowings and is subject to
national bank limits for payment of dividends. If such association has not
requalified or converted to a national bank within three
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years after the failure, it must divest of all investments and cease all
activities not permissible for a national bank. In addition, it must repay
promptly any outstanding FHLB borrowings, which may result in repayment
penalties. If any association that fails the QTL test is controlled by a
holding company, then within one year after the failure, the holding company
must register as a bank holding company and become subject to all restrictions
on bank holding companies.
Provident Bank is a member of the SAIF, which is administered by the FDIC.
As insurer, the FDIC imposes deposit insurance premiums and is authorized to
conduct examinations of and to require reporting by FDIC-insured institutions.
It also may prohibit any FDIC-insured institution from engaging in any
activity the FDIC determines by regulation or order to pose a serious risk to
the FDIC. The FDIC also has the authority to initiate enforcement actions
against savings associations, after giving the OTS an opportunity to take such
action, and may terminate the deposit insurance if it determines that the
institution has engaged in unsafe or unsound practices, or is in an unsafe or
unsound condition.
PAYMENT OF DIVIDENDS
Exchange Bank, Peoples and Farmers are subject to the dividend restrictions
set forth by the OCC. Under such restrictions, they may not, without prior
approval of the OCC, declare dividends in excess of the sum of the current
year's earnings (as defined) plus the retained earnings (as defined) from the
prior two years. Provident Bank, as a Tier 1 savings institution, is limited
in its payment of dividends during a calendar year to the higher of 100% of
the current year earnings during the calendar year plus the amount that would
reduce by one-half its surplus capital ratio at the beginning of the calendar
year, or 75% of its current earnings over the most recent four-quarter period.
Provident Bank is required to obtain OTS approval for dividends exceeding the
preceding amount. There are no specific state bank regulatory restrictions on
the ability of Citizens to pay dividends. In addition, under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a FDIC-
insured depository institution may not pay any dividend if payment would cause
it to become undercapitalized or in the event it is undercapitalized.
If, in the opinion of the applicable federal bank regulatory authority, a
depository institution or holding company is engaged in or is about to engage
in an unsafe or unsound practice (which, depending on the financial condition
of the depository institution or holding company, could include the payment of
dividends), such authority may require, after notice and hearing (except in
the case of an emergency proceeding where there is no notice or hearing), that
such institution or holding company cease and desist from such practice. The
federal banking agencies have indicated that paying dividends that deplete a
depository institution's or holding company's capital base to an inadequate
level would be such an unsafe and unsound banking practice. Moreover, the
Federal Reserve and the FDIC have issued policy statements providing that bank
holding companies and insured depository institutions generally should only
pay dividends out of current operating earnings.
TRANSACTIONS WITH AFFILIATES AND INSIDERS
The Banks are subject to Section 23A of the Federal Reserve Act, which
places limits on the amount of loans or extensions of credit to, or
investments in, or certain other transactions with, affiliates, including the
Company. In addition, limits are placed on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. Most of
these loans and certain other transactions must be secured in prescribed
amounts. The Banks are also subject to Section 23B of the Federal Reserve Act,
which, among other things, prohibits an institution from engaging in
transactions with certain affiliates unless the transactions are on terms
substantially the same, or at least as favorable to such institution or its
subsidiaries, as those prevailing at the time for comparable transactions with
non-affiliated companies. The Banks are subject to restrictions on extensions
of credit to executive officers, directors, certain principal stockholders,
and their related interests. Such extensions of credit (i) must be made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with third parties
and (ii) must not involve more than the normal risk of repayment or present
other unfavorable features.
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BRANCHING
National bank branches are required by the National Bank Act to adhere to
branch banking laws applicable to state banks in the states in which they are
located. Under federal legislation, effective June 1, 1997, a bank may merge
or consolidate across state lines, unless, prior to May 31, 1997, either of
the states involved elected to prohibit such mergers or consolidations. States
may also authorize banks from other states to engage in branching across state
lines de novo and by transaction of branches without acquiring a whole banking
institution. Missouri has enacted legislation authorizing interstate branching
within thirty miles of its state borders and placing a minimum age requirement
of five years on acquired institutions. The Kansas legislature recently failed
to take action with regard to the above-referenced federal legislation. State
law in Missouri permits branching anywhere in the state. Statewide branching
is also allowed in Kansas.
COMMUNITY REINVESTMENT ACT
The Community Reinvestment Act requires that, in connection with
examinations of financial institutions within their jurisdiction, the Federal
Reserve, the FDIC, the OCC and the OTS evaluate the record of such financial
institutions in meeting the credit needs of their local communities, including
low and moderate income neighborhoods, consistent with the safe and sound
operation of those institutions. These factors are also considered in
evaluating mergers, transactions and applications to open a branch or
facility.
OTHER REGULATIONS
Interest and certain other charges collected or contracted for by the Banks
are subject to state usury laws and certain federal laws concerning interest
rates. The Banks' loan operations are also subject to certain federal laws
applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers, the Home Mortgage
Disclosure Act of 1975 requiring financial institutions to provide information
to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the
community it serves, the Equal Credit Opportunity Act prohibiting
discrimination on the basis of race, creed or other prohibited factors in
extending credit, the Fair Credit Reporting Act of 1978 governing the use and
provision of information to credit reporting agencies, the Fair Debt
Collection Act governing the manner in which consumer debts may be collected
by collection agencies, and the rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws.
The deposit operations of the Banks also are subject to the Right to Financial
Privacy Act, which imposes a duty to maintain confidentiality of consumer
financial records and prescribes procedures for complying with administrative
subpoenas of financial records, and the Electronic Funds Transfer Act and
Regulation E issued by the Federal Reserve to implement that act, which govern
automatic deposits to and withdrawals from deposit accounts and customers'
rights and liabilities arising from the use of automated teller machines and
other electronic banking services.
REGULATORY CAPITAL REQUIREMENTS
Federal regulations establish minimum requirements for the capital adequacy
of depository institutions. The regulators may establish higher minimum
requirements if, for example, a bank has previously received special attention
or has a high susceptibility to interest rate risk. The Banks with capital
ratios below the required minimum are subject to certain administrative
actions, including prompt corrective action, the termination of deposit
insurance upon notice and hearing, or a temporary suspension of insurance
without a hearing.
The federal risk-based capital guidelines for banks require a ratio of Tier
1, or core capital, to total risk-weighted assets of 4% and a ratio of total
capital to total risk-weighted assets of 8%. The leveraged capital guidelines
require that banks maintain Tier 1 capital of no less than 5% of total
adjusted assets, except in the case of certain highly rated banks for which
the minimum leverage ratio is 3% of total adjusted assets. OTS capital
regulations require savings institutions to meet three capital standards: (1)
tangible capital equal to 1.5% of total adjusted assets, (2) a leverage ratio
(core capital to total adjusted assets) of at least 3% and (3) a risk-based
capital requirement equal to at least 8% of total risk-weighted assets.
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Federal regulations applicable to financial institutions define five capital
levels: well capitalized, adequately capitalized, undercapitalized, severely
undercapitalized and critically undercapitalized. An institution is critically
undercapitalized if it has a tangible equity to total assets ratio that is
equal to or less than 2%. An institution is well capitalized (adequately
capitalized) if it has a total risk-based capital ratio (total capital to
risk-weighted assets) of 10% or greater (8.00% to be adequately capitalized),
has a Tier 1 risk-based capital ratio (Tier 1 capital to risk-weighted assets)
of 6% or greater (4.00% to be adequately capitalized), has a leveraged ratio
(Tier 1 capital to total adjusted assets) of 5% or greater (4.00% to be
adequately capitalized), and is not subject to an order, written agreement,
capital directive, or prompt corrective action directive to meet and maintain
a specific capital level for any capital measure. Under the regulations, each
of the Banks is well capitalized at September 30, 1997, except that Exchange
Bank is adequately capitalized.
The FDICIA requires federal banking regulators to take "prompt corrective
action" with respect to capital-deficient institutions. In addition to
requiring the submission of a capital restoration plan, FDICIA contains broad
restrictions on certain activities of undercapitalized institutions involving
asset growth, transactions, branch establishment, and expansion into new lines
of business. With certain exceptions, an insured depository institution is
prohibited from making capital distributions, including dividends, and is
prohibited from paying management fees to control persons if the institution
would be undercapitalized after any such distribution or payment.
As an institution's capital decreases, the powers of the federal regulators
become greater. A significantly undercapitalized institution is subject to
mandated capital raising activities, restrictions on interest rates paid and
transactions with affiliates, removal of management, and other restrictions.
The regulators have very limited discretion in dealing with a critically
undercapitalized institution and are virtually required to appoint a receiver
or conservator if the capital deficiency is not corrected promptly.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities, as well as other benefits as described in the
Trust Agreement. This summary of certain provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms.
Wherever particular defined terms of the Trust Agreement are referred to
herein, such defined terms are incorporated herein by reference. A copy of the
form of the Trust Agreement is available upon request from the Issuer
Trustees.
GENERAL
The Preferred Securities will be limited to $25,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$3,750,000 aggregate liquidation amount of referred Securities for exercise of
the Underwriters' over-allotment option). See "Underwriting." The Preferred
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under "--Subordination of
Common Securities." The Junior Subordinated Debentures will be registered in
the name of the Issuer Trust and held by the Property Trustee in trust for the
benefit of the holders of the Preferred Securities and Common Securities. The
Guarantee will be a guarantee on a subordinated basis with respect to the
Preferred Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Preferred Securities when
the Issuer Trust does not have funds on hand available to make such payments.
See "Description of Guarantee."
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DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and Distributions on each Preferred
Security will be payable at the annual rate of % of the stated Liquidation
Amount of $25, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each a "Distribution Date"), to the holders of
the Preferred Securities at the close of business on 15th day of March, June,
September and December (whether or not a Business Day (as defined below)) next
preceding the relevant Distribution Date. Distributions on the Preferred
Securities will be cumulative. Distributions will accumulate from ,
199 . The first Distribution Date for the Preferred Securities will be
, 199 . The amount of Distributions payable for any period less
than a full Distribution period will be computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period. Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. If any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the
next succeeding day that is a Business Day (without any additional
Distributions or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right under the Junior Subordinated Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate of %
per annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company's capital stock or (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company's capital stock or of any class or series of the Company's
indebtedness for any class or series of the Company's capital stock, (c) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights,
stock or other property under any stockholder's rights plan, or the redemption
or repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall
be due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees notice of its election of such Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the
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Preferred Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to
give notice to holders of the Preferred Securities of the record date or the
date such Distributions are payable, but in any event not less than one
Business Day prior to such record date. The Property Trustee will give notice
of the Company's election to begin a new Extension Period to the holders of
the Preferred Securities. Subject to the foregoing, there is no limitation on
the number of times that the Company may elect to begin an Extension Period.
See "Description of Junior Subordinated Debentures--Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of the
Preferred Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer Trust will invest the proceeds from the
issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The
payment of Distributions and other amounts payable on the Preferred Securities
(if and to the extent the Issuer Trust has funds legally available for and
cash sufficient to make such payments) is guaranteed by the Company on a
limited basis as set forth herein under "Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Preferred Securities, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Redemption
Price") equal to the aggregate Liquidation Amount of such Preferred Securities
plus accumulated but unpaid Distributions thereon to the date of redemption
(the "Redemption Date") and the related amount of the premium, if any, paid by
the Company upon the concurrent redemption of such Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures--Redemption."
If less than all the Junior Subordinated Debentures are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities. The amount of premium, if any, paid by
the Company upon the redemption of all or any part of the Junior Subordinated
Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after , , in whole at any time or in part from time to
time, or (ii) in whole, but not in part, at any time within 90 days following
the occurrence and during the continuation of a Tax Event, Investment Company
Event or Capital Treatment Event (each as defined below), in each case subject
to possible regulatory approval. See "--Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"25% Capital Limitation" means the limitation imposed by the Federal Reserve
that the proceeds of certain qualifying securities like the Trust Securities
will qualify as Tier 1 capital of the issuer up to an amount not to exceed 25%
of the Issuer's Tier 1 capital, or any subsequent limitation adopted by the
Federal Reserve.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on
which banking institutions in the State of Kansas or the City of New York are
authorized or required by law or executive order to remain closed, or (c) a
day on which the Property Trustee's Corporate Trust Office or the Corporate
Trust Office of the Debenture Trustee is closed for business.
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"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of
Trust Securities in connection with a dissolution or liquidation of the Issuer
Trust, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or which pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days of the delivery of such opinion, will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes or (iii) the Issuer Trust is, or will be within 90 days of
the delivery of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation
or application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or
decision is announced on or after the date of issuance of the Preferred
Securities, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes
of the risk-based capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Company.
If a Tax Event described in clause (i) or (iii) of the definition of Tax
Event above has occurred and is continuing and the Issuer Trust is the holder
of all the Junior Subordinated Debentures, the Company will pay Additional
Sums (as defined below), if any, on the Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on
the outstanding Preferred Securities and Common Securities of the Issuer Trust
will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result
of a Tax Event.
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REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "--Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, in the case of Preferred Securities held in
book-entry form, 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 the
holders of the Preferred Securities. With respect to Preferred Securities not
held in book-entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will
give such paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption shall be payable to the holders of the
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. If any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day. In the event that payment
of the Redemption Price in respect of Preferred Securities called for
redemption is improperly withheld or refused and not paid either by the Issuer
Trust or by the Company pursuant to the Guarantee as described under
"Description of Guarantee," Distributions on such Preferred Securities will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Issuer Trust for such Preferred Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated
pro rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than
60 days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, or if
the Preferred Securities are then held in the form of a Global Preferred
Security (as defined below), in accordance with DTC's customary procedures.
The Property Trustee shall promptly notify the securities registrar for the
Trust Securities in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case
of any Preferred Securities redeemed or to be redeemed only in part, to the
portion of the aggregate Liquidation Amount of Preferred Securities which has
been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities
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register for the Trust Securities. Unless the Company defaults in payment of
the Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions
will cease to accumulate on the Preferred Securities or portions thereof)
called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in
respect of, any of the Common Securities, and no other payment on account of
the redemption, liquidation or other acquisition of such Common Securities,
shall be made unless payment in full in cash of all accumulated and unpaid
Distributions on all the outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all the
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the Trust Agreement until the effects of all such Events of
Default with respect to such Preferred Securities have been cured, waived or
otherwise eliminated. See "--Events of Default; Notice" and "Description of
Junior Subordinated Debentures--Debenture Events of Default." Until all such
Events of Default under the Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee will act solely on behalf of the holders of the Preferred Securities
and not on behalf of the holders of the Common Securities, and only the
holders of the Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $25 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption
should consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect
on the level or composition of the organization's capital base (unless the
equity or capital instrument were redeemed with the proceeds of, or replaced
by, a like amount of a similar or higher quality capital instrument and the
Federal Reserve considers the organization's capital position to be fully
adequate after the redemption).
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In the event the Company, while a holder of Common Securities, dissolves the
Issuer Trust prior to the stated maturity of the Preferred Securities and the
dissolution of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the Federal Reserve under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the Federal Reserve. Moreover, any changes
in applicable law or changes in the Federal Reserve's risk-based capital
guidelines or policies could impose a requirement on the Company that it
obtain the prior approval of the Federal Reserve to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the
first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) the
distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if the holders of Common Securities have
given written direction to the Property Trustee to dissolve the Issuer Trust
(which direction, subject to the foregoing restrictions, is optional and
wholly within the discretion of the holders of Common Securities), (iii) the
repayment of all the Preferred Securities in connection with the redemption of
all the Trust Securities as described under "--Redemption" and (iv) the entry
of an order for the dissolution of the Issuer Trust by a court of competent
jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer
Trust as provided by applicable law, to the holders of such Trust Securities a
Like Amount of the Junior Subordinated Debentures, unless such distribution is
not practical, in which event such holders will be entitled to receive out of
the assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Issuer Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Issuer Trust on its Preferred Securities shall be paid on a pro rata
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, the Preferred
Securities shall have a priority over the Common Securities. See "--
Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures (i) the Preferred Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee
and (iii) any certificates representing the Preferred Securities not held by
DTC or its nominee will be deemed to represent the Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
the Preferred Securities and bearing accrued and unpaid interest in an amount
equal to the accumulated and unpaid Distributions on the Preferred Securities
until such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution
to the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the
Issuer Trust were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Junior
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Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Company by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Preferred Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually
with the Property Trustee a certificate as to whether or not they are in
compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts
in respect of the Preferred Securities as described above. See "--
Subordination of Common Securities," "--Liquidation Distribution Upon
Dissolution" and "Description of Junior Subordinated Debentures--Debenture
Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities may remove an Issuer Trustee for cause or, if
a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at
least 25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee
resigns, such Trustee will appoint its successor. If an Issuer Trustee fails
to appoint a successor, the holders of at least 25% in Liquidation Amount of
the outstanding Preferred Securities may appoint a successor. If a successor
has not been appointed by the holders, any holder of Preferred Securities or
Common Securities or the other Issuer Trustee may petition a court in the
State of Delaware to appoint a successor. Any Delaware Trustee must meet the
applicable requirements of Delaware law. Any Property Trustee must be a
national or state-chartered bank, and at the time of appointment have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization and have capital and surplus of at
least
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$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment
by the successor trustee in accordance with the provisions of the Trust
Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the
request of the holders of the Common Securities and with the consent of the
holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities, merge with or into, consolidate, amalgamate,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of
any State, so long as (i) such successor entity either (a) expressly assumes
all the obligations of the Issuer Trust with respect to the Preferred
Securities or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities have the same
priority as the Preferred Securities with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) a trustee of such
successor entity, possessing the same powers and duties as the Property
Trustee, is appointed to hold the Junior Subordinated Debentures, (iii) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, (v) such
successor entity has a purpose substantially identical to that of the Issuer
Trust, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Issuer Trust has received an opinion from
independent counsel experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in
any material respect and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Issuer
Trust nor such successor entity will be required to register as an investment
company under the Investment Company Act, and (vii) the Company or any
permitted successor or assignee owns all the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer Trust may not, except with the
consent of holders of 100% in aggregate Liquidation Amount of the Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Issuer Trust or the successor entity to be taxable as a corporation for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided above and under "--Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
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The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Preferred Securities, (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, provided
that any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as may be
necessary to ensure that the Issuer Trust will not be taxable as a corporation
for United States federal income tax purposes at any time that any Trust
Securities are outstanding or to ensure that the Issuer Trust will not be
required to register as an "investment company" under the Investment Company
Act, and any amendments of the Trust Agreement will become effective when
notice of such amendment is given to the holders of Trust Securities. The
Trust Agreement may be amended by the holders of a majority of the Common
Securities and the Property Trustee with (i) the consent of holders
representing not less than a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities and (ii) receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will
not affect the Issuer Trust's not being taxable as a corporation for United
States federal income tax purposes or the Issuer Trust's exemption from status
as an "investment company" under the Investment Company Act, except that,
without the consent of each holder of Trust Securities affected thereby, the
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a holder of Trust Securities
to institute suit for the enforcement of any such payment on or after such
date.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
or execute any trust or power conferred on the Property Trustee with respect
to the Junior Subordinated Debentures, (ii) waive any past default that is
waivable under Section of the Junior Subordinated Indenture, (iii)
exercise any right to rescind or annul a declaration that the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Junior Subordinated Indenture or
the Junior Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of at least
a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, except that, if a consent under the Junior Subordinated Indenture
would require the consent of each holder of Junior Subordinated Debentures
affected thereby, no such consent will be given by the Property Trustee
without the prior consent of each holder of the Preferred Securities. The
Property Trustee may not revoke any action previously authorized or approved
by a vote of the holders of the Preferred Securities except by subsequent vote
of the holders of the Preferred Securities. The Property Trustee will notify
each holder of Preferred Securities of any notice of default with respect to
the Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, before taking any of the
foregoing actions, the Property Trustee will obtain an opinion of counsel
experienced in such matters to the effect that the Issuer Trust will not be
taxable as a corporation for United States federal income tax purposes on
account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each registered holder of Preferred Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Issuer
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Trustees or any affiliate of the Company or any Issuer Trustees, will, for
purposes of such vote or consent, be treated as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Preferred Securities) and
all costs and expenses of the Issuer Trust (including costs and expenses
relating to the organization of the Issuer Trust, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the operation of the
Issuer Trust) and to pay any and all taxes and all costs and expenses with
respect thereto (other than United States withholding taxes) to which the
Issuer Trust might become subject. The foregoing obligations of the Company
under the Indenture are for the benefit of, and shall be enforceable by, any
person to whom any such debts, obligations, costs, expenses and taxes are owed
(a "Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Issuer Trust or any other
person before proceeding against the Company. The Company has also agreed in
the Indenture to execute such additional agreements as may be necessary or
desirable to give full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The Preferred Securities will be issued in the form of one or more fully
registered global securities which will be deposited with, or on behalf of,
DTC and registered in the name of DTC's nominee. Unless and until it is
exchangeable in whole or in part for the Preferred Securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with DTC or its nominee ("Participants") or persons
that may hold interests through Participants. The Company expects that, upon
the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security
will be shown on, and the transfer of such ownership interests will be
effected only through, records maintained by DTC (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
Persons held through Participants). Beneficial owners will not receive written
confirmation from DTC of their purchase, but are expected to receive written
confirmations from the Participants through which the beneficial owner entered
into the transaction. Transfers of ownership interests will be accomplished by
entries on the books of Participants acting on behalf of the beneficial
owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global
security for all purposes under the Junior Subordinated Indenture. Except as
provided below, owners of beneficial interests in a global security will not
be entitled to receive physical delivery of the Preferred Securities in
definitive form and will not be considered the owners or holders thereof under
the Junior Subordinated Indenture. Accordingly, each person owning a
beneficial interest in such a global security must rely on the procedures of
DTC and, if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any
rights of a holder of Preferred Securities under the Junior Subordinated
Indenture. The Company understands that, under DTC's existing practices, in
the event that the Company requests any action of holders, or an owner of a
beneficial interest in such a global security desires to take any action which
a holder is entitled to take under the Junior Subordinated Indenture, DTC
would authorize the Participants holding the relevant beneficial interests to
take such action, and such Participants would authorize beneficial owners
owning through such Participants to take such action or would otherwise act
upon the instructions of beneficial owners owning through them. Redemption
notices will also be sent to DTC. If less than all of the Preferred Securities
are being redeemed, the Company understands that it is DTC's existing practice
to determine by lot the amount of the interest of each Participant to be
redeemed.
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Distributions on the Preferred Securities registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred
Securities. None of the Company, the Issuer Trustees, the Administrators, any
Paying Agent or any other agent of the Company or the Issuer Trustees will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the payable date.
Payments by Participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Company,
the Issuer Trustees, the Paying Agent or any other agent of the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Company or the Issuer Trustees. If DTC notifies the Company that it is
unwilling to continue as such, or if it is unable to continue or ceases to be
a clearing agency registered under the Exchange Act and a successor depository
is not appointed by the Company within ninety days after receiving such notice
or becoming aware that DTC is no longer so registered, the Company will issue
the Preferred Securities in definitive form upon registration of transfer of,
or in exchange for, such global security. In addition, the Company may at any
time and in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the
need for physical movement of certificates. Participants include securities
brokers and dealers (such as the Underwriter), banks, trust companies and
clearing corporations and may include certain other organizations. Certain of
such Participants (or their representatives), together with other entities,
own DTC. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with a Participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the Underwriters in
immediately available funds.
Secondary trading in Preferred Securities of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as
to the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The
paying agent (the "Paying Agent") will initially be the Property
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Trustee and any co-paying agent chosen by the Property Trustee and acceptable
to the Administrators. The Paying Agent will be permitted to resign as Paying
Agent upon 30 days' written notice to the Property Trustee and the
Administrators. If the Property Trustee is no longer the Paying Agent, the
Property Trustee will appoint a successor (which must be a bank or trust
company reasonably acceptable to the Administrators) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Company, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Issuer Trust
or the Trust Agreement, that the Property Trustee and the holders of Common
Securities determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge any
of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance with the
laws of the State of Delaware.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as
Debenture Trustee. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Junior Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Junior Subordinated Indenture,
including the definitions therein of certain terms. Whenever particular
defined terms of the Junior Subordinated Indenture (as amended or supplemented
from time to time) are referred to herein, such defined terms are incorporated
herein by reference. A copy of the form of Junior Subordinated Indenture is
available from the Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Issuer Trust
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from , 1997, at the annual rate of % of the principal
amount thereof, payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year (each, an "Interest Payment Date"), commencing
, 199 , to the person in whose name each Junior Subordinated
Debenture is registered at the close of business on the 15th day of March,
June, September or December (whether or not a Business Day) next preceding
such Interest Payment Date. It is anticipated that, until the liquidation, if
any, of the Issuer Trust, each Junior Subordinated Debenture will be
registered in the name of the Issuer Trust and held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The amount of
interest payable for any period less than a full interest period will be
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of interest payable
for any full interest period will be computed by dividing the rate per annum
by four. If any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (without
any interest or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
Accrued interest that is not paid on the applicable Interest Payment Date will
bear additional interest on the amount thereof (to the extent permitted by
law) at the rate per annum of %, compounded quarterly and computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in
a partial month in such period. The amount of additional interest payable for
any full interest period will be computed by dividing the rate per annum by
four. The term "interest" as used herein includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , , subject to
the Maturity Adjustment (such date, as it may be shortened by the Maturity
Adjustment is referred to herein as the Stated Maturity). The Maturity
Adjustment represents the right of the Company to shorten the maturity date
once at any time to any date not earlier than , , subject to the
Company having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve. In the
event the Company elects to shorten the Stated Maturity of the Junior
Subordinated Debentures, it will give notice to the registered holders of the
Junior Subordinated Debentures, the Debenture Trustee and the Issuer Trust of
such shortening no less than 90 days prior to the effectiveness thereof. The
Property Trustee must give notice to the holders of the Trust Securities of
the shortening of the Stated Maturity at least 30 but not more than 60 days
before such date.
The Junior Subordinated Debentures will be unsecured and will rank junior and
be subordinate in right of payment to all Senior Indebtedness of the Company.
The Junior Subordinated Debentures will not be subject to a sinking fund. The
Junior Subordinated Indenture does not limit the incurrence or issuance of
other secured or unsecured debt by the Company, including Senior Indebtedness,
whether under the Junior Subordinated Indenture or any existing or other
indenture that the Company may enter into in the future or otherwise. See "--
Subordination."
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. During any such
Extension Period the Company shall have the right to make partial payments of
interest on any interest payment date. At the end of such Extension Period,
the Company must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly and computed
on the basis of a 360-day year of twelve 30-day months and the actual days
elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full
interest period will be computed by dividing the rate per annum by four.
During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures (or holders of Preferred Securities while
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholders rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options
or other rights is the same stock as that on which the dividend is being paid
or ranks pari passu with or junior to such stock). Prior to the termination of
any such Extension Period, the Company may further defer the payment of
interest, provided that no Extension Period may exceed 20 consecutive
quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period
at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Property Trustee
will give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. There is no limitation on the number
of times that the Company may elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , , in whole at any time or in
part from time to time, or (ii) in whole, but not in part, at any time within
90 days following the occurrence and during the continuation of a Tax Event,
Investment Company
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Event or Capital Treatment Event (each as defined under "Description of
Preferred Securities--Redemption"), in each case at the redemption price
described below. The proceeds of any such redemption will be used by the
Issuer Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other
capital instruments before stated maturity could have a significant impact on
a bank holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such
redemption could have a material effect on the level or composition of the
organization's capital base (unless the equity or capital instrument were
redeemed with the proceeds of, or replaced by, a like amount of a similar or
higher quality capital instrument and the Federal Reserve considers the
organization's capital position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company prior to
their Stated Maturity would constitute the redemption of capital instruments
under the Federal Reserve's current risk-based capital guidelines and may be
subject to the prior approval of the Federal Reserve. The redemption of the
Junior Subordinated Debentures also could be subject to the additional prior
approval of the Federal Reserve under its current risk-based capital
guidelines.
The redemption price for Junior Subordinated Debentures is the outstanding
principal amount of the Junior Subordinated Debentures plus accrued interest
(including any Additional Interest or any Additional Sums) thereon to but
excluding the date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Junior Subordinated Indenture that, if and
for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Company
will pay as additional sums on the Junior Subordinated Debentures such amounts
as may be required so that the Distributions payable by the Issuer Trust will
not be reduced as a result of any such additional taxes, duties or other
governmental charges. See "Description of Preferred Securities--Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Issuer Trust. If the Junior Subordinated Debentures are distributed to
holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities--Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed
by the Company within 90 days of receipt of notice from DTC to such effect,
the Company will cause the Junior Subordinated Debentures to be issued in
definitive form.
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede & Co., the nominee for DTC, as the registered holder of
the Junior Subordinated Debentures, as described under "Description of
Preferred Securities--Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be
registrable, and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other authorized denominations of a like
aggregate principal amount, at the corporate trust office of the Debenture
Trustee in New York, New York or at the offices of any Paying Agent or
transfer agent appointed by the Company, provided that payment of interest may
be made at the option of the Company by
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check mailed to the address of the persons entitled thereto. However, a holder
of $1 million or more in aggregate principal amount of Junior Subordinated
Debentures may receive payments of interest (other than interest payable at
the Stated Maturity) by wire transfer of immediately available funds upon
written request to the Debenture Trustee not later than 15 calendar days prior
to the date on which the interest is payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations, and of
a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent
designated by the Company for such purpose without service charge and upon
payment of any taxes and other governmental charges as described in the Junior
Subordinated Indenture. The Company will appoint the Debenture Trustee as
securities registrar under the Junior Subordinated Indenture. The Company may
at any time designate additional transfer agents with respect to the Junior
Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption,
except, in the case of any Junior Subordinated Debentures being redeemed in
part, any portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or then
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the Company,
be repaid to the Company and the holder of such Junior Subordinated Debenture
shall thereafter look, as a general unsecured creditor, only to the Company
for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted that it will not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period
or other event referred to below, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of
a subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise
of such warrants, options or other rights is the same stock as that on which
the dividend is being paid or ranks pari passu with or junior to such stock),
if at such time (i) there has occurred any event (a) of which the Company has
actual
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knowledge that with the giving of notice or the lapse of time, or both, would
constitute a Debenture Event of Default and (b) that the Company has not taken
reasonable steps to cure, (ii) if the Junior Subordinated Debentures are held
by the Issuer Trust, the Company is in default with respect to its payment of
any obligations under the Guarantee or (iii) the Company has given notice of
its election of an Extension Period as provided in the Junior Subordinated
Indenture and has not rescinded such notice, or such Extension Period, or any
extension thereof, is continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Trust Agreement, to cause the Issuer Trust to continue
not to be taxable as a corporation for United States federal income tax
purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of any of the holders of the outstanding Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Junior
Subordinated Indenture to: (1) evidence succession of another corporation or
association to the Company and the assumption by such person of the
obligations of the Company under the Junior Subordinated Debentures, (2) add
further covenants, restrictions or conditions for the protection of holders of
the Junior Subordinated Debentures, (3) cure ambiguities or correct the Junior
Subordinated Debentures in the case of defects or inconsistencies in the
provisions thereof, so long as any such cure or correction does not adversely
affect the interest of the holders of the Junior Subordinated Debentures in
any material respect, (4) change the terms of the Junior Subordinated
Debentures to facilitate the issuance of the Junior Subordinated Debentures in
certificated or other definitive form, (5) evidence or provide for the
appointment of a successor Debenture Trustee, or (6) qualify, or maintain the
qualification of, the Junior Subordinated Indentures under the Trust Indenture
Act. The Junior Subordinated Indenture contains provisions permitting the
Company and the Debenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the Junior Subordinated Debentures, to
modify the Junior Subordinated Indenture in a manner affecting the rights of
the holders of the Junior Subordinated Debentures, except that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture so affected, (i) change the Stated Maturity of the
Junior Subordinated Debentures, or reduce the principal amount thereof, the
rate of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the currency in which, any such
amount is payable or impair the right to institute suit for the enforcement of
any Junior Subordinated Debenture or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Junior Subordinated Indenture.
Furthermore, so long as any of the Preferred Securities remain outstanding, no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Junior Subordinated
Indenture may be effective, without the prior consent of the holders of at
least a majority of the aggregate Liquidation Amount of the outstanding
Preferred Securities unless and until the principal of (and premium, if any,
on) the Junior Subordinated Debentures and all accrued and unpaid interest
thereon have been paid in full and certain other conditions are satisfied.
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DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated Debentures
when due and continuance of such default for a period of 30 days (subject
to the deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at the Stated Maturity; or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Junior Subordinated Indenture for 90 days after
written notice to the Company from the Debenture Trustee or the holders of
at least 25% in aggregate outstanding principal amount of the outstanding
Junior Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding with
respect to the Company or all or substantially all its property.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in "Description of Preferred Securities--
Events of Default; Notice," the occurrence of a Debenture Event of Default
will also constitute an Event of Default in respect of the Trust Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate principal amount of outstanding Junior Subordinated Debentures
may declare the principal due and payable immediately upon a Debenture Event
of Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Junior Subordinated Indenture cannot be
modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture affected thereby. See "--Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on
the Junior Subordinated Debentures, and any other amounts payable under the
Junior Subordinated Indenture, to be forthwith due and payable and to enforce
its other rights as a creditor with respect to the Junior Subordinated
Debentures.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities
by the Company in connection with a Direct Action.
The holders of the Preferred Securities are not able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
except under the circumstances described in the preceding paragraph. See
"Description of Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person may consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) if the Company consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Company's obligations in respect of the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would constitute a Debenture Event of Default, has occurred and is
continuing; and (iii) certain other conditions as prescribed in the Junior
Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford holders of
the Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at the Stated Maturity within one year, and the Company deposits
or causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if
any) and interest to the date of the deposit or to the Stated Maturity, as the
case may be, then the Junior Subordinated Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums
due pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will
be deemed to have satisfied and discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to
all Senior Indebtedness (as defined below) of the Company. If the Company
defaults in the payment of any principal, premium, if any, or interest, if
any, or any other amount payable on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for redemption
or by declaration of acceleration or otherwise, then, unless and until such
default has been
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cured or waived or has ceased to exist or all Senior Indebtedness has been
paid, no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase
or other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all or a
portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of the Company; (iv) every obligation of the Company
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business); (v) every capital lease obligation of the
Company; (vi) every obligation of the Company for claims (as defined in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended) in
respect of derivative products such as interest and foreign exchange rate
contracts, commodity contracts and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another
person and all dividends of another person the payment of which, in either
case, the Company has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise; provided that Senior Indebtedness shall
not include (i) any obligations which, by their terms, are expressly stated to
rank pari passu in right of payment with, or to not be superior in right of
payment to, the Junior Subordinated Debentures, (ii) any Senior Indebtedness
of the Company which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was
without recourse to the Company, (iii) any indebtedness of the Company to any
of its subsidiaries, (iv) indebtedness to any executive officer or director of
the Company, or (v) any indebtedness in respect of debt securities issued to
any trust, or a trustee of such trust, partnership or other entity affiliated
with the Company that is a financing entity of the Company in connection with
the issuance of such financing entity of securities that are similar to the
Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or liquidation
of the Company or the holder of the Common Securities, (ii) any proceeding for
the liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshaling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will
be paid or delivered directly to the holders of Senior Indebtedness in
accordance with the priorities then existing among such holders until all
Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company
ranking on a parity with the Junior Subordinated Debentures, will be entitled
to be paid from the remaining assets of the Company the amounts at the time
due and owing on the Junior Subordinated Debentures and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations of the
Company ranking junior to the Junior Subordinated Debentures and such other
obligations. If any payment or distribution on account of the Junior
Subordinated Debentures of any character or any security, whether in cash,
securities or other property is received by any holder of any Junior
Subordinated Debentures in contravention of any of the terms hereof and before
all the Senior Indebtedness has been paid in full, such payment or
distribution or security will be received in trust for the benefit of, and
must be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the
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payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all such Senior Indebtedness in full. By reason of such subordination, in
the event of the insolvency of the Company, holders of Senior Indebtedness may
receive more, ratably, and holders of the Junior Subordinated Debentures may
receive less, ratably, than the other creditors of the Company. Such
subordination will not prevent the occurrence of any Event of Default in
respect of the Junior Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The
Company expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and continuance of a
default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated Indenture at the request of any holder
of Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its
duties if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to time as
trustee under other indentures or trust agreements with the Company or its
subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships
with Bankers Trust Company and its affiliates.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance of Preferred Securities by the Issuer Trust for the benefit
of the holders from time to time of the Preferred Securities. Bankers Trust
Company will act as Guarantee Trustee under the Guarantee. This summary of
certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Guarantee, including the definitions therein of certain terms. A copy
of the form of Guarantee is available upon request from the Guarantee Trustee.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders
of the Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth in the Guarantee and described herein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Issuer Trust may have or assert other than the defense of payment. The
following payments with respect to the Preferred Securities, to the extent not
paid by or on behalf of the Issuer Trust (the "Guarantee Payments"), will be
subject to the Guarantee: (i) any accrued and unpaid Distributions required to
be paid on such Preferred Securities, to the extent that the Issuer Trust has
funds on hand available therefor at such time, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, termination, winding up or
liquidation of the Issuer Trust (unless the Junior Subordinated Debentures are
distributed to holders of the
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Preferred Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Preferred Securities on liquidation of the
Issuer Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of the Preferred Securities or by causing the Issuer Trust to pay such
amounts to such holders.
The Guarantee will be an irrevocable guarantee of payment on a subordinated
basis of the Issuer Trust's obligations under the Preferred Securities, but
will apply only to the extent that the Issuer Trust has funds sufficient to
make such payments, and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated Debentures
held by the Issuer Trust, the Issuer Trust will not be able to pay any amounts
payable in respect of the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company. See "--Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness,
whether under the Junior Subordinated Indenture, any other indenture that the
Company may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company in the same manner as the Junior Subordinated
Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no consent
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred Securities--
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default
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remains unremedied for 30 days. The holders of not less than a majority in
aggregate Liquidation Amount of the outstanding Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer
Trust, the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after the
occurrence of an event of default with respect to the Guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested
in it by the Guarantee at the request of any holder of the Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
as Guarantee Trustee, and the Company, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Preferred Securities, upon full payment
of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities in exchange for all of
the Preferred Securities. The Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of the Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed, on a subordinated basis, by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. If and to the extent that the Company does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of amounts payable with
respect to the Preferred Securities when the Issuer Trust does not have
sufficient funds to pay such amounts. In such event, the remedy of a holder of
the Preferred Securities is to institute a legal proceeding directly against
the Company for enforcement of payment of the Company's obligations under
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures and
the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated Debentures,
such payments will be sufficient to cover Distributions and other payments
distributable on the Preferred Securities, primarily because (i) the aggregate
principal amount of the Junior Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Preferred Securities and
Common Securities; (ii) the interest rate and interest and other payment dates
on the Junior Subordinated Debentures will match the Distribution rate,
Distribution Dates and other payment dates for the Preferred Securities; (iii)
the Company will pay for any and all costs, expenses and liabilities of the
Issuer Trust except the Issuer Trust's obligations to holders of the Trust
Securities; and (iv) the Trust Agreement further provides that the Issuer
Trust will not engage in any activity that is not consistent with the limited
purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default in respect of the Preferred
Securities. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness of the Company, the subordination provisions of the
Junior Subordinated Indenture provide that no payments may be made in respect
of the Junior Subordinated Debentures until such Senior Indebtedness has been
paid in full or any payment default thereunder has been cured or waived. See
"Description of Junior Subordinated Debentures--Subordination."
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LIMITED PURPOSE OF ISSUER TRUST
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and the Issuer Trust exists for the sole
purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions or other amounts distributable with respect
to the Preferred Securities from the Issuer Trust (or from the Company under
the Guarantee) only if and to the extent the Issuer Trust has funds available
for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Issuer Trust as required by applicable law, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Issuer
Trust, the Liquidation Distribution in cash. See "Description of Preferred
Securities-- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Issuer Trust, as
registered holder of the Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated and junior in right of
payment to all Senior Indebtedness as set forth in the Junior Subordinated
Indenture, but entitled to receive payment in full of all amounts payable with
respect to the Junior Subordinated Debentures before any stockholders of the
Company receive payments or distributions. Since the Company is the guarantor
under the Guarantee and has agreed under the Junior Subordinated Indenture to
pay for all costs, expenses and liabilities of the Issuer Trust (other than
the Issuer Trust's obligations to the holders of the Trust Securities), the
positions of a holder of the Preferred Securities and a holder of such Junior
Subordinated Debentures relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company are expected
to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Blackwell Sanders Matheny Weary & Lombardi LLP, Kansas
City, Missouri, in its capacity as counsel to the Company ("Tax Counsel"), the
following discussion summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of the Preferred
Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject
to change, possibly on a retroactive basis. The authorities on which this
summary is based are subject to various interpretations, and the opinions of
Tax Counsel are not binding on the Internal Revenue Service (the "IRS") or the
courts, either of which could take a contrary position. Moreover, no rulings
have been or will be sought from the IRS with respect to the transactions
described herein. Accordingly, there can be no assurance that the IRS will not
challenge the opinions expressed herein or that a court would not sustain such
a challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance (an "Initial Holder") at their
original offering price and (ii) is a US Holder (as defined below). This
summary does not address all the tax consequences that may be relevant to a US
Holder, nor does it address the tax consequences, except as stated below, to
holders that are not US Holders ("Non-US Holders") or to holders that may be
subject to special tax treatment (such as banks, thrift institutions, real
estate investment trusts, regulated investment companies, insurance companies,
brokers and dealers in securities or currencies, certain securities traders,
other financial institutions, tax-exempt organizations, persons holding the
Preferred Securities as a position in a "straddle," or
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as part of a "synthetic security," "hedging," as part of a "conversion" or
other integrated investment, persons having a functional currency other than
the U.S. Dollar and certain United States expatriates). Further, this summary
does not address (a) the income tax consequences to shareholders in, or
partners or beneficiaries of, a holder of the Preferred Securities, (b) the
United States federal alternative minimum tax consequences of the purchase,
ownership or disposition of the Preferred Securities, or (c) any state, local
or foreign tax consequences of the purchase, ownership and disposition of
Preferred Securities.
A "US Holder" generally is a holder of the Preferred Securities who or which
is (i) a citizen or individual resident (or is treated as a citizen or
individual resident) of the United States for income tax purposes, (ii) a
corporation or partnership created or organized (or treated as created or
organized for income tax purposes) in or under the laws of the United States
or any political subdivision thereof, (iii) an estate the income of which is
includible in its gross income for United States federal income tax purposes
without regard to its source, or (iv) a trust if (a) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (b) one or more United States trustees have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS.
US HOLDERS
CHARACTERIZATION OF THE ISSUER TRUST. In connection with the issuance of the
Preferred Securities, Tax Counsel will render its opinion generally to effect
that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with
the terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities generally will be considered the owner of
an undivided interest in the Junior Subordinated Debentures owned by the
Issuer Trust, and each US Holder will be required to include all income or
gain recognized for United States federal income tax purposes with respect to
its allocable share of the Junior Subordinated Debentures on its own income
tax return.
CHARACTERIZATION OF THE JUNIOR SUBORDINATED DEBENTURES. The Company and the
Issuer Trust will agree to treat the Junior Subordinated Debentures as
indebtedness for all United States federal income tax purposes. In connection
with the issuance of the Junior Subordinated Debentures, Tax Counsel will
render its opinion generally to the effect that, under then current law and
based on the representations, facts and assumptions set forth in this
Prospectus, and assuming full compliance with the terms of the Junior
Subordinated Indenture (and other relevant documents) and based on certain
assumptions and qualifications referenced in the opinion, the Junior
Subordinated Debentures will be characterized for United States federal income
tax purposes as debt of the Company.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the terms of the Junior
Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a
period not exceeding 20 consecutive quarterly periods, but not beyond the
maturity of the Junior Subordinated Debentures. Treasury regulations under
Section 1273 of the Code provide that debt instruments like the Junior
Subordinated Debentures will not be considered issued with original issue
discount ("OID") by reason of the Company's ability to defer payments of
interest if the likelihood of such deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the date
of this Prospectus, the likelihood of deferring payments of interest under the
terms of the Junior Subordinated Debentures is "remote"
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within the meaning of the applicable Treasury regulations, in part because
exercising that option would prevent the Company from declaring dividends on
its stock and would prevent the Company from making any payments with respect
to debt securities that rank pari passu with or junior to the Junior
Subordinated Debentures. Therefore, the Junior Subordinated Debentures should
not be treated as issued with OID by reason of the Company's deferral option.
Rather, stated interest on the Junior Subordinated Debentures will generally
be taxable to a US Holder as ordinary income when paid or accrued in
accordance with that holder's method of accounting for income tax purposes. It
should be noted, however, that these Treasury regulations have not yet been
interpreted in any rulings or any other published authorities of the IRS.
Accordingly, it is possible that the IRS could take a position contrary to the
interpretation described herein.
In the event the Company exercises its option to defer payments of interest,
the Junior Subordinated Debentures would be treated as redeemed and reissued
for OID purposes and the sum of the remaining interest payments (and any de
minimis OID) on the Junior Subordinated Debentures would thereafter be treated
as OID, which would accrue, and be includible in a US Holder's taxable income,
on an economic accrual basis (regardless of the US Holder's method of
accounting for income tax purposes) over the remaining term of the Junior
Subordinated Debentures (including any period of interest deferral), without
regard to the timing of payments under the Junior Subordinated Debentures.
(Subsequent distributions of interest on the Junior Subordinated Debentures
generally would not be taxable.) The amount of OID that would accrue in any
period would generally equal the amount of interest that accrued on the Junior
Subordinated Debentures in that period at the stated interest rate.
Consequently, during any period of interest deferral, US Holders will include
OID in gross income in advance of the receipt of cash, and a US Holder which
disposes of a Preferred Security prior to the record date for payment of
distributions on the Junior Subordinated Debentures following that period will
be subject to income tax on OID accrued through the date of disposition (and
not previously included in income), but will not receive cash from the Issuer
Trust with respect to the OID.
If the possibility of the Company's exercise of its option to defer payments
of interest is not remote, the Junior Subordinated Debentures would be treated
as initially issued with OID in an amount equal to the aggregate stated
interest (plus any de minimis OID) over the term of the Junior Subordinated
Debentures. That OID would generally be includible in a US Holder's taxable
income, over the term of the Junior Subordinated Debentures, on an economic
accrual basis.
CHARACTERIZATION OF INCOME. Because the income underlying the Preferred
Securities will not be characterized as dividends for income tax purposes,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction for any income recognized with respect to the
Preferred Securities.
MARKET DISCOUNT AND BOND PREMIUM. Holders of the Preferred Securities may be
considered to have acquired their undivided interests in the Junior
Subordinated Debentures with market discount or acquisition premium (as each
phrase is defined for United States federal income tax purposes).
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
ISSUER TRUST. Under certain circumstances described herein (See "Description
of the Preferred Securities--Liquidation Distribution Upon Dissolution"), the
Issuer Trust may distribute the Junior Subordinated Debentures to holders in
exchange for the Preferred Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event
for United States federal income tax purposes, and each US Holder would have
an aggregate adjusted basis in its Junior Subordinated Debentures for United
States federal income tax purposes equal to such holder's aggregate adjusted
basis in its Preferred Securities. For United States federal income tax
purposes, a US Holder's holding period in the Junior Subordinated Debentures
received in such a liquidation of the Issuer Trust would include the period
during which the Preferred Securities were held by the holder. If, however,
the relevant event is a Tax Event which results in the Issuer Trust being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to US Holders of the Preferred Securities
for United States federal income tax purposes.
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Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption
of their Preferred Securities. Such a redemption would be taxable for United
States federal income tax purposes, and a US Holder would recognize gain or
loss as if it had sold the Preferred Securities for cash. See "--Sales of
Preferred Securities" below.
SALES OF PREFERRED SECURITIES. A US Holder that sells Preferred Securities
will recognize gain or loss equal to the difference between its adjusted basis
in the Preferred Securities and the amount realized on the sale of such
Preferred Securities. A US Holder's adjusted basis in the Preferred Securities
generally will be its initial purchase price, increased by OID previously
included (or currently includible) in such holder's gross income to the date
of disposition, and decreased by payments received on the Preferred Securities
(other than any interest received with respect to the period prior to the
effective date of the Company's first exercise of its option to defer payments
of interest). Any such gain or loss generally will be capital gain or loss,
and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year prior to the date of
disposition. Tax rates on long-term capital gains received by individual US
Holders vary depending on each US Holder's income and holding period for the
Preferred Securities. US Holders that are individuals should contact their own
tax advisors for more information or for the capital gains rate applicable to
a specific Preferred Security.
A holder who disposes of his Preferred Securities between record dates for
payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the
date of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount
from the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Preferred Securities (or as to OID only,
to add such amount to such holder's adjusted tax basis in its Preferred
Securities). To the extent the selling price is less than the holder's
adjusted tax basis (which will include accrued but unpaid OID, if any), a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
NON-US HOLDERS
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Preferred Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Preferred Security is not a controlled foreign corporation that
is related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Preferred Securities certifies to the Issuer Trust or
its agent, under penalties of perjury, that it is a Non-US Holder and provides
its name and address, or (ii) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Preferred Security in such capacity, certifies to the Issuer Trust or its
agent, under penalties of perjury, that such a statement has been received
from the beneficial owner by it or by another Financial Institution between it
and the beneficial owner in the chain of ownership, and furnishes the Issuer
Trust or its agent with a copy thereof.
A Non-US Holder of a Preferred Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Junior Subordinated Debentures.
87
<PAGE>
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States. In addition, payments made
on, and payments of the proceeds from the sale of, the Preferred Securities to
or through the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its Non-United States
status or otherwise establishes an exemption from information reporting and
backup withholding. See "--Backup Withholding." Taxable income on the
Preferred Securities for a calendar year should be reported to US Holders on
the appropriate forms by the following January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification or exemption requirements. Any amounts so withheld
will be allowed as a credit against the holder's income tax liability, or
refunded, provided the required information is provided to the IRS.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE PREFERRED SECURITIES. POTENTIAL HOLDERS OF THE PREFERRED SECURITIES ARE
URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be considered a
"party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a "disqualified person" within
the meaning of Section 4975 of the Code with respect to many employee benefit
plans ("Plans") that are subject to ERISA. The purchase of the Preferred
Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section
4975(e)(1) of the Code and with respect to which the Company, or any affiliate
of the Company is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code, unless the Preferred Securities are
acquired pursuant to and in accordance with an applicable exemption. Any
pension or other employee benefit plan proposing to acquire any Preferred
Securities should consult with its counsel.
88
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") dated , 1997, among the Company, the Issuer
Trust and the underwriters named therein (the "Underwriters"), the Issuer
Trust has agreed to sell to the Underwriters, and the Underwriters have
severally agreed to purchase from the Issuer Trust, the following respective
aggregate Liquidation Amount of Preferred Securities at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus:
<TABLE>
<CAPTION>
LIQUIDATION AMOUNT
OF PREFERRED
UNDERWRITER: SECURITIES:
------------ ------------------
<S> <C>
Advest, Inc............................................
-----------
Total................................................ $25,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the Preferred Securities offered hereby if any of such
Preferred Securities are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Preferred Securities to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per Preferred Security to certain other
dealers. After the public offering, the public offering price, concession and
reallowance to dealers may be changed by the representative of the
Underwriters. No such change shall affect the amount of proceeds to be
received by the Company as set forth on the cover page of this Prospectus.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an
additional $3,750,000 aggregate Liquidation Amount of the Preferred Securities
at the public offering price. To the extent that the Underwriters exercise
such option, the Company will be obligated, pursuant to the option, to sell
such Preferred Securities to the Underwriters. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the Preferred Securities offered hereby. If purchased, the Underwriters will
offer such additional Preferred Securities on the same terms as those on which
the $25,000,000 aggregate Liquidation Amount of the Preferred Securities are
being offered.
In connection with the offering of the Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize,
maintain or otherwise affect the market price of the Preferred Securities.
Such transactions may include over-allotment transactions in which the
Underwriters create a short position for their own account by selling more
Preferred Securities than they are committed to purchase from the Issuer
Trust. In such a case, to cover all or part of the short position, the
Underwriters may exercise the over-allotment option described above or may
purchase Preferred Securities in the open market following completion of the
initial offering of the Preferred Securities. The Underwriters also may engage
in stabilizing transactions in which they bid for, and purchase, shares of the
Preferred Securities at a level above that which might otherwise prevail in
the open market for the purpose of preventing or retarding a decline in the
market price of the Preferred Securities. The Underwriters also may reclaim
any selling concessions allowed to an Underwriter or dealer if the
Underwriters repurchase shares distributed by that Underwriter or dealer. Any
of the foregoing transactions may result in the maintenance of a price for the
Preferred Securities at a level above that which might otherwise prevail in
the open market. Neither the Company nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Preferred
Securities. The Underwriters are not required to engage in any of the
foregoing transactions and, if commenced, such transactions may be
discontinued at any time without notice.
89
<PAGE>
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued
by the Company, the Underwriting Agreement provides that the Company will pay
as compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $ per Preferred Security (or $ ($
if the over-allotment option is exercised in full) in the aggregate) and an
advisory fee equal to $25,000 for the account of the Representative.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made
in compliance with the applicable provisions of Rule 2810 of the NASD's
Conduct Rules.
The Preferred Securities are a new issue of securities with no established
trading market. The Company and the Issuer Trust have been advised by the
Underwriters that they intend to make a market in the Preferred Securities.
However, the Underwriters are not obligated to do so and such market making
may be interrupted or discontinued at any time without notice at the sole
discretion of each of the Underwriters. Application has been made by the
Company to list the Preferred Securities in the Nasdaq National Market, but
one of the initial requirements for listing is the presence of three market
makers for the Preferred Securities, and the presence of other market makers
cannot be assured. Accordingly, no assurance can be given as to the
development or liquidity of any market for the Preferred Securities.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
Advest, Inc. acted as the co-managing underwriter in connection with the
Company's initial public offering completed in November 1996 and has continued
to serve as a financial advisor to the Company in connection with the
Company's acquisition and capital programs. The other Underwriters may in the
future perform various services to the Company, including investment banking
services for which they may receive customary fees.
VALIDITY OF SECURITIES
The validity of the Guarantee and the Junior Subordinated Debentures and
certain tax matters will be passed upon for the Company by Blackwell Sanders
Matheny Weary & Lombardi LLP, Kansas City, Missouri, and certain legal matters
will be passed upon for the Underwriters by Arnold & Porter, Washington, D.C.
and New York, New York. Certain matters of Delaware law relating to the
validity of the Preferred Securities, the enforceability of the Trust
Agreement and the creation of the Issuer Trust will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Company and the
Issuer Trust. Blackwell Sanders Matheny Weary & Lombardi LLP and Arnold &
Porter will rely as to certain matters of Delaware law on the opinion of
Richards, Layton & Finger.
90
<PAGE>
EXPERTS
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company and subsidiaries as of
and for the years ended December 31, 1996 and 1995 have been included herein
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing and on the report of GRA, Thompson,
White & Co., P.C. on the consolidated financial statements of Peoples
Bancshares, Inc. as of and for the years ended December 31, 1996 and 1995, and
upon the authority of said firm as experts in accounting and auditing.
CHANGE IN ACCOUNTANTS
In November 1995, the Company retained Keith E. Bouchey, a principal of GRA
Thompson, White & Company, P.C. ("GRA Thompson") to serve as its Executive
Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. At
the time of his employment by the Company, GRA Thompson served as the
Company's independent certified public accountants. In view of the Securities
and Exchange Commission's rules dealing with the independence of accountants,
the Board of Directors of the Company retained KPMG Peat Marwick LLP to serve
as the Company's new independent certified public accountants on April 29,
1996. There were and are no disagreements with GRA Thompson on any matter of
accounting principles or practice, financial statement disclosure, or auditing
scope and procedure and GRA Thompson's reports on any of the Company's
financial statements have not contained an adverse opinion or disclaimer of
opinion or been qualified as to uncertainty, audit scope or accounting
principles.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor,
500 West Madison Street, Chicago, Illinois 60661. Copies of such material can
also be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material also may be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov. This Prospectus does not
contain all the information set forth in the Registration Statement and
exhibits thereto, which the Company has filed with the Commission under the
Securities Act and to which reference is hereby made.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special
purpose entity, has no operating history or independent operations and is not
engaged in and does not propose to engage in any activity other than holding
as trust assets the Junior Subordinated Debentures and issuing the Trust
Securities. See "GBCI Capital Trust," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures" and "Description of
Guarantee." In addition, the Company does not expect that the Issuer Trust
will be filing reports under the Exchange Act with the Commission.
91
<PAGE>
GOLD BANC CORPORATION, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(WITH INDEPENDENT AUDITORS' REPORTS THEREON)
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF THE COMPANY
<TABLE>
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets at December 31, 1996 and 1995................. F-3
Consolidated Statements of Earnings for the Years Ended December 31, 1996
and 1995................................................................. F-4
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996 and 1995............................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996 and 1995............................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
Consolidated Balance Sheets at September 30, 1997 and 1996 (Unaudited).... F-21
Consolidated Statements of Earnings for the Nine Months ended September
30, 1997 and 1996 (Unaudited)............................................ F-22
Consolidated Statements of Earnings for the Three Months ended September
30, 1997 and 1996 (Unaudited)............................................ F-23
Consolidated Statements of Cash Flows for the Nine Months ended September
30, 1997 and 1996 (Unaudited)............................................ F-24
Notes to Consolidated Financial Statements (Unaudited).................... F-25
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Gold Banc Corporation, Inc.:
We have audited the accompanying consolidated balance sheets of Gold Banc
Corporation, Inc. and subsidiaries (the Company) as of December 31, 1996 and
1995 and the related consolidated statements of earnings, stockholders' equity
and cash flows for the years then ended, as restated for the acquisition of
Peoples Bancshares, Inc. (Peoples) on August 22, 1997 in a business
combination accounted for as a pooling of interests. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The contribution of Peoples to total assets,
net interest income and net income for 1996 and 1995 represented 19%, 20%, 35%
and 21%, 20%, 42%, respectively. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Peoples, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Gold Banc Corporation, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Kansas City, Missouri
November 6, 1997
F-2
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ -------- -------
<S> <C> <C>
Cash and due from banks...................................... $ 13,895 10,059
Federal funds sold and interest-bearing deposits............. 8,902 14,955
-------- -------
Total cash and cash equivalents.......................... 22,797 25,014
-------- -------
Investment securities (note 2):
Held-to-maturity........................................... 102 99
Available-for-sale......................................... 98,725 99,669
Other...................................................... 2,318 2,297
-------- -------
Total investment securities.............................. 101,145 102,065
-------- -------
Mortgage loans held for sale, net............................ 2,182 6,665
Loans, net (note 3).......................................... 231,176 183,625
Premises and equipment, net (note 4)......................... 12,746 8,187
Deferred taxes (note 9)...................................... 507 736
Accrued interest and other assets............................ 6,305 6,610
-------- -------
252,916 205,823
-------- -------
$376,858 332,902
======== =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Deposits (note 5).......................................... $316,573 285,721
Securities sold under agreements to repurchase (note 6).... 11,966 17,742
Federal funds purchased, long-term debt and other
borrowings (note 7)....................................... 11,568 12,392
Accrued interest and other liabilities..................... 2,411 2,160
-------- -------
Total liabilities........................................ 342,518 318,015
-------- -------
Stockholders' equity (notes 9 and 12):
Preferred stock, 7,500,000 shares authorized, no shares
issued.................................................... -- --
Preferred stock, Class B $1,000 par value, 1,000 shares
authorized, 65 shares issued at December 31, 1995......... -- 65
Common stock, $1 par value, 7,500,000 shares authorized;
4,793,615 and 2,493,615 shares issued and outstanding at
December 31, 1996 and 1995, respectively.................. 4,794 2,494
Additional paid-in capital................................. 18,784 3,031
Retained earnings.......................................... 11,300 9,222
Unrealized gain (loss) on available-for-sale securities,
net....................................................... (262) 75
Unearned compensation (note 9)............................. (276) --
-------- -------
Total stockholders' equity............................... 34,340 14,887
-------- -------
Commitments and contingent liabilities (notes 9 and 15)...... -- --
$376,858 332,902
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Interest income:
Loans, including fees....................................... $19,796 17,254
Investment securities....................................... 6,134 5,992
Other....................................................... 469 195
------- -------
26,399 23,441
------- -------
Interest expense:
Deposits.................................................... 13,340 11,257
Borrowings and other........................................ 1,725 1,637
------- -------
15,065 12,894
------- -------
Net interest income....................................... 11,334 10,547
Provision for loan losses (note 3)............................ (25) 1,334
------- -------
Net interest income after provision for loan losses....... 11,359 9,213
------- -------
Other income:
Service fees................................................ 1,033 999
Net gains on sale of mortgage loans......................... 1,128 1,058
Net securities losses....................................... (11) (92)
Gain on sale of other assets................................ 297 14
Other....................................................... 405 336
------- -------
2,852 2,315
------- -------
Other expense:
Salaries and employee benefits.............................. 6,063 5,339
Net occupancy expense....................................... 1,675 1,444
Federal deposit insurance premiums (note 5)................. 551 400
Other....................................................... 2,778 2,607
------- -------
11,067 9,790
------- -------
Earnings before income taxes.............................. 3,144 1,738
Income taxes (note 8)......................................... 1,066 520
------- -------
Net earnings.............................................. $ 2,078 1,218
======= =======
Earnings per share............................................ $ 0.76 0.48
======= =======
Weighted average common shares outstanding.................... 2,740 2,557
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN
(LOSS)
ON
SECURITIES
ADDITIONAL AVAILABLE-
PREFERRED COMMON PAID-IN RETAINED FOR- UNEARNED TREASURY
STOCK STOCK CAPITAL EARNINGS SALE, NET COMPENSATION STOCK TOTAL
--------- ------ ---------- -------- ---------- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994................... $100 2,536 3,421 8,004 (1,345) -- (35) 12,681
Purchase of 117,756
shares of common
stock................. -- -- -- -- -- -- (1,095) (1,095)
Issuance of 53,346
shares of common
stock................. -- 53 347 -- -- -- -- 400
Sale of 23,339 shares
of common stock....... -- -- (25) -- -- -- 288 263
Retirement of 35 shares
of Class B preferred
stock and 94,416
shares of common stock
held in treasury...... (35) (95) (712) -- -- -- 842 --
Change in unrealized
gain on securities
available-for-sale.... -- -- -- -- 1,420 -- -- 1,420
Net earnings........... -- -- -- 1,218 -- -- -- 1,218
---- ----- ------ ------ ------ ---- ------ ------
Balance at December 31,
1995 65 2,494 3,031 9,222 75 -- -- 14,887
Conversion of 65 shares
of preferred stock
into 14,048 shares of
common stock.......... (65) 14 51 -- -- -- -- --
Redemption and
retirement of 105.5
shares of common
stock................. -- (14) (120) -- -- -- -- (134)
Issuance of 2,300,000
shares of common
stock, net of issuance
costs of $1,942....... -- 2,300 15,822 -- -- -- -- 18,122
Purchase of 31,888
shares of common stock
for the employee stock
ownership plan........ -- -- -- -- -- (276) -- (276)
Change in unrealized
loss on securities
available-for-sale.... -- -- -- -- (337) -- -- (337)
Net earnings........... -- -- -- 2,078 -- -- -- 2,078
---- ----- ------ ------ ------ ---- ------ ------
Balance at December 31,
1996................... -- 4,794 18,784 11,300 (262) (276) -- 34,340
==== ===== ====== ====== ====== ==== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings............................................ $ 2,078 1,218
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Provision for loan losses............................. (25) 1,334
Net losses on sales of available-for-sale securities.. 10 92
Amortization of investment securities' premiums, net
of accretion......................................... 154 104
Depreciation and amortization......................... 803 761
Gain on sale of assets, net........................... (335) (18)
Net (increase) decrease in mortgage loans held for
sale................................................. 4,483 (4,879)
Other changes:
Accrued interest receivable and other assets........ (67) (521)
Accrued interest payable and other liabilities...... 326 392
-------- --------
Net cash provided by (used in) operating
activities........................................ 7,427 (1,517)
-------- --------
Cash flows from investing activities:
Net increase in loans................................... (47,511) (21,276)
Principal collections and proceeds from maturities of
held-to-maturity securities............................ 73 12,195
Principal collections and proceeds from sales and
maturities of available-for-sale securities............ 43,385 31,109
Purchases of available-for-sale securities.............. (43,127) (38,801)
Purchases of held-to-maturity securities................ (99) (1,645)
Net additions to premises and equipment................. (5,251) (3,315)
Proceeds from sale of other assets...................... 922 269
-------- --------
Net cash used in investing activities.............. (51,608) (21,464)
-------- --------
Cash flows from financing activities:
Increase in deposits.................................... 30,851 39,825
Net increase (decrease) in short-term borrowings........ (588) 1,312
Proceeds from long-term debt............................ -- 500
Principal payment on long-term debt..................... (7,775) (941)
Purchase of treasury stock.............................. (134) (1,095)
Proceeds from issuance of common stock, net of costs.... 18,122 350
Proceeds from sale of treasury stock.................... -- 263
(Decrease) increase in repurchase agreements............ (187) 87
Increase (decrease) in Federal Funds purchased.......... 1,675 (1,000)
-------- --------
Net cash provided by financing activities.......... 41,964 39,301
-------- --------
Increase (decrease) in cash and cash equivalents... (2,217) 16,320
Cash and cash equivalents, beginning of year............. 25,014 8,694
-------- --------
Cash and cash equivalents, end of year................... $ 22,797 25,014
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.................. $ 14,927 12,533
======== ========
Cash paid during the year for income taxes.............. $ 985 1,256
======== ========
Supplemental schedule of noncash investing activities:
Loans transferred to other real estate owned............ $ 741 94
======== ========
Transfer of held-to-maturity investment securities to
available-for-sale..................................... -- 42,968
======== ========
Supplemental schedule of noncash financing activities:
Common stock subscribed................................. -- 50
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
On August 22, 1997, the Company issued 493,615 shares of its common stock in
exchange for all of the shares of common stock of Peoples Bancshares, Inc.
(the merger). Peoples Bancshares, Inc. owned all of the outstanding common
stock of The Peoples National Bank located in Clay Center, Kansas. The merger
has been accounted for as a pooling-of-interests and, accordingly, the 1996
and 1995 consolidated financial statements have been restated to include the
accounts and results of operations of the combining companies. Subsequent to
the merger, Peoples Bancshares, Inc. was liquidated into the Company.
Principles of Consolidation
The consolidated financial statements include the accounts of Gold Banc
Corporation, Inc. and its subsidiary banks, Exchange National Bank,
Marysville, Kansas, Citizens State Bank and Trust Company, Seneca, Kansas,
Provident Bank, f.s.b., St. Joseph, Missouri and The Peoples National Bank,
Clay Center, Kansas, collectively referred to as the Company. All significant
intercompany transactions have been eliminated.
Nature of Operations
The Company is a multibank holding company that owns and operates community
banks located in northeastern Kansas and northwestern Missouri. The banks
provide a full range of commercial and consumer banking services primarily to
small and medium-sized communities and the surrounding market areas, including
suburban Kansas City.
Initial Public Offering
Effective November 19, 1996, the Company completed an initial public
offering selling 2,000,000 shares of its common stock at $8.75 per share.
Subsequently, the Company's underwriter exercised its over-allotment option
and on December 19, 1996, the Company sold an additional 300,000 shares at
$8.75 per share. Total expenses, including underwriter's discounts, aggregated
$1,942,000. The Company is considered by the Securities and Exchange
Commission (SEC) as a small business enterprise and, accordingly, files SEC-
related items as such. The Company's shares are registered on the NASDAQ under
the symbol GLDB.
Estimates
The preparation of the consolidated financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investment Securities
The Company classifies investment securities as either available-for-sale or
held-to-maturity. Held-to-maturity securities are those which the Company has
the positive intent and ability to hold to maturity. All other securities are
classified as available-for-sale.
Held-to-maturity securities are recorded at amortized cost. Available-for-
sale securities are recorded at fair value. Unrealized holding gains and
losses, net of related tax effect, on available-for-sale securities are
excluded from earnings and are reported as a separate component of
stockholders' equity until realized.
F-7
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A decline in the market value of any security below cost that is deemed
other than temporary is charged to income, resulting in the establishment of a
new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to interest income. Dividend and interest
income is recognized when earned. Realized gains and losses upon disposition
of available-for-sale securities are included in income using the specific
identification method for determining the cost of the securities sold.
Mortgage Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of aggregate cost or estimated fair value. Fees received
on such loans are deferred and recognized in income as part of the gain or
loss on sale. Net unrealized losses are recognized through a valuation
allowance by charges to income.
The Company adopted the Financial Accounting Standards Board's Statement of
Financial Accounting Standard (SFAS) No. 122, "Accounting for Mortgage
Servicing Rights," on January 1, 1996. This statement requires that the value
of retained mortgage servicing rights related to loans originated and sold
after January 1, 1996 be capitalized as an asset, thereby increasing the gain
on sale of the loan by the amount of the asset. The adoption of this standard
did not have a material impact on the Company.
Loans
Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their
outstanding principal balance adjusted for any charge-offs, the allowance for
loan losses, and any deferred fees or costs on originated loans and
unamortized premiums or discounts on purchased loans.
Interest income on loans is accrued and credited to operations based on the
principal amount outstanding. The accrual of interest on impaired loans is
discontinued when, in management's opinion, the borrower may be unable to meet
payments as they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently recognized only
to the extent cash payments are received. Significant loan and commitment fee
income and related costs are deferred and amortized over the term of the
related loan or commitment.
Allowance for Loan Losses
Provisions for losses on loans receivable are based upon management's
estimate of the amount required to maintain an adequate allowance for losses,
relative to the risk in the loan portfolio. This estimate is based on reviews
of the loan portfolio, including assessment of the estimated net realizable
value of the related underlying collateral, and upon consideration of past
loss experience, current economic conditions and such other factors which, in
the opinion of management, deserve current recognition. Amounts are charged
off as soon as probability of loss is established, taking into consideration
such factors as the borrower's financial condition, underlying collateral and
guarantees. Loans are also subject to periodic examination by regulatory
agencies. Such agencies may require charge-offs or additions to the allowance
based upon their judgments about information available at the time of their
examination.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation and amortization are computed using the straight-
line and accelerated methods based on the estimated useful lives of the
related assets.
F-8
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Goodwill
The excess cost over fair value of assets acquired of consolidated
subsidiaries is being amortized on a straight-line basis over periods of ten
to twenty-five years.
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax
return. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and are measured using enacted tax rates expected to
apply to taxable income in the years in which those differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
for subsequent changes in tax rates is recognized in the period that includes
the tax rate change.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, cash equivalents
include cash on hand, amounts due from banks, federal funds sold and interest-
bearing deposits.
Earnings Per Share
Earnings per share is based upon the weighted average shares outstanding
during the periods presented.
(2) INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair
value of investment securities by major security type at December 31, 1996 and
1995 are as follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1996 COST GAINS LOSSES VALUE
---- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Held-to-maturity:
Obligations of states and political
subdivisions...................... $ 102 -- -- 102
======= === ==== ======
Available-for-sale:
U.S. treasury and agency
securities........................ $50,586 58 (220) 50,424
Obligations of states and political
subdivisions...................... 10,786 121 (34) 10,873
Mortgage-backed securities......... 37,339 115 (468) 36,986
Equity securities.................. 435 7 -- 442
------- --- ---- ------
Total............................ $99,146 301 (722) 98,725
======= === ==== ======
<CAPTION>
1995
----
<S> <C> <C> <C> <C>
Held-to-maturity:
Obligations of states and political
subdivisions...................... $ 99 -- -- 99
======= === ==== ======
Available-for-sale:
U.S. treasury and agency
securities........................ $53,444 268 (187) 53,525
Obligations of states and political
subdivisions...................... 9,518 151 (17) 9,652
Mortgage-backed securities......... 36,169 80 (222) 36,027
Equity securities.................. 435 30 -- 465
------- --- ---- ------
Total............................ $99,566 529 (426) 99,669
======= === ==== ======
</TABLE>
F-9
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The amortized cost and estimated fair values of investment securities at
December 31, 1996, by contractual maturity, are shown below (in thousands).
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
------------------- -------------------
ESTIMATED ESTIMATED
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Due in one year or less..... $-- -- 19,560 19,590
Due after one year through
five years................. 102 102 33,259 33,138
Due after five years through
ten years.................. -- -- 7,037 7,056
Due after ten years......... -- -- 1,515 1,512
Mortgage-backed securities.. -- -- 37,339 36,986
Equity securities........... -- -- 436 443
---- --- ------ ------
Total................... $102 102 99,146 98,725
==== === ====== ======
</TABLE>
Other securities at December 31, 1996 and 1995 consist primarily of stock in
the Federal Reserve Bank, Federal Home Loan Bank and Kansas Venture Capital
Stock. The cost of such investments approximates their fair value. At December
31, 1996, investment securities with fair values of approximately $57,795,000
were pledged to secure public deposits and for other purposes.
(3) LOANS
Loans are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Real estate--mortgage.................................. $114,990 82,672
Real estate--construction.............................. 28,672 24,535
Commercial............................................. 52,524 43,018
Agricultural........................................... 21,303 20,458
Consumer............................................... 13,027 11,510
Other.................................................. 3,641 4,684
-------- -------
234,157 186,877
Allowance for loan losses.............................. (2,981) (3,252)
-------- -------
$231,176 183,625
======== =======
</TABLE>
At December 31, 1996, the Company serviced loans of approximately
$29,000,000 for investors. Service fee income of approximately $82,000 and
$90,000, respectively, related to these portfolios is included in service fee
income in the consolidated statements of earnings for the years ended December
31, 1996 and 1995. During 1996, loans were sold servicing released and,
accordingly, the impact of SFAS No. 122 was insignificant.
Loans made to directors and officers of the Company approximated $7,986,000
and $5,071,000 at December 31, 1996 and 1995, respectively. Such loans were
made in the ordinary course of business on normal credit terms, including
interest rate and collateralization.
Impaired loans are considered insignificant at December 31, 1996 and 1995.
Nonaccrual loans approximated $319,000 and $1,762,000 at December 31, 1996 and
1995, respectively. The interest income not recognized on these loans was
approximately $23,000 and $27,000 in 1996 and 1995, respectively.
F-10
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Activity in the allowance for loan losses during the years ended December 31,
1996 and 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ -----
<S> <C> <C>
Balance at beginning of year............................... $3,252 2,668
Provision for loan losses.................................. (25) 1,334
Loan charge-offs........................................... (501) (903)
Loan recoveries............................................ 255 153
------ -----
Balance at end of year..................................... $2,981 3,252
====== =====
</TABLE>
(4) PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Land....................................................... $ 2,795 1,924
Buildings and leasehold improvements....................... 4,955 4,470
Construction in progress................................... 3,522 509
Furniture, fixtures and equipment.......................... 4,141 3,312
Automobiles................................................ 146 198
------- ------
15,559 10,413
Accumulated depreciation and amortization.................. 2,813 2,226
------- ------
$12,746 8,187
======= ======
</TABLE>
Depreciation expense aggregating $745,000 and $666,000 for the years ended
December 31, 1996 and 1995, respectively, has been included in net occupancy
expense in the accompanying consolidated statements of earnings.
(5) DEPOSITS
Deposits are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Demand:
Noninterest bearing.................................... $ 27,093 24,427
-------- -------
Interest-bearing:
NOW.................................................. 18,823 16,739
Advantage............................................ 11,477 10,119
Super NOW............................................ 14,916 9,963
Money market......................................... 37,670 22,344
-------- -------
82,886 59,165
-------- -------
Total demand....................................... 109,979 83,592
Savings.................................................. 13,139 13,950
Time..................................................... 193,455 188,179
-------- -------
$316,573 285,721
======== =======
</TABLE>
Time deposits include certificates of deposit of $100,000 and over, totaling
approximately $41,729,000 and $33,200,000 at December 31, 1996 and 1995,
respectively.
F-11
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Principal maturities of time deposits at December 31, 1996 are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1997............................ $134,375
1998............................ 38,509
1999............................ 10,680
2000............................ 5,607
2001............................ 4,146
Thereafter...................... 138
--------
$193,455
========
</TABLE>
During 1996, the Federal Deposit Insurance Corporation imposed a one-time
special assessment on Savings Association Insurance Fund (SAIF) assessable
deposits. The assessment on the Company's SAIF deposits was $389,000 and is
included in federal deposit insurance premiums in the accompanying 1996
consolidated statement of earnings.
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Information concerning securities sold under agreements to repurchase is as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Average monthly balance during the year.................. $ 7,825 8,314
Weighted average interest rate during the year........... 5.46% 5.51%
Maximum month-end balance during the year................ $21,808 18,251
</TABLE>
At December 31, 1996, such agreements were secured by investment and
mortgage-backed securities. Pledged securities are maintained by a safekeeping
agent under the control of the Company.
(7) FEDERAL FUNDS PURCHASED, LONG-TERM DEBT AND OTHER BORROWINGS
Federal funds purchased fluctuate daily based on the liquidity needs of the
Company. As of December 31, 1996, federal funds purchased of $6,675,000 had a
weighted average interest rate of 6.53% and a one-day maturity. There were no
federal funds purchased outstanding at December 31, 1995.
Following is a summary of long-term borrowings at December 31, 1996 and 1995
(in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Note payable to bank, interest at 6.0%.................... $ -- 7,000
Note payable to bank, interest at 6.6%, maturing April 1,
1997..................................................... 3,015 3,400
Note payable of Gold Banc Corporation, Inc. Employee Stock
Ownership Plan, interest at Boatmen's corporate base
rate, (8.25% at December 31, 1996) secured by 31,888
shares of Company stock (see note 9)..................... 276 --
Federal Home Loan Bank (FHLB) borrowings by a subsidiary
bank bearing weighted average fixed interest rates of
5.48% and 6.02% at December 31, 1996 and 1995,
respectively, secured by qualifying one-to-four family
mortgage loans........................................... 1,602 1,992
------ ------
$4,893 12,392
====== ======
</TABLE>
F-12
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Note payable to bank in the amount of $3,015,000 represents an obligation of
People Bancshares, Inc. Subsequent to year-end, such note was repaid by the
Company in connection with the merger (see notes 1 and 14).
At December 31, 1996, the Company had a $10,000,000 committed line of credit
with a correspondent bank with no advances outstanding.
Principal maturities of long-term borrowings are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1997.............................. $3,377
1998.............................. 362
1999.............................. 292
2000.............................. 252
2001.............................. 128
Thereafter........................ 482
------
$4,893
======
</TABLE>
None of the Company's borrowings have any related compensating balance
requirements which restrict the usage of Company assets. However, regulations
of the Federal Reserve System require reserves to be maintained by all banking
institutions according to the types and amounts of certain deposit
liabilities. These requirements restrict usage of a portion of the amounts
shown as consolidated "cash and due from banks" from everyday usage in
operation of the banks. The minimum reserve requirements for the subsidiary
banks at December 31, 1996 approximated $1,395,000.
(8) INCOME TAXES
Income tax expense (benefit) related to operations for 1996 and 1995 is
summarized as follows (in thousands):
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
1996:
Federal.......................................... $473 435 908
State............................................ 155 3 158
---- ---- -----
$628 438 1,066
==== ==== =====
1995:
Federal.......................................... $713 (429) 284
State............................................ 246 (10) 236
---- ---- -----
$959 (439) 520
==== ==== =====
</TABLE>
F-13
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 are presented below (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ -----
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses.................................. $ 334 663
Unrealized losses on available-for-sale securities, net.... 180 60
State taxes................................................ 488 320
Other...................................................... 150 167
------ -----
Total deferred tax assets................................ 1,152 1,210
------ -----
Deferred tax liabilities:
FHLB stock dividends....................................... 125 125
Premises and equipment..................................... 427 206
Other...................................................... 93 143
------ -----
Total deferred tax liabilities........................... 645 474
------ -----
Net deferred tax asset................................... $ 507 736
====== =====
</TABLE>
A valuation allowance for deferred tax assets was not necessary at December
31, 1996 or 1995.
A reconciliation of expected income tax expense based on the statutory rate
of 34% to actual tax expense for 1996 and 1995 is summarized as follows
(dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
---------------- ---------------
AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------ -------
<S> <C> <C> <C> <C>
Expected federal income tax expense............. $ 1,069 34.00% $ 591 34.00%
Municipal interest.............................. (147) (4.69) (154) (8.85)
State taxes, net of federal tax benefit......... 155 4.94 167 9.64
Other, net...................................... (11) (.34) (84) (4.87)
------- ----- ----- -----
$ 1,066 33.91% $ 520 29.92%
======= ===== ===== =====
</TABLE>
(9) EMPLOYEE BENEFIT PLANS
On January 1, 1986, the Company established the Gold Banc Corporation, Inc.
Employee Stock Ownership Plan (ESOP) to acquire shares of the Company common
stock for the benefit of all eligible employees. The amount of annual
contributions from the Company, if any, is determined by the Board of
Directors. Contributions were approximately $78,000 and $75,000 for the years
ended December 31, 1996 and 1995, respectively. The ESOP, which is
noncontributory, covers substantially all employees of the corporation.
During 1996, the ESOP borrowed $275,800 from an unaffiliated bank to
purchase 31,888 shares of common stock from a stockholder of the Company (see
note 7). The ESOP will repay the loan with contributions received from the
Company. Accordingly, the Company has recorded the obligation with an off-
setting amount of unearned compensation included in stockholders' equity in
the accompanying 1996 consolidated balance sheet.
In 1995, the Company established a 401(k) savings plan for the benefit of
all eligible employees. The Company does not match employee contributions. The
401(k) plan covers substantially all employees of the corporation.
F-14
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company's Board of Directors and stockholders have approved the adoption
of the 1996 Equity Compensation Plan (the Plan). Under the terms of the Plan,
the Company can grant stock options, stock appreciation rights, restricted
stock, performance units or performance shares. Options granted under the Plan
will carry an exercise price equal to or greater than the fair market value at
the date of grant, and generally expire ten years after grant. The Company has
reserved 250,000 shares of common stock for issuance under the Plan. On April
7, 1997, the Company granted options to certain officers of the Company to
purchase a total of 70,500 shares of the Company's common stock at the fair
market value of the Company's stock on that date ($10.50 per share). Of the
total options, 23,000 vest as of October 6, 1997, with the remainder vesting
as of April 1, 2002.
(10) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
Financial instruments, which represent off-balance sheet credit risk,
consist of open commitments to extend credit, irrevocable letters of credit
and loans sold with recourse. Open commitments to extend credit and
irrevocable letters of credit amounted to approximately $39,807,000 at
December 31, 1996. Such agreements require the Company to lend to a customer
as long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses. Since many of the commitments are expected to expire without being
fully drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained
(if deemed necessary by the Company upon extension of credit) is based on
management's credit evaluation of the customer. Collateral held varies, but
may include accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
The Company processes residential home mortgage loans for sale in the
secondary market. In conjunction with the sale of such loans, the Company has
entered into agreements with the purchasers of the loans, setting forth
certain provisions. Among those provisions is the right of the purchaser to
return the loans to the Company in the event the borrower defaults within a
stated period. This period ranges among the various purchasers from between
one to twelve months. Loans sold with recourse amounted to approximately
$6,021,000 and $26,511,000 at December 31, 1996 and 1995, respectively. The
Company's exposure to credit loss in the event of default by the borrower and
the return of the loan by the purchaser is represented by the difference in
the amount of the loan and the recovery value of the underlying collateral.
(11) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of the estimated fair value of financial
instruments are made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company and its subsidiaries using
available market information and valuation methodologies. However,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company and its
subsidiaries could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material impact
on the estimated fair value amounts.
F-15
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The estimated fair value of the Company's financial instruments is as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------------ ------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Investment securities.................... $101,145 98,725 102,065 99,669
======== ======= ======= =======
Mortgage loans held for sale............. $ 2,182 2,182 6,665 6,765
======== ======= ======= =======
Loans.................................... $231,176 231,064 183,625 184,393
======== ======= ======= =======
Deposits................................. $316,573 316,380 285,720 285,630
======== ======= ======= =======
Securities sold under agreements to
repurchase.............................. $ 11,966 11,966 17,742 17,742
======== ======= ======= =======
Federal funds purchased and other short-
term borrowings......................... $ 6,675 6,675 -- --
======== ======= ======= =======
Long-term debt........................... $ 4,893 4,893 12,392 12,392
======== ======= ======= =======
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Investment Securities--Various methods and assumptions were used to
estimate fair value of the investment securities. For investment
securities, excluding other securities, fair values are based on quoted
market prices or dealer quotes. If a quoted market price is not available,
fair value is estimated using quoted prices for similar securities. The
carrying value of other securities approximates fair values.
Loans Held for Sale--The fair value of loans held for sale equals the
contractual sales price agreed upon with third-party investors.
Loans--For certain homogenous categories of loans, such as some Small
Business Administration guaranteed loans, student loans, residential
mortgages, consumer loans and commercial loans, fair value is estimated
using quoted market prices for similar loans or securities backed by
similar loans, adjusted for differences in loan characteristics. The fair
value of other types of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities.
Deposits--The fair value of demand deposits, savings accounts and money
market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated by
discounting the future cash flows using the rates currently offered for
deposits of similar remaining maturities.
Long-term Debt--The fair value of long-term debt is estimated using
discounted cash flow analyses based on the Company's and subsidiaries'
current incremental borrowing rates for similar types of borrowing
arrangements.
Federal Funds Purchased and Securities Sold Under Agreements to
Repurchase--For federal funds purchased and securities sold under
agreements to repurchase, the current carrying amount is a reasonable
estimate of fair value.
Commitments to Extend Credit and Irrevocable Letters of Credit--The fair
value of commitments is estimated using the fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the customers. For fixed-
rate loan commitments, fair value also considers the difference between
current levels of interest rates and the committed rates. The estimated
fair value of letters of credit is based on the fees currently charged for
similar agreements. These instruments were determined to have no positive
or negative market value adjustments and are not listed in the following
table.
F-16
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Loans Sold with Recourse--The fair value of loans sold with recourse is
limited to the contractual amount of the loans required to be repurchased.
Loans currently under the recourse provision have been sold to investors
within the last twelve months. Because the recourse provisions have not yet
expired, it is impractical to determine the fair value; however, it is not
believed they would have a material market value adjustment.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1996 and 1995. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for
purposes of the consolidated financial statements since that date and,
therefore, current estimates of fair value may differ significantly from the
amounts presented herein.
(12) CAPITAL ADEQUACY
Quantitative measures established by regulation to ensure capital adequacy
require the Company and its subsidiaries to maintain minimum amounts and
ratios (set forth in the table below on a consolidated basis, dollars in
thousands) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets and of Tier I capital to average assets. Management
believes, as of December 31, 1996, that the Company meets all capital adequacy
requirements to which it is subject.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER
PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
------------- ------------- -------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
At December 31, 1996:
Total risk-based capital
(to risk-weighted assets)....... $36,181 14.85% $19,493 8.00% $24,366 10.00%
Tier I capital (to risk-weighted
assets)......................... 33,200 13.59 9,746 4.00 14,620 6.00
Tier I capital (to average
assets)......................... 33,200 9.56 13,780 4.00 17,225 5.00
At December 31, 1995:
Total risk-based capital
(to risk-weighted assets)....... 15,418 8.19 15,445 8.00 19,306 10.00
Tier I capital (to risk-weighted
assets)......................... 13,043 6.93 7,722 4.00 11,583 6.00
Tier I capital (to average
assets)......................... 13,043 4.36 11,958 4.00 14,948 5.00
</TABLE>
F-17
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(13) PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
Following is condensed financial information of the Company as of and for
the years ended December 31, 1996 and 1995 (in thousands):
CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ -------- ------
<S> <C> <C>
Cash........................................................... $ 62 110
Federal funds sold, securities purchased under agreements to
resell and interest-bearing deposits.......................... 8,641 --
Loans, net..................................................... -- 852
Investment in subsidiaries..................................... 28,340 23,749
Other.......................................................... 683 763
-------- ------
Total assets............................................... $ 37,726 25,474
======== ======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Borrowed funds................................................. $ 3,291 10,400
Other.......................................................... 95 187
Stockholders' equity........................................... 34,340 14,887
-------- ------
Total liabilities and stockholders' equity................. $ 37,726 25,474
======== ======
</TABLE>
CONDENSED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------- -----
<S> <C> <C>
Dividends from subsidiaries.................................... $ 1,048 2,309
Interest income................................................ 61 28
Other expense, net............................................. 1,442 1,563
------- -----
Income (loss) before equity in undistributed earnings of
subsidiaries.............................................. (333) 774
Increase (decrease) in undistributed equity of subsidiaries.... 1,933 (88)
------- -----
Earnings before income taxes............................... 1,600 686
Income tax benefit............................................. 478 532
------- -----
Net earnings............................................... $ 2,078 1,218
======= =====
</TABLE>
F-18
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------- -----
<S> <C> <C>
Cash flows from operating activities:
Net earnings.................................................. $ 2,078 1,218
Increase in undistributed equity of subsidiary................ (1,933) (88)
Other......................................................... 150 207
------- -----
Net cash provided by operating activities................... 295 1,337
------- -----
Cash flows from investing activities:
Net change in held-to-maturity securities..................... (5) (75)
Net change in loans........................................... 501 (501)
Net additions to premises and equipment....................... 5 12
Capital contributions to subsidiaries......................... (3,000) --
------- -----
Net cash used in investing activities....................... (2,499) (564)
------- -----
Cash flows from financing activities:
Principal payments on long-term debt.......................... (7,385) (491)
Purchase of treasury stock.................................... (134) (832)
Issuance of common stock...................................... 18,122 350
------- -----
Net cash provided by (used in) financing activities......... 10,603 (973)
------- -----
Net increase (decrease) in cash............................. 8,399 (200)
Cash at beginning of year....................................... 110 310
------- -----
Cash at end of year............................................. $ 8,509 110
======= =====
</TABLE>
The primary source of funds available to the Company is the payment of
dividends by the subsidiaries. Subject to maintaining certain minimum
regulatory capital requirements, regulations limit the amount of dividends
that may be paid without prior approval of the subsidiaries' regulatory
agencies. At December 31, 1996, the subsidiaries could pay dividends of
$3,577,000 without prior regulatory approval.
(14) MERGERS AND ACQUISITIONS
As discussed in note 1, the 1996 and 1995 consolidated financial statements
have been restated to include the accounts and results of operations of
Peoples Bancshares, Inc. with those of the Company. The results of operations
previously reported by each of the companies and the amounts presented in the
accompanying consolidated financial statements for the years ended December
31, 1996 and 1995 are summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -----
<S> <C> <C>
Net interest income, after provision for loan losses:
Gold Banc Corporation, Inc................................ $ 8,936 7,102
Peoples Bancshares, Inc................................... 2,423 2,111
------- -----
$11,359 9,213
======= =====
Net income:
Gold Banc Corporation, Inc................................ $ 1,351 704
Peoples Bancshares, Inc................................... 727 514
------- -----
$ 2,078 1,218
======= =====
</TABLE>
F-19
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(15) SUBSEQUENT EVENTS
Exchange National Bank, a wholly-owned subsidiary of Gold Banc Corporation,
Inc., is a named defendant in a case filed in the United States District Court
for the District of Kansas on September 11, 1997. The case caption is Lisa
Wilson, et al. v. Olathe Bank, et al., Case No. 97-2458-KHV. The case has been
filed on behalf of individuals who allege that they invested in entities known
as Parade of Toys and Bandero Cigar Company. The Complaint alleges violations
of the RICO statute (18 U.S.C. (S) 1962 (c)), conspiracy to violate RICO,
negligent misrepresentation, fraud, civil conspiracy and negligence on the
part of the defendants. The plaintiffs contend that a number of
misrepresentations were made in connection with solicitations seeking their
investment in these businesses. The defendants, including Exchange National
Bank, were listed in Trade Reference Sheets provided to plaintiffs by Parade
of Toys and Bandero Cigar Company. Plaintiffs contend that these references
add to the legitimacy of the solicitations. Moreover, the plaintiffs represent
that they contacted the defendants and were advised that Parade of Toys and
Bandero Cigar Company were honest, legitimate, trustworthy and a good
investment. Plaintiffs contend that these representations were false and
misleading and that they relied on these investments to their detriment. The
case was initially filed in the District Court of Johnson County, Kansas, but
a motion has been filed by plaintiffs to dismiss that case. The case in the
United States District Court has been brought by seven plaintiffs who allege
they have invested a total of $176,000. The claim is brought on behalf of a
putative class asserted to be over 2,400 persons who allegedly invested in
Parade of Toys or Bandero Cigar Company with allegations that each member of
the putative class has invested at least $14,900. In each count, the
plaintiffs have sought actual damages in an amount in excess of $75,000,
punitive damages in an amount in excess of $75,000 and costs of the action.
Exchange National Bank has denied any liability and is vigorously contesting
the allegations made against it. The Company is not yet in a position to
determine whether the expenses and losses, if any, in connection with this
action will be material.
Effective October 1, 1997, the Company acquired 100% of the outstanding
common stock of Farmers Bancshares of Oberlin, Inc. (Farmers) and its wholly-
owned subsidiary, Farmers National Bank, in exchange for cash of $1,964,000
and 273,000 shares of Company common stock valued at $3,753,000. The
acquisition will be accounted for as a purchase and, accordingly, the excess
of the total consideration paid of $5,718,000 over the fair value of the
underlying net assets of Farmers of $5,557,000, aggregating $161,000, will be
recorded as goodwill. Farmers had total assets of approximately $52.0 million
at September 30, 1997.
F-20
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
ASSETS 1997 1996
------ ------------- -------------
<S> <C> <C>
Cash and Due from Banks............................ $ 10,422 $ 10,780
Federal funds sold and interest-bearing deposits... 6,630 2,112
-------- --------
Total cash and cash equivalents................ 17,052 12,892
-------- --------
Held-to-maturity securities........................ 101 102
Available-for-sale securities...................... 78,246 99,443
Restricted equity securities....................... 3,157 2,737
-------- --------
Total investment securities.................... 81,504 102,282
Mortgage loans held for sale....................... 2,872 2,174
Loans, net......................................... 288,076 218,569
Bank premises and fixed assets..................... 14,114 11,564
Deferred taxes..................................... 499 957
Accrued interest and other assets.................. 6,969 6,498
-------- --------
Total Assets................................... $411,086 $354,936
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Deposits......................................... $344,271 $300,237
Securities sold under agreements to repurchase... 24,676 18,403
Federal funds purchased and other borrowings..... 350 3,075
Long-term debt................................... 1,667 14,522
Accrued interest and other liabilities........... 3,057 3,264
-------- --------
Total liabilities.............................. $374,021 $339,501
Stockholders' equity:
Common stock, $1 par value, 25,000,000 shares
authorized; 4,793,615 and 2,493,615 share issued
and outstanding at September 30, 1997 and 1996,
respectively.................................... $ 4,794 $ 2,494
Additional paid-in capital....................... 18,784 2,965
Undivided profits................................ 13,700 10,552
Unrealized profits (loss) on available for sale
securities, net................................. 63 (576)
Unearned compensation............................ (276) --
-------- --------
Total stockholders' equity..................... $ 37,065 $ 15,435
-------- --------
Total liabilities and stockholders' equity..... $411,086 $354,936
======== ========
</TABLE>
F-21
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Interest income:
Loans, including fees............................ $ 18,170 $ 14,507
Investments...................................... 4,074 4,626
Other............................................ 379 423
---------- ----------
22,623 19,556
---------- ----------
Interest expense:
Deposits......................................... 10,684 9,934
Borrowings and other............................. 1,155 1,309
---------- ----------
11,839 11,243
---------- ----------
Net interest income............................ 10,784 8,313
Provision for loan losses.......................... 535 145
---------- ----------
Net interest income after provision for loan
losses........................................ 10,249 8,168
---------- ----------
Other income:
Service charges.................................. 738 687
Net gain on sale of mortgage loans............... 501 943
Gain/Loss on sale of securities.................. 89 20
Gain on sale of other assets..................... 205 298
Other............................................ 384 310
---------- ----------
1,917 2,258
---------- ----------
Other expense:
Salaries and employee benefits................... 4,450 4,637
Occupancy expense................................ 1,417 1,213
Federal deposit insurance premiums............... 76 514
Other............................................ 2,204 2,054
---------- ----------
8,147 8,418
---------- ----------
Earnings before income taxes................... 4,019 2,008
Income taxes....................................... 1,346 678
---------- ----------
Net Earnings................................... $ 2,673 $ 1,330
========== ==========
Earnings per share................................. $ 0.56 $ 0.53
========== ==========
Weighted average common and common equivalent
shares outstanding................................ 4,793,615 2,494,838
========== ==========
</TABLE>
F-22
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Interest income:
Loans, including fees............................ $ 6,708 $ 5,124
Investments...................................... 1,249 1,553
Other............................................ 136 84
---------- ----------
8,093 6,761
Interest expense:
Deposits......................................... 3,808 3,394
Borrowings and other............................. 495 465
---------- ----------
4,303 3,859
Net interest income............................ 3,790 2,902
Provision for loan losses.......................... 280 30
---------- ----------
Net interest income after provision for loan
losses........................................ 3,510 2,872
Other income:
Service charges.................................. 248 235
Net gain on sale of mortgage loans............... 212 243
Gain/Loss on sale of securities.................. 88 (4)
Gain on sale of other assets..................... 6 267
Other............................................ 199 117
---------- ----------
753 858
Other expense:
Salaries and employee benefits................... 1,609 1,570
Occupancy expense................................ 483 447
Federal deposit insurance premiums............... 19 433
Other............................................ 800 743
---------- ----------
2,911 3,193
Earnings before income taxes....................... 1,352 537
Income taxes....................................... 450 182
---------- ----------
Net Earnings................................... $ 902 $ 355
========== ==========
Earnings per share................................. $ 0.19 $ 0.14
========== ==========
Weighted average common and common equivalent
shares outstanding................................ 4,793,615 2,493,615
========== ==========
</TABLE>
F-23
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Earnings..................................... $ 2,673 1,330
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for loan losses........................ 535 145
Net gains on sales of available for sale
securities...................................... (89) (20)
Amortization (accretion) of investment
securities' premiums, net of accretion.......... 4 (25)
Depreciation and amortization.................... 749 623
Gain on sale of assets, net...................... (205) (299)
Originations of mortgage loans held for sale, net
of sales proceeds............................... (691) 4,491
Other changes:
Accrued interest receivable and other assets... (854) (899)
Accrued interest payable and other liabilities. 976 1,102
------- --------
Net cash provided by operating activities...... 3,098 6,448
Cash flows from investing activities:
Net increase in loans............................ (57,434) (35,087)
Principal collections and proceeds from
maturities of held to maturity securities....... -- (3)
Principal collections and proceeds from sales and
maturities of available for sale securities..... 33,601 27,743
Purchases of available for sale securities....... (13,876) (27,912)
Net additions to premises and equipment.......... (2,004) (3,861)
Proceeds from sale of other assets............... 285 298
------- --------
Net cash used in investing activities.......... (39,428) (38,822)
Cash flows from investing activities:
Increase in deposits............................. 27,700 14,516
Net increase in short-term borrowings............ 6,385 3,736
Principal (payments) proceeds on long-term debt.. (3,226) 2,131
Dividends paid................................... (273) --
Proceeds from sale of treasury stock............. -- (131)
------- --------
Net cash provided by financing activities...... 30,586 20,252
Decrease in cash equivalents................... $(5,744) $(12,122)
Cash and cash equivalents, beginning of year....... 22,796 25,014
------- --------
Cash and cash equivalents, end of year............. $17,052 $ 12,892
======= ========
</TABLE>
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION.
The consolidated financial statements include the accounts of the Company's
subsidiaries, Exchange National Bank, Citizens State Bank, Peoples National
lBank, and Provident Bank, f.s.b. (the "Banks"). All significant intercompany
balances and transactions have been eliminated.
The consolidated financial statements as of September 30, 1997, and for the
nine months ended and the three months ended September 30, 1997 and 1996 are
unaudited but include all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
financial position and results of operations for those periods. The
Consolidated Statements of Earnings for the nine months ended and the three
months ended September 30, 1997 and 1996 are not necessarily indicative of the
results that will be achieved for the entire year.
2. EARNINGS PER COMMON SHARE.
Earnings per common share are based upon the weighted average number of
common shares outstanding during the periods.
3. SUBSEQUENT EVENTS.
The Company completed its previously announced acquisition of Farmers
Bancshares, Inc. of Oberlin, Kansas and its subsidiary, Farmers National Bank,
through a combination of cash and tax-free exchange of stock on October 1,
1997. At September 30, 1997, Farmers National Bank had total assets of $50.0
million, deposits of $42.5 million and loans of $27.2 million. The transaction
was accounted for as a purchase under Generally Accepted Accounting
Principles.
On October 30, 1997 the Company declared a quarterly dividend in the amount
of $.03 per share to shareholders of record as of November 14, 1997, payable
on December 15, 1997.
4. LEGAL PROCEEDINGS.
Exchange National Bank, along with approximately 24 other persons and
entities including a number of depository institutions, is a named defendant
in a case filed in the United States District Court for the District of Kansas
on September 11, 1997 on behalf of a putative class of over 2,400 persons who
allegedly invested at least $14,900 each in entities known as Parade of Toys
and Bandero Cigar Company. The complaint alleges violations of the Racketeer
Influenced Corrupt Organizations ("RICO") statute (18 U.S.C. (S) 1962(c)),
conspiracy to violate RICO, negligent misrepresentation, fraud, civil
conspiracy and negligence on the part of the defendants. The plaintiffs
contend that the defendants, including Exchange Bank, were listed in trade
reference sheets provided to plaintiffs by Parade of Toys and Bandero Cigar
Company and that the defendants made false and misleading representations on
which they relied to their detriment. In each count, the plaintiffs have
sought actual damages in an amount in excess of $75,000 each, treble damages
under RICO, and punitive damages. Exchange National Bank denies liability and
is in the process of vigorously defending this claim.
5. NEW ACCOUNTING PRONOUNCEMENT.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" which revises the calculation and presentation
provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The
Company believes the adoption of Statement No. 128 will not have a significant
effect on its reported earnings per share.
F-25
<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................
Risk Factors..............................................................
GBCI Capital Trust........................................................
Use of Proceeds...........................................................
Capitalization............................................................
Accounting Treatment......................................................
Management's Discussion and Analysis of Financial Condition and Results of
Operations...............................................................
The Company...............................................................
Business..................................................................
Management................................................................
Certain Relationships and Related Transactions............................
Supervision and Regulation................................................
Description of Preferred Securities.......................................
Description of Junior Subordinated Debentures.............................
Description of Guarantee..................................................
Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee.............................................
Certain Federal Income Tax Consequences...................................
Certain ERISA Considerations..............................................
Underwriting..............................................................
Validity of Securities....................................................
Experts...................................................................
Available Information.....................................................
Index to Financial Statements of the Company.............................. F-1
</TABLE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
$25,000,000
GBCI CAPITAL TRUST
% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER
PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
GOLD BANC
CORPORATION, INC.
---------------
PROSPECTUS
---------------
ADVEST, INC.
, 1997
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Articles of Incorporation of the Company and the
Amended and Restated Bylaws of the Company require it to indemnify its
directors and officers and advisory directors against liabilities. fines,
penalties, settlements, claims and reasonable expenses incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those capacities to the fullest extent permitted by the
Kansas General Corporation Code ("KGCC"). The KGCC permits a corporation to
indemnify its present and former directors and officers if ordered to do so by
a court or after a determination by its independent counsel, stockholders or a
majority of its disinterested directors that the person to be indemnified
acted in good faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of the corporation.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses, other than underwriting discounts and commissions,
in connection with the Offering are as follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................ $ 9,000
NASD Filing Fee................................................. $ 6,000
Nasdaq Fees..................................................... $ 15,000
Printing Expenses............................................... $ 60,000
Legal Fees and Expenses......................................... $130,000
Auditing and Accounting Service................................. $ 20,000
Transfer Agent Fees and Expenses*............................... $ 10,000
--------
Total....................................................... $250,000
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the period from January 1995 through June 1996, the Company sold
90,733 shares of Common Stock, of which 14,047 shares were issued to one
person in exchange for 100 shares of preferred stock. The remaining 76,686
shares were sold to six persons for $575,000 in cash. A majority of such
shares were acquired by employees of the Company and the Banks. On October 1,
1997, the Company issued 273,000 shares of Common Stock in exchange for all of
the issued and outstanding shares of Farmers Bancshares, Inc. No underwriter
or independent selling agent was used and no compensation or commissions were
paid in connection with such offerings, as all such offers and sales were
effected by the Company's directors and executive officers. The sales
conducted described above were completed in reliance on the exemption from the
registration requirements provided by Section 4(2) of the Securities Act.
ITEM 27. EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
1 --Form of Underwriting Agreement
3(a) --Amended and Restated Articles of Incorporation of the Company*
3(a)(i) --Certificate of Amendment to Restated Articles of
Incorporation**
3(b) --Restated By-laws of the Company*
4(a) --Form of Junior Subordinated Indenture
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
4(b) --Form of Amended and Restated Trust Agreement
4(c) --Form of Guarantee Agreement
5(a) --Opinion of Blackwell Sanders Matheny Weary & Lombardi LLP
5(b) --Opinion of Richards, Layton & Finger.***
8 --Opinion of Blackwell Sanders Matheny Weary & Lombardi LLP
9(a) --Proxy Agreement/Stockholder Agreement between Michael W. Gullion
and William Wallman, dated as of September 15, 1996*
9(b) --Proxy Agreement/Stockholder Agreement between Michael W. Gullion,
William Wright and Allen Petersen, dated as of September 15, 1996*
9(c) --Accession of The Lifeboat Foundation to the Proxy
Agreement/Stockholder Agreement among Michael W. Gullion, William
Wright and Allen Petersen, dated as of May 28, 1997
10(a) --Employment Agreement between the Company and Michael W. Gullion*
10(b) --Employment Agreement between the Company and Keith E. Bouchey*
10(c) --Gold Banc Corporation, Inc. 1996 Equity Compensation Plan*
10(d) --Form of Tax Sharing Agreements between the Company and the Banks*
10(e) --Form of Federal Home Loan Bank Credit Agreement to which each of
the Banks is a party*
16 --Letter Regarding Change in Certifying Accountants*
21 --List of Subsidiaries of the Company
23(a) --Consent of KPMG Peat Marwick LLP.
23(b) --Consent of GRA Thompson, White & Company, P.C.
23(c) --Consent of Blackwell Sanders Matheny Weary & Lombardi LLP
(included in Exhibits 5 and 8).
23(d) --Consent of Richards, Layton & Finger (included in Exhibit 5)***
24 --Powers of Attorney (included in signature page to Registration
Statement).
25 --Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bankers Trust Company, as trustee under the Junior
Subordinated Indenture, the Amended and Restated Trust Agreement
and the Guarantee agreement relating to GBCI Capital Trust.
99 --Report of GRA Thompson, White & Company, P.C.
* --Previously filed as an Exhibit to the Company's Registration
Statement on Form SB-2 No. 333-12397 and the same is incorporated
herein by reference.
** --Previously filed as an Exhibit to the Company's Registration
Statement on Form S-4 No. 333-28563 and the same is incorporated
herein by reference.
*** --To be filed by Amendment.
</TABLE>
ITEM 28. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company
II-2
<PAGE>
as been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(b) The undersigned Company hereby undertakes to, for purposes of
determining any liability under the Securities Act, treat 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 Company under Rule 424(b)(1), or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(c) The undersigned Company hereby undertakes to, for purposes of
determining any liability under the Securities Act, treat each post-effective
amendment that contains a form of prospectus as a new registration statement
for the securities offered in the registration statement, and that offering of
the securities at that time as the initial bona fide offering of those
securities.
II-3
<PAGE>
SIGNATURES
In accordance with 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 of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Leawood, State of Kansas, on November 2, 1997.
Gold Banc Corporation, Inc.
/s/ Michael W. Gullion
By___________________________________
Michael W. Gullion
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Gold Banc Corporation, Inc.,
do hereby constitute and appoint Michael W. Gullion and Keith E. Bouchey, and
each of them, our true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for us and in our name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and any additional Registration Statements filed
pursuant to Rule 462(b) under the Securities Act, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and we do hereby ratify and confirm all that said attorneys-in-
fact and agents, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates stated.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ Michael W. Gullion November 2, 1997
- - ------------------------------------
Michael W. Gullion Chief Executive Officer,
President, Director
(principal executive
officer)
/s/ Keith E. Bouchey
- - ------------------------------------
Keith E. Bouchey Chief Financial Officer,
Executive Vice President,
Secretary, Director
(principal financial and
accounting officer) November 2, 1997
/s/ William Wallman November 2, 1997
- - ------------------------------------
William Wallman Director
/s/ D. Michael Browne November 2, 1997
- - ------------------------------------
D. Michael Browne Director
/s/ William F. Wright November 2, 1997
- - ------------------------------------
William F. Wright Director
/s/ Allen D. Petersen November 2, 1997
- - ------------------------------------
Allen D. Petersen Director
</TABLE>
II-4
<PAGE>
$25,000,000*
GBCI CAPITAL TRUST
GOLD BANC CORPORATION, INC.
_____% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
_______ __, 1997
ADVEST, INC.
As Representative of the Several
Underwriters
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
GBCI Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. Section 3801 et
seq.), and Gold Banc Corporation, Inc., a Kansas corporation (the "Company"), as
depositor of the Trust and as guarantor, hereby confirm their agreement with you
and the several underwriters, on whose behalf you have been duly authorized to
act as their representative (the "Representative"), as follows:
SECTION 1. Introduction. The Company agrees, upon the terms and conditions
------------
set forth in this Underwriting Agreement (this "Agreement"), to issue and sell
to the several underwriters identified in Schedule A annexed hereto (the
"Underwriters"), who are acting severally and not jointly, an aggregate
liquidation amount of $25,000,000 (the "Firm Securities") of the Trust's _____%
preferred securities (the "Preferred Securities"). The Trust and the Company
also propose to issue and sell to the
______________________
* Plus an option to acquire up to an additional $3,750,000 aggregate
liquidation amount of Preferred Securities from the Trust to cover over-
allotments.
<PAGE>
Underwriters, at the Underwriters' option, up to an additional $3,750,000
aggregate Liquidation Amount of Preferred Securities (the "Option Securities")
as set forth herein. The term "Preferred Securities" as used herein, unless
indicated otherwise, shall mean the Firm Securities and the Option Securities.
The Preferred Securities and the Common Securities (as defined herein) are
to be issued pursuant to the terms of an Amended and Restated Trust Agreement
dated as of ______ __, 1997 (the "Trust Agreement"), among the Company, as
depositor, and, together with the Trust, the "Offerors," and Bankers Trust
Company ("Trust Company"), a New York banking corporation, as property trustee
("Property Trustee") and Bankers Trust (Delaware) ("Trust Delaware" and,
together with the Trust Company, "Trustees"), a Delaware banking corporation, as
Delaware trustee ("Delaware Trustee") and the holders from time to time of
undivided interests in the assets of the Trust. The Preferred Securities will be
guaranteed by the Company on a subordinated basis and subject to certain
limitations with respect to distributions and payments upon liquidation,
redemption or otherwise (the "Guarantee") pursuant to the Guarantee Agreement
dated as of ______ __, 1997 (the "Guarantee Agreement"), between the Company and
the Trust Company, as Trustee (the "Guarantee Trustee"). The assets of the Trust
will consist of _____% junior subordinated deferrable interest debentures, due
________ __, 2027 (the "Subordinated Debentures") of the Company which will be
issued under a Junior Subordinated Indenture dated as of _____ __, 1997 (the
"Indenture"), between the Company and the Trust Company, as Trustee (the
"Indenture Trustee"). Under certain circumstances, the Subordinated Debentures
will be distributable to the holders of undivided beneficial interests in the
assets of the Trust. The entire proceeds from the sale of the Preferred
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of the Trust's common securities (the "Common Securities"), and
will be used by the Trust to purchase an equivalent amount of the Subordinated
Debentures.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (Nos. 333-__________ and
333-__________-01) and a related preliminary prospectus for the registration of
the Preferred Securities, the Guarantee and the Subordinated Debentures under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Offerors have
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the
- 2 -
<PAGE>
Securities Act by the Commission. The registration statement as amended at the
time it became effective (including the prospectus and all information deemed to
be a part of the registration statement at the time it became effective pursuant
to Rule 430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Date (as defined below), "Registration Statement" shall refer to such
registration statement as so amended. Each prospectus included in the
registration statement, or amendments thereof, before it became effective under
the Securities Act and any prospectus filed with the Commission by the Company
with the consent of the Underwriters pursuant to Rule 424(a) of the Securities
Act Regulations (including the documents incorporated by reference therein) is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means the
final prospectus (including the documents incorporated by reference therein, if
any), as first filed with the Commission pursuant to paragraph (1) or (4) of
Rule 424(b) of the Securities Act Regulations. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus.
SECTION 2. Representations and Warranties. Each of the Offerors represents
------------------------------
and warrants to, and agrees with, each of the Underwriters as follows:
(a) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Kansas with full
power and authority (corporate and other) to own, lease, and operate its
properties and conduct its business as described in the Prospectus (as defined
in Section 2(e) of this Agreement); the Company is duly registered under the
Bank Holding Company Act of 1956, as amended; the Company has no subsidiaries
except those described in the Registration Statement (each a "Subsidiary"); the
Company owns, directly or indirectly, beneficially and of record all of the
outstanding capital stock of each Subsidiary free and clear of any claim, lien,
encumbrance or security interest, except as described in the Prospectus. The
Company and each of its Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which any of them
own or lease properties, has an office, or in which the business conducted by
any of them make such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on the condition (financial or
otherwise), business, prospects, assets, properties, results of operations, or
net worth of the Company and its Subsidiaries taken as a whole ("Material
Adverse Effect"); and no proceeding has been instituted in any jurisdiction
revoking, limiting or curtailing, or seeking to
- 3 -
<PAGE>
revoke, limit or curtail, such power and authority or qualification.
(b) The Preferred Securities have been duly and validly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and, when
executed and authenticated in accordance with the terms of the Trust Agreement
and delivered to the Underwriters against payment of the consideration set forth
herein, will constitute valid and legally binding obligations of the Trust
enforceable in accordance with their terms and entitled to the benefits provided
by the Trust Agreement (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Trust Agreement has been duly authorized
and, when executed by the proper officers of the Trust and delivered by the
Trust, will have been duly executed and delivered by the Trust and will
constitute the valid and legally binding instrument of the Trust, enforceable in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Subordinated Debentures have been duly
and validly authorized for delivery by the Company and, when duly authenticated
in accordance with the terms of the Indenture and delivered to the Trust against
payment of the consideration set forth herein, will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)) and entitled to the benefits provided by the
Indenture. The Indenture has been duly authorized and, when executed by the
proper officers of the Company and delivered by the Company, will have been duly
executed and delivered by the Company and will constitute the valid and legally
binding instrument of the Company, enforceable in accordance with its terms,
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally or general equity principles (whether considered in a proceeding in
equity or at law)). The Guarantee Agreement has been duly authorized and, when
executed by the proper officers of the Company and delivered by the Company,
will have been duly
- 4 -
<PAGE>
executed and delivered by the Company and will constitute the valid and legally
binding instrument of the Company, enforceable in accordance with its terms,
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally or general equity principles (whether considered in a proceeding in
equity or at law)). The Trust Agreement, the Guarantee Agreement, and the
Indenture have been duly qualified under the Trust Indenture Act; and the
Preferred Securities, the Common Securities, the Trust Agreement, the Guarantee
Agreement, the Subordinated Debentures and the Indenture conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(c) Neither the Trust nor the Company or any Subsidiary, is, or with
the giving of notice or lapse of time or both will be, in violation or breach
of, or in default under, nor will the execution or delivery of, or the
performance and consummation of the transactions contemplated by this Agreement
(including the offer, sale, or delivery of the Preferred Securities), conflict
with, or result in a violation or breach of, or constitute a default under, any
provision of the organization documents of the Trust or the Articles of
Incorporation, Bylaws (as amended or restated) of the Company, or other
governing documents of the Trust, the Company or any Subsidiary, or of any
provision of any agreement, contract, mortgage, deed of trust, lease, loan
agreement, indenture, note, bond, or other evidence of indebtedness, or other
material agreement or instrument to which the Trust, the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
properties is subject, nor will the performance by the Offerors of their
obligations hereunder violate any rule, regulation, order, or decree, applicable
to the Trust, the Company or any Subsidiary of any court or any regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Trust, the Company or any Subsidiary or any of their respective properties, or
any order of any court or governmental agency or authority entered in any
proceeding to which the Trust, the Company or any Subsidiary was or is now a
party or by which it is bound, except those, if any, described in the Prospectus
or which are not material to the Company and the Trust taken as a whole. No
consent, approval, filing, authorization, registration, qualification, or order,
including with or by any bank regulatory agency, is required for the execution,
delivery, and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than such that have been
obtained or made, except for compliance with the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Blue Sky Laws
applicable to the public offering of the Preferred Securities by
- 5 -
<PAGE>
the Underwriters, the clearance of such offering and the underwriting
arrangements evidenced hereby with the National Association of Securities
Dealers, Inc. ("NASD"), and the listing of the Preferred Securities on the
Nasdaq Stock Market. This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and constitutes a valid and binding
obligation of the Company and the Trust and is enforceable against the Company
and the Trust in accordance with its terms.
(d) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus complies
in all material respects with the requirements of the Securities Act and the
Securities Act Regulations. As of the effective date of the Registration
Statement, and at all times subsequent thereto up to the Closing Date or any
Option Closing Date (as defined below), the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained or will contain
all material statements that are required to be stated therein in accordance
with the Securities Act and the Securities Act Regulations and conformed or will
conform in all material respects to the requirements of the Securities Act and
the Securities Act Regulations, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto included or will include any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that no representation or warranty is made as
to information contained in or omitted from the Registration Statement, the
Prospectus or any amendment or supplement in reliance upon and in conformity
with written information furnished to the Company and the Trust by or on behalf
of the Underwriters.
(e) KPMG Peat Marwick, LLP, which has audited, reviewed, and
expressed its opinion with respect to certain of the financial statements and
schedules filed with the Commission as a part of the Registration Statement and
included or to be included, as the case may be, in the Prospectus and in the
Registration Statement, and whose report is included in the Prospectus and the
Registration Statement are independent accountants as required by the Securities
Act and the Securities Act Regulations.
(f) The financial statements and schedules and the related notes
thereto included or to be included, as the case may be, in the Registration
Statement, the Preliminary Prospectus, and the Prospectus present fairly the
financial position of the entities purported to be shown thereby as of the
respective dates of such financial statements and schedules, and the results of
operations and changes in equity and in cash flows of the entities purported to
be shown thereby for the respective periods covered
- 6 -
<PAGE>
thereby, all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as may be disclosed
in the Prospectus. All adjustments necessary for a fair presentation of the
results of such periods have been made. The Company had an outstanding
capitalization as set forth under "Capitalization" in the Prospectus as of the
date indicated therein and there has been no material change therein since such
date except as disclosed in the Prospectus. The financial, operating, and
statistical information set forth in the Prospectus under captions "Prospectus
Summary," "Selected Consolidated Financial Data," "Use of Proceeds,"
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business" and "Management" are fairly presented and
prepared on a basis consistent with the audited financial statements of the
Company.
(g) There is no litigation or governmental proceeding, action, or
investigation pending or, to the knowledge of the Trust or the Company,
threatened, to which the Trust, the Company or any Subsidiary is or may be a
party or to which property owned or leased by the Company or any Subsidiary is
or may be subject, or related to environmental or discrimination matters, which
is required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act or the Securities Act Regulations and is not so disclosed, or
which questions the validity of this Agreement or any action taken or to be
taken pursuant hereto.
(h) Either the Company or a Subsidiary, as the case may be, has good
and marketable title in fee simple to all items of real property and good and
marketable title to all the personal properties and assets reflected as owned by
the Company or a Subsidiary in the Prospectus (or elsewhere in the Registration
Statement), in each case clear of all liens, mortgages, pledges, charges, or
encumbrances of any kind or nature except those, if any, reflected in the
financial statements described above (or elsewhere in the Registration
Statement) or which are not material to the Company and its Subsidiaries taken
as a whole; all properties held or used by the Company or a Subsidiary under
leases, licenses, franchises or other agreements are held by them under valid,
existing, binding, and enforceable leases, franchises, licenses, or other
agreements with respect to which it is not in default.
(i) Neither the Trust nor the Company or any Subsidiary has taken or
will take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
stabilization or manipulation, under the Exchange Act or otherwise, of the price
of the Preferred Securities.
- 7 -
<PAGE>
(j) Except as reflected in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and prior to the Closing Date and Option Closing Date (as
such terms are hereinafter defined):
(i) neither the Company nor any Subsidiary has or will have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction not in the ordinary course of business
without the prior consent of the Representative;
(ii) neither the Company nor any Subsidiary has or will have
paid or declared any dividend or other distribution with respect to its capital
stock and neither the Company nor any Subsidiary has or will be delinquent in
the payment of principal or interest on any outstanding debt obligations; and
(iii) there has not been and will not be any change in the
capital stock or any material change in the indebtedness of the Company or any
Subsidiary (except as may result from the closing of the transactions
contemplated by this Agreement), or any adverse change in the condition
(financial or otherwise), or any development involving a prospective adverse
change in their respective businesses (resulting from litigation or otherwise),
prospects, properties, condition (financial or otherwise), net worth, or results
of operations which is material to the Company and its Subsidiaries taken as a
whole.
(k) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or to be
filed as an exhibit to the Registration Statement, by the Securities Act or by
the Securities Act Regulations that has not been described or filed as required.
(l) All documents delivered or to be delivered by the Offerors or any
of their representatives in connection with the issuance and sale of the
Preferred Securities were on the dates on which they were delivered, or will be
on the dates on which they are to be delivered, true, complete, and correct in
all material respects.
(m) The Company and each Subsidiary have filed all necessary federal
and all state and foreign income and franchise tax returns and paid all taxes
shown as due thereon; and no tax deficiency has been asserted or threatened
against the Company or any Subsidiary that would have a Material Adverse Effect,
except as described in the Prospectus.
- 8 -
<PAGE>
(n) Neither the Trust nor the Company or any Subsidiary has, directly
or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation of law; or
(ii) made any payment to any federal, state, local, or foreign
government officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(o) The Company or a Subsidiary owns or possesses adequate rights to
use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, servicemark registrations, copyrights, and licenses
necessary for the conduct of the business of the Company and the Subsidiaries or
ownership of their respective properties, and neither the Company nor any
Subsidiary has received notice of conflict with the asserted rights of others in
respect thereof which has not been resolved.
(p) The Company and each Subsidiary have in place and effective such
policies of insurance, with limits of liability in such amounts, as are normal
and prudent in the ordinary scope of business similar to that of the Company and
such Subsidiary in the respective jurisdiction in which they conduct business.
(q) The Company and each Subsidiary have and hold, and at the Closing
Date or Option Closing Date will have and hold, and are operating in compliance
with, and have fulfilled and performed all of their material obligations with
respect to, all permits, certificates, franchises, grants, easements, consents,
licenses, approvals, charters, registrations, authorizations, and orders
(collectively, "Permits") required under all laws, rules, and regulations in
connection with their respective businesses, and all of such Permits are in full
force and effect; and there is no pending proceeding, and neither the Company
nor any Subsidiary has received notice of any threatened proceeding, relating to
the revocation or modification of any such Permits. Neither the Company nor any
Subsidiary is (by virtue of any action, omission to act, contract to which it is
a party or by which it is bound, or any occurrence or state of facts whatsoever)
in violation of any applicable federal, state, municipal, or local statutes,
laws, ordinances, rules, regulations and/or orders issued pursuant to foreign,
federal, state, municipal, or local statutes, laws, ordinances, rules, or
regulations (including those relating to any aspect of banking, bank holding
companies, environmental protection, occupational safety and health, and equal
employment
- 9 -
<PAGE>
practices) heretofore or currently in effect, except such violation that has
been fully cured or satisfied without recourse or that is not reasonably likely
to have a Material Adverse Effect.
(r) The provisions of any employee pension benefit plan ("Pension
Plan") as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in which the Company or any Subsidiary is a
participating employer are in substantial compliance with ERISA, and neither the
Company nor any Subsidiary is in violation of ERISA. The Company, each
Subsidiary, or the plan sponsor thereof, as the case may be, has duly and timely
filed the reports required to be filed by ERISA in connection with the
maintenance of any Pension Plans in which the Company or any Subsidiary is a
participating employer, and no facts, including any "reportable event" as
defined by ERISA and the regulations thereunder, exist in connection with any
Pension Plan in which the Company or any Subsidiary is a participating employer
which might constitute grounds for the termination of such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate U.S.
District Court of a trustee to administer any such plan. The provisions of any
employee benefit welfare plan, as defined in Section 3(1) of ERISA, in which the
Company or any Subsidiary is a participating employer, are in substantial
compliance with ERISA, and the Company, any Subsidiary, or the plan sponsor
thereof, as the case may be, has duly and timely filed the reports required to
be filed by ERISA in connection with the maintenance of any such plans.
(s) Neither the Company nor the Trust is an open-end investment
company, unit investment trust or face-amount certificate company that is, or is
required to be, registered under Section 8 of the Investment Company Act of
1940, as amended, or subject to regulation under such Act.
(t) The deposits of Exchange National Bank, Provident Bank, f.s.b.,
Farmers National Bank, Peoples National Bank, and Citizens State Bank and Trust
Company are each insured by the Federal Deposit Insurance Corporation ("FDIC")
up to the legal limits.
(u) Neither this Agreement nor any certificate, statement or other
document delivered or to be delivered by the Offerors or any Subsidiary contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
- 10 -
<PAGE>
Any certificate signed by any director or officer of the Company or the
Trust, as the case may be, and delivered to the Representative or to counsel for
the Underwriters shall be deemed a representation and warranty of the Company or
the Trust, as the case may be, to the Underwriters as to the matters covered
thereby.
Any certificate delivered by the Company or the Trust, as the case may be,
to their respective counsel for purposes of enabling such counsel to render an
opinion pursuant to Section 8 will also be furnished to the Representative and
counsel for the Underwriters and shall be deemed to be additional
representations and warranties to the Underwriters by the Company and the Trust
as to the matters covered thereby.
SECTION 3. Purchase Sale and Delivery to Underwriters, Closing. On the
---------------------------------------------------
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Trust and the Company, as the case
may be, agree that the Trust will issue and sell to the Underwriters, and each
of the Underwriters agrees, severally and not jointly to purchase from the
Trust, the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule A at a purchase price of $25 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm Securities
shall be made at the offices of Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C., or at such other place as shall be agreed upon by the
Representative, the Trust and the Company, at 9:00 A.M. Eastern Time, on the
fourth business day (unless postponed in accordance with the provisions of
Section 14) following the date of this Agreement, or such other time not later
than ten (10) business days after such date as shall be agreed upon by the
Representative, the Trust and the Company (such time and date of payment and
delivery being herein called the "Closing Date").
As compensation (the "Underwriting Commission") for the commitments of the
Underwriters contained in this Section 3, the Company hereby agrees to pay to
the Underwriters an amount equal to 4.0% of the public offering price of the
Preferred Securities. Such payment will be made on the Closing Date or on the
Option Closing Date (as defined below) with respect to the Option Securities.
Payment for the Firm Securities shall be made to the Trust by wire transfer
of immediately available funds, against delivery to the Underwriter of the Firm
Securities to be purchased by it. The Firm Securities shall be issued in the
form of one or more fully registered global securities (the "Global Securities")
in
- 11 -
<PAGE>
book-entry form in such denominations and registered in the name of the nominee
of The Depository Trust Company (the "DTC") or in such names as the
Representative may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Securities shall be
made available for examination by the Representative and counsel to the
Underwriters not later than 9:30 A.M. Eastern Time on the last business day
prior to the Closing Date.
In addition, on the basis of the representations, warranties, and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Trust hereby grants to the Underwriters an option to purchase,
severally and not jointly, from the Trust the Option Securities in the same
proportion as the number of Preferred Securities set forth opposite their names
on Schedule A bears to the total number of Firm Securities, at the same purchase
price per Preferred Security to be paid for the Firm Securities, for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Securities. The option granted hereunder may be
exercised at any time (but not more than once) within thirty (30) days after the
date of this Agreement, upon notice by the Representative to the Trust which
sets forth the aggregate liquidation amount of Option Securities as to which the
Underwriters are exercising the option, and the time and place at which the
certificate representing the Option Securities will be delivered. Such time of
delivery may not be earlier than the Closing Date and herein is called the
"Option Closing Date." The Option Closing Date shall be determined by the
Representative, but if at any time other than the Closing Date, shall not be
earlier than three nor later than five full business days after delivery of such
notice to exercise. Certificates for the Option Securities will be made
available for inspection at least 24 hours prior to the Option Closing Date at
the offices of the DTC, or its designated custodian, or at such other location
as specified by the Representative. The manner of payment for a delivery of the
Option Securities shall be the same as for the Firm Securities as specified in
this Section 3.
SECTION 4. Representations and Warranties of the Underwriters. The
--------------------------------------------------
Representative, on behalf of the Underwriters, represents and warrants to the
Company that the information set forth on the inside front cover page of the
Prospectus relating to stabilization and in the third, fifth, and eighth
paragraphs of the section in the Prospectus entitled "Underwriting" was the only
written information furnished to the Company by and on behalf of any Underwriter
expressly for use in connection with the preparation of the Registration
Statement, and is correct and complete in all material respects and does not
include any untrue statement of a material fact or omit to state any material
fact
- 12 -
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading.
SECTION 5. Offering by the Underwriters. The Trust and the Company are
----------------------------
advised by the Representative that the Underwriters propose to make a public
offering of the Preferred Securities, on the terms and conditions set forth in
the Registration Statement from time to time as and when the Underwriters deem
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
SECTION 6. Agreements of the Offerors. Each of the Offerors covenants and
--------------------------
agrees with the Underwriter that:
(a) If any information shall have been omitted from the Registration
Statement in reliance upon Rule 430A, the Company, at the earliest possible
time, will furnish the Representative with a copy of the Prospectus to be filed
by the Offerors with the Commission to comply with Rule 424(b) and Rule 430A
under the Securities Act, and, will file such Prospectus with the Commission in
compliance with such Rules. Upon compliance with such Rules, the Company will so
advise the Representative promptly. The Company will advise the Representative
and counsel to the Underwriters promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, or of any notification
received by the Company of the suspension of qualification of the Preferred
Securities for sale in any jurisdiction or the initiation or threatening of any
proceedings for that purpose. The Company also will advise the Representative
and counsel to the Underwriters promptly of any request of the Commission for
amendment or supplement of the Registration Statement, of any Preliminary
Prospectus, or of the Prospectus, or for additional information, and the
Offerors will not file any amendment or supplement to the Registration Statement
(either before or after it becomes effective), to any Preliminary Prospectus, or
to the Prospectus (including a prospectus filed pursuant to Rule 424(b)) if the
Representative has not been furnished with a copy prior to such filing or if the
Representative reasonably objects to such filing.
(b) For the period during which a Prospectus relating to the
Preferred Securities is required to be delivered under the Securities Act, the
Offerors shall comply with all requirements imposed on them by the Securities
Act, as now and hereafter amended, and by the Securities Act Regulations, as
from time to
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time in force, so far as is necessary to permit the continuance of sales or
dealings in the Preferred Securities as contemplated by the provisions hereof
and the Prospectus. If any event occurs as a result of which the Prospectus,
including any subsequent amendment or supplement, would include an untrue
statement of a material fact, or would omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it
becomes necessary at any time to amend the Prospectus, including any amendment
or supplement thereto, to comply with the Securities Act, the Company promptly
will advise the Representative and counsel to the Underwriters thereof and the
Offerors will promptly prepare and file with the Commission an amendment or
supplement that will correct such statement or omission or an amendment that
will effect such compliance; and, if any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement, the Company, upon request of the Representative but at the expense of
such Underwriter, will prepare promptly such prospectus or prospectuses as may
be necessary to permit compliance with the requirements of Section 10(a)(3) of
the Securities Act.
(c) The Offerors will not, prior to the Option Closing Date or thirty
(30) days after the date of this Agreement, whichever occurs first, without the
prior consent of the Representative, incur any material liability or obligation,
direct or contingent, or enter into any material transaction, other than in the
ordinary course of business, or any transaction with a related party which is
required to be disclosed in the Prospectus pursuant to Item 404 of Regulation S-
K under the Securities Act, except as contemplated by the Prospectus.
(d) The Company will make generally available to its security holders
and the Representative an earnings statement of the Company as soon as
practicable, but in no event later than fifteen (15) months after the end of the
Company's current fiscal quarter, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, but beginning not later than four (4) months after such effective
date, which will satisfy the provisions of the last subsection of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an underwriter or dealer, the Company will
furnish to the Representative, at the expense of the Company, copies of the
Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents in each case as soon as
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available and in such quantities as the Representative may reasonably request,
for the purposes contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or cause to be
taken in cooperation with the Representative and counsel to the Underwriters all
actions required in qualifying or registering the Preferred Securities for sale
under the Blue Sky Laws of such jurisdictions as the Representative may
reasonably designate, provided the Offerors shall not be required to qualify
generally as foreign corporations or as a dealer in securities or to consent
generally to the service of process under the law of any such state (except with
respect to the offering and sale of the Preferred Securities), and will continue
such qualifications or registrations in effect so long as reasonably requested
by the Representative to effect the distribution of the Preferred Securities
(including, without limitation, compliance with all undertakings given pursuant
to such qualifications or registrations). In each jurisdiction where any of the
Preferred Securities shall have been qualified as provided above, the Offerors
will file such reports and statements as may be required to continue such
qualification for a period of not less than one (1) year from the date of this
Agreement.
(g) The Company will furnish to its security holders annual reports
containing financial statements audited by independent public accountants.
During the period ending three (3) years after the date of this Agreement, (i)
as soon as practicable after the end of the fiscal year, the Company will
furnish to the Representative two copies of the annual report of the Company
containing the audited consolidated balance sheet of the Company as of the close
of such fiscal year and corresponding audited consolidated statements of
earnings, stockholders' equity and cash flows for the year then ended, and (ii)
the Company will file promptly and will furnish to the Representative at or
before the filing thereof copies of all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13, 14, or 15 of the Exchange Act. During such three-year
period the Company also will furnish to the Representative one copy of the
following:
(i) as soon as practicable after the filing thereof, each other
report, statement, or other document filed by the Company with the Commission;
(ii) as soon as practicable after the filing thereof, all
reports, statements, other documents and financial statements furnished by the
Company to Nasdaq pursuant to requirements of or agreements with Nasdaq; and
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(iii) as soon as available,each report, statement, or other
document of the Company mailed to its stockholders.
(h) The Offerors will use their best efforts to satisfy or cause to
be satisfied the conditions to the obligations of the Underwriters in Section 8
hereof.
(i) The Offerors shall deliver the requisite notice of issuance to
the NASD and shall take all necessary or appropriate action within its power to
maintain the authorization for trading of the Preferred Securities on the Nasdaq
Stock Market for a period of at least thirty-six (36) months after the date of
this Agreement.
(j) The Trust shall comply in all respects with the undertakings
given by the Trust in connection with the qualification or registration of the
Preferred Securities for offering and sale under the Blue Sky Laws.
(k) The Trust shall apply the proceeds from its sale of the Preferred
Securities, combined with the entire proceeds from the sale by the Trust to the
Company of the Trust's Common Securities, to purchase an equivalent amount of
Subordinated Debentures. All the proceeds to be received by the Company from the
sale of the Subordinated Debentures will be used in the manner and for the
purposes specified under the heading "Use of Proceeds" in the Prospectus. The
Offerors shall file, and will furnish or cause to be furnished to the
Underwriter and counsel to the Underwriters copies of all reports as may be
required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to this
Agreement, neither the Company nor any Subsidiary shall, directly or indirectly,
offer, sell, contract to sell, issue, distribute, grant any option, right, or
warrant to purchase or otherwise dispose of any shares of the Preferred
Securities or substantially similar securities, in the open market or otherwise,
for a period of one hundred eighty (180) days after the later of the effective
date of the Registration Statement or the date of this Agreement, without the
express prior written consent of the Representative.
SECTION 7. Payment of Expenses and Fees
----------------------------
(a) Whether or not the transactions contemplated hereunder are
consummated, or if this Agreement is terminated for any reason, the Company will
pay or cause to be paid the costs, fees, and expenses incurred in connection
with the offering of the Preferred Securities as follows:
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(i) All costs, fees, and expenses incurred in connection with
the performance of the Company and the Trust's obligations hereunder, including
all fees and expenses of the Company and the Trust's accountants and counsel,
all costs and expenses incurred in connection with the preparation, printing,
filing, and distribution (including delivery and shipping costs) of the
Registration Statement, each Preliminary Prospectus, and the Prospectus
(including all amendments and exhibits thereto and the financial statements
therein), and agreements and supplements provided for herein, this Agreement and
other underwriting documents, including various Underwriters' letters, and the
Preliminary and Supplemental Blue Sky Memoranda;
(ii) All filing and registration fees and expenses, including
the legal fees and disbursements of counsel, incurred in connection with
qualifying or registering all or any part of the Preferred Securities, the
Guarantee and the Subordinated Debentures for offer and sale under the Blue Sky
Laws;
(iii) All fees and expenses of the Offerors' registrar and
transfer agent; all transfer taxes, if any, and all other fees and expenses
incurred in connection with the sale and delivery of the Preferred Securities to
the Underwriters;
(iv) The filing fees of the NASD and applicable fees charged by
Nasdaq for inclusion of the Preferred Securities for quotation on the National
Market System; and
(v) All other costs and expenses incident to the performance of
the Company's and the Trust's obligations hereunder which are not otherwise
provided for in this Section 7(a).
(b) On the consummation of the offering of the Preferred Securities,
the Company shall pay Advest, Inc. $25,000 as a financial advisory fee.
SECTION 8. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters under this Agreement shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Trust set forth herein as of the Closing Date, and if applicable, as of the
Option Closing Date, as the case may be, to the accuracy of the statements of
the Offerors' directors and officers, to the performance by the Company and the
Trust of their obligations hereunder, and to the following additional
conditions, except to the extent expressly waived in writing by the
Representative:
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<PAGE>
(a) The Registration Statement and all post-effective amendments
thereto shall have been declared effective by the Commission no later than 5:30
p.m. Eastern Time, on the date of this Agreement, or such later time as shall
have been consented to by the Representative, but in any event not later than
5:30 p.m., Eastern Time, on the third full business day following the date
hereof; if the Offerors omitted information from the Registration Statement at
the time it became effective in reliance on Rule 430A under the Securities Act,
the Prospectus shall have been filed with the Commission in compliance with Rule
424(b) and Rule 430A under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for the issuance of such an order
shall have been initiated or shall be pending or, to the knowledge of the
Offerors or the Representative, threatened or contemplated by the Commission;
and any request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
disclosed to the Representative and complied with to the Representative's
satisfaction.
(b) The Preferred Securities, the Guarantee and the Subordinated
Debentures shall have been qualified or registered for sale, or subject to an
available exemption from such qualification or registration, under the Blue Sky
Laws of such jurisdictions as shall have been reasonably specified by the
Representative and the offering contemplated by this Agreement shall have been
cleared by the NASD.
(c) Since the dates as of which information is given in the
Registration Statement:
(i) There shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the ability
of the Company or any Subsidiary to conduct their respective business (whether
by reason of any court, legislative, other governmental action, order, decree,
or otherwise), or in the general affairs, condition (financial and otherwise)
business, prospects, properties, management, financial position or earnings,
results of operations, or net worth of the Company or any Subsidiary, whether or
not arising from transactions in the ordinary course of business; and
(ii) Neither the Company nor any Subsidiary shall have sustained
any loss or interference from any labor dispute, strike, fire, flood, windstorm,
accident, or other calamity (whether or not insured) or from any court or
governmental action, order, or decree; the effect of which on the Company or any
Subsidiary, in any such case described in clause (c)(i) or (ii) above, is in the
reasonable opinion of the Representative so
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material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Preferred Securities on the terms and
in the manner contemplated in the Registration Statement and the Prospectus.
(d) There shall have been furnished to the Representative on the
Closing Date and the Option Closing Date, except as otherwise expressly provided
below:
(i) An opinion of Blackwell, Sanders, Matheny, Weary &
Lombardi, LLP, counsel to the Company, dated as of the Closing Date and any
Option Closing Date, in form and substance substantially in the form attached
hereto as Exhibit A.
(ii) The favorable opinion, dated the Closing Date and the
Option Closing Date, of White & Case, counsel to the Trust Company and Trust
Delaware, substantially in the form attached hereto as Exhibit B.
(iii) The favorable opinion, dated the Closing Date and the
Option Closing Date, of Richards, Layton & Finger, special Delaware counsel to
the Company and the Trust, substantially to the effect and in the form attached
hereto as Exhibit C.
(iv) The favorable opinion, dated the Closing Date and the
Option Closing Date, of Richards, Layton & Finger, special Delaware counsel to
Trust Delaware, substantially to the effect and in the form attached hereto as
Exhibit D.
(v) The favorable opinion, dated the Closing Date and the
Option Closing Date, of Arnold & Porter, counsel to the Underwriters as to such
matters as the Representative shall reasonably request.
In rendering such opinions specified in clause (d)(ii), (iii) or
(iv) above, counsel may rely upon an opinion or opinions, each dated the Closing
Date and the Option Closing Date, of other counsel retained by them or the
Company as to laws of any jurisdiction other than the United States or the State
of New York, provided that (A) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to the
Representative, and (B) counsel shall state in their opinion that they believe
that they and the Underwriters are justified in relying thereon. Insofar as such
opinions involve factual matters, such counsel may rely, to the extent such
counsel deems proper, upon certificates of officers of the Company, its
subsidiaries and the Trust and certificates of public officials.
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<PAGE>
(e) At the time this Agreement is executed and also on the Closing
Date and the Option Closing Date, as the case may be, there shall be delivered
to the Representative a letter addressed to the Representative from KPMG Peat
Marwick LLP, the Company's independent accountants, the first letter to be dated
the date of this Agreement, the second letter to be dated the Closing Date, and
the third letter to be dated the Option Closing Date, if any, which shall be in
form and substance reasonably satisfactory to the Representative and shall
contain information as of a date within five days of the date of such letter.
There shall not have been any change set forth in any letter referred to in this
subsection (e) that makes it impracticable or inadvisable in the judgment of the
Representative to proceed with the public offering or purchase of the Preferred
Securities as contemplated hereby.
(f) On the Closing Date and on the Option Closing Date, a certificate
signed by the Chairman of the Board, the President, a Vice Chairman of the Board
or any Executive or Senior Vice President and the principal financial or
accounting officer of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, to the effect that the signers of such certificate
have carefully examined the Registration Statement and this Agreement and that:
(i) The representations and warranties of the Offerors in this
Agreement are true and correct in all material respects on and as of the Closing
Date or the Option Closing Date, as the case may be, with the same effect as if
made on the Closing Date or the Option Closing Date, as the case may be, and the
Offerors have complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be; and
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or any
amendment thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and, to the knowledge of the respective
signatories, no proceeding for that purpose has been instituted or is pending or
contemplated under the Securities Act;
(iii) Each of the respective signatories of the certificate has
carefully examined the Registration Statement, the Prospectus, and any
amendments or supplements thereto, and such documents contain all material
statements and information required to be made therein, and neither the
Registration Statement nor any amendment or supplement thereto includes any
untrue statement of a
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<PAGE>
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and, since the date
on which the Registration Statement was initially filed, no event has occurred
that was required to be set forth in an amended or supplemented prospectus or in
an amendment to the Registration Statement that has not been so set forth;
provided, however, that no representation need be made as to information
contained in or omitted from the Registration Statement or any amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company and the Trust by or on behalf of any Underwriter through the
Representative; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there has not been any material adverse
change or a development involving a prospective material adverse change in the
business, properties, financial condition, or earnings of the Company and its
Subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as disclosed in the Registration Statement
as heretofore amended or (but only if the Representative expressly consents
thereto in writing) as disclosed in an amendment or supplement thereto filed
with the Commission and delivered to the Representative after the execution of
this Agreement; since such date and except as so disclosed or in the ordinary
course of business, neither the Company nor any Subsidiary has incurred any
liability or obligation, direct or indirect, or entered into any transaction
that is material to the Company or such Subsidiary, as the case may be, not
contemplated in the Prospectus; since such date and except as so disclosed there
has not been any change in the outstanding capital stock of the Company, or any
change that is material to the Company and its Subsidiaries taken as a whole in
the short-term debt or long-term debt of the Company or any Subsidiary; since
such date and except as so disclosed, neither the Company nor any of its
Subsidiaries have incurred any material contingent obligations, and no material
litigation is pending or, to their knowledge threatened against the Company or
any Subsidiary; and, since such date and except as so disclosed, neither the
Company nor any of its Subsidiaries have sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action, order, or
decree.
(g) Prior to the Closing Date and any Option Closing Date, the
Company shall have furnished to the Representative such further information,
certificates and documents as the Representative may reasonably request in
connection with the offering of the Preferred Securities.
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If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice from the Representative to the Company at any time
without liability on the part of any Underwriters, including the Representative,
or the Company, except for expenses to be paid by the Company pursuant to
Section 7 hereof or reimbursed by the Company pursuant to Section 9 and except
to the extent provided in Section 11.
SECTION 9. Reimbursement of Underwriters' Expenses. If the sale of the
---------------------------------------
Preferred Securities to the Underwriters on the Closing Date is not consummated
because the offering is terminated or indefinitely suspended by the Company or
by the Representative for any reason permitted by this Agreement, other than the
Underwriters' inability to legally act as such, the Company will reimburse the
Representative for the Underwriters' reasonable out-of-pocket expenses,
including fees and disbursements of counsel, that shall have been incurred by
the Underwriters in connection with the proposed purchase and sale of the
Preferred Securities. Any such termination or suspension shall be without
liability of any party to the other except that the provisions of this Section
9, and Sections 7 and 11 shall remain effective and shall apply.
SECTION 10. Maintain Effectiveness of Registration Statement. The
------------------------------------------------
Representative and the Company will use their respective best efforts to prevent
the issuance of any stop order or other such order suspending the effectiveness
of the Registration Statement and, if such stop order is issued, to obtain the
lifting thereof as soon as possible.
SECTION 11. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, expenses, liabilities, or actions in respect thereof ("Claims"), joint
or several to which such Underwriter or each such controlling person may become
subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in settlement
of any litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company or the Trust contained in
this Agreement, any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
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Prospectus, or any amendment or supplement thereto, or in any application filed
under any Blue Sky Law or other document executed by the Offerors for that
purpose or based upon written information furnished by the Offerors and filed in
any state or other jurisdiction to qualify or register any or all of the
Preferred Securities under the securities laws thereof (any such document,
application, or information being hereinafter called a "Blue Sky Application"),
or arise out of or are based upon the omission or alleged omission to state in
any of the foregoing a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Company agrees to reimburse
each Underwriter and each such controlling person promptly for any legal fees or
other expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim or appearing as a
third-party witness in connection with any such Claim; provided, however, that
the Company will not be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto or in any Blue Sky Application in reliance upon
and in conformity with the written information furnished by or on behalf of the
Underwriters to the Offerors expressly for use therein pursuant to Section 4 of
this Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1) any such Claim
suffered or incurred by any Underwriter (or any person who controls such
Underwriter) resulted from an action, claim, or suit by any person who purchased
Preferred Securities that are the subject thereof from such Underwriter in the
offering of the Preferred Securities, and (2) such Underwriter failed to deliver
a copy of the Prospectus (as then amended if the Offerors shall have amended the
Prospectus) to such person at or prior to the confirmation of the sale of such
Preferred Securities in any case where such delivery is required by the
Securities Act, unless such failure was due to failure by the Company to provide
copies of the Prospectus (as so amended) to the Underwriter as required by this
Agreement.
(b) Each Underwriter severally, but not jointly, agrees to indemnify
and hold harmless the Offerors, each of their directors, each of their officers
who sign the Registration Statement, and each person who controls the Company or
the Trust within the meaning of the Securities Act, against any Claim to which
the Offerors, or any such director, officer, or controlling person may become
subject under the Securities Act, the Exchange
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<PAGE>
Act, the Securities Act Regulations, Blue Sky Laws, or other federal or state
statutory laws or regulations, at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter and the Representative, which consent shall not be
unreasonably withheld), insofar as such Claim arises out of or is based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, or arises out
of or is based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or in any Blue Sky Application, in
reliance upon and in conformity with the written information furnished by or on
behalf of such Underwriter to the Offerors pursuant to Section 4 of this
Agreement. Each Underwriter will severally reimburse any legal fees or other
expenses reasonably incurred by the Offerors, or any such director, officer, or
controlling person in connection with investigating or defending any such Claim,
and from any and all Claims resulting from failure of such Underwriter to
deliver a copy of the Prospectus, if the person asserting such Claim purchased
Preferred Securities from such Underwriter and a copy of the Prospectus (as then
amended if the Offerors shall have amended the Prospectus) was not sent or given
by or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
Preferred Securities to such person, and if the Prospectus (as so amended) would
have cured the defect giving rise to such Claim (unless such failure was due to
a failure by the Company and the Trust to provide sufficient copies of the
Prospectuses (as so amended) to each Underwriter).
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) of this Section 11 of notice of the commencement of any action in
respect of a Claim, such indemnified party will, if a Claim in respect thereof
is to be made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof. In case any such
action is brought against any indemnified party, and such indemnified party
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in and, to the extent that it may wish,
jointly with all other indemnifying parties, similarly notified, assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any
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such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be legal
defenses available to the indemnified party and/or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under subsection (a) or (b) of this Section 11 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with the
proviso to the last sentence of subsection (c) of this Section 11 (it being
understood, however, that the indemnified party shall not be liable for the
legal fees and expenses of more than one separate counsel (plus local counsel),
approved by the Representative if one or more of the Underwriters or their
controlling persons are the indemnified parties); or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the indemnified party's notice to the
indemnifying party of commencement of the action.
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party or insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject, to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the Underwriters
on the other hand from the offering of the Preferred Securities; or
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(ii) if the allocation provided by clause (e)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (e)(i) above, but also the
relative fault of the Offerors on the one hand and the Underwriters on the other
hand in connection with the statements or omissions that resulted in such Claim,
as well as any other relevant equitable considerations.
The respective relative benefits received by the Offerors on the one hand
and the Underwriters on the other hand shall be deemed to be in such proportion
that the Underwriters are responsible for that portion of a Claim represented by
the percentage that the amount of the Underwriting Commission bears to the
public offering price of the Preferred Securities, and the Company (including
the Company's directors, officers, and controlling persons) is responsible for
the remaining portion of such Claim.
The relative fault of the Offerors on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Offerors on the one hand or the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by a party
as a result of the Claims referred to above shall be deemed to include, subject
to the limitations set forth in subsections (c) and (d) of this Section 11, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
(f) The Offerors and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined by pro
rata or per capita allocation or by any other method or allocation that does not
take into account the equitable considerations referred to in subsection (e) of
this Section 11. Notwithstanding the other provisions of this Section 11, no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Preferred Securities underwritten by it
and distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligation to contribute pursuant to this
Section 11
- 26 -
<PAGE>
are several in proportion to their respective underwriting commitments and not
joint.
(g) The obligations of the Company, the Trust and the Underwriters
under this Section 11 shall be in addition to any liability that the Company,
the Trust or the Underwriters may otherwise have.
SECTION 12. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and to the obligations of the Trust to sell and deliver the Preferred
Securities hereunder, and to the obligations of each Underwriter to purchase the
Preferred Securities in the manner described herein, that, except as hereinafter
provided in this Section 12, each of the Underwriters (except a defaulting
Underwriter) shall purchase and pay for all the Preferred Securities agreed to
be purchased by such Underwriter hereunder upon tender to the Representative of
all such Preferred Securities in accordance with the terms hereof. If any
Underwriter or Underwriters default in its or their obligations to purchase
Preferred Securities hereunder on either the Closing Date or the Option Closing
Date and the aggregate number of Preferred Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed ten
percent (10%) of the liquidation amount of Preferred Securities the Underwriters
are obligated to purchase on such Closing Date, the Representative may make
arrangements for the purchase of such Preferred Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date or Option Closing Date the nondefaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the Preferred Securities such defaulting Underwriters agreed but failed
to purchase on such Closing Date or Option Closing Date. If any Underwriter or
Underwriters so default and the liquidation amount of Preferred Securities with
respect to which such default or defaults occur is greater than the above
percentage and arrangements satisfactory to the Representative for the purchase
of such Preferred Securities by other person are not made within thirty-six (36)
hours after such default, this Agreement will terminate without liability on the
part of any nondefaulting Underwriter or the Company, except to the extent
provided in Section 11.
If Preferred Securities to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representative or the Company shall have the right to postpone the Closing Date
or Option Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes, if any, in the Registration Statement,
Prospectus, and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the
- 27 -
<PAGE>
term "Underwriter" includes any person substituted for an Underwriter under this
Section 12. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 13. Effective Date. This Agreement shall become effective
--------------
immediately on the date hereof.
SECTION 14. Termination. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representative prior to the Closing Date and the option from
the Company and the Trust referred to in Section 3, if exercised, may be
canceled by the Representative at any time prior to the Option Closing Date, if:
(a) The Offerors shall have failed, refused, or been unable, at or
prior to the Closing Date or Option Closing Date, as the case may be to perform
any agreement on its part to be performed hereunder.
(b) Any other condition to the obligations of the Underwriters
hereunder is not fulfilled; or
(c) In the Representative's reasonable judgment, payment for and
delivery of the Preferred Securities is rendered impracticable or inadvisable
because:
(i) Additional governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established on
any national securities exchange or over-the-counter market, or trading in
securities generally shall have suspended on any national securities exchange or
on the Nasdaq Stock Market, or a general banking moratorium shall have been
established by federal or state authorities;
(ii) Any event shall have occurred or shall exist that makes
untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or that is not reflected in the
Registration Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(iii) Any outbreak or escalation of major hostilities or other
national or international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have accelerated
to such extent, in the Representative's reasonable judgment, as to have a
material adverse effect on the general securities market or make it
impracticable or inadvisable to proceed with completion of the
- 28 -
<PAGE>
sale and payment for the Preferred Securities as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without liability on
the part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid by the Company pursuant to Section 7
or reimbursed by the Company pursuant to Section 9 and except as to
indemnification and contribution to the extent provided in Section 11).
SECTION 15. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnity and contribution agreements of the Company and the
Underwriters, and the representations, warranties, covenants, other statements
of the Offerors and of their directors and officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Offerors, or any
of its or their partners, officers, directors, or any controlling person, as the
case may be, and will survive delivery of and payment for the Preferred
Securities sold hereunder. The respective indemnity and contribution of the
Company and the Underwriters, the provisions of Section 7(a) and Section 9 of
this Agreement, and the representations and warranties of the Offerors will
survive the termination or cancellation of this Agreement.
SECTION 16. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Representative, will be mailed, delivered, or telecopied
(with receipt confirmed) to Advest, Inc., at One Rockefeller Plaza, 20th Floor,
New York, New York 10020, Attention: Thomas G. Rudkin, Managing Director (Fax
No. (212) 584-4292) with a copy to Steven Kaplan, Arnold & Porter, 555 Twelfth
Street, N.W., Washington, D.C. 20004, (Fax No. (202) 942-5999; and if sent to
the Company or the Trust will be mailed, delivered, or telecopied (with receipt
confirmed) to Gold Banc Corporation, Inc., 11301 Nall Avenue, Leawood, Kansas
66211, Attention: Keith E. Bouchey, Executive Vice President and Chief Financial
Officer (Fax No. (913)451-8004) with a copy to Steve F. Carman, Blackwell,
Sanders, Matheny, Weary and Lombardi, LLP, Two Pershing Square, 2300 Main
Street, Suite 1100, P.O. Box 41977, Kansas City, MO 64108 (Fax. No. (816)274-
6914).
SECTION 17. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors or assigns,
and to the benefit of the directors and officers (and their personal
representatives) and controlling persons referred to in Section 11, and no other
person shall acquire or have any right or obligation hereunder. The terms
"successors or assigns," as used in this Agreement, shall
- 29 -
<PAGE>
not include any purchaser of the Preferred Securities from any Underwriter
merely by reason of such purchase.
SECTION 18. Partial Unenforceability. If any section, subsection, clause,
------------------------
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
SECTION 19. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York.
SECTION 20. Entire Agreement. This Agreement embodies the entire
----------------
agreement among the parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements among the parties with respect
to such transactions other than as set forth or provided for herein.
SECTION 21. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed counterparts hereof, whereupon it will
become a binding agreement among the Company, the Trust and the Underwriters,
including the Representative, in accordance with its terms.
Very truly yours,
GOLD BANC CORPORATION, INC.
By:________________________________
Title:_____________________________
GBCI CAPITAL TRUST
By: GOLD BANC CORPORATION, INC.
as Depositor
By:________________________________
Title:______________________________
- 30 -
<PAGE>
ADVEST, INC.
As representative of the several
Underwriters listed in Schedule A.
By:________________________________
Title:_____________________________
- 31 -
<PAGE>
GBCI CAPITAL TRUST
GOLD BANC CORPORATION, INC.
SCHEDULE A
Liquidation Amount of
Firm Securities to be
Name of Underwriter Purchased
------------------- ---------------------
Advest, Inc. .............................. $17,500,000
Aggregate Liquidation Amount............... $__________
<PAGE>
EXHIBIT A
---------
The opinion of special counsel to the Company to be delivered pursuant to
Section 8(d)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation existing and in good standing under the laws
of the State of Kansas, with requisite corporate power and authority to own its
properties and conduct its business as described in the Registration Statement,
except for such power and authority the absence of which would not have a
material adverse effect on the Company, and is registered as bank holding
company under the Bank Holding Company Act of 1956, as amended.
2. The Company and each Subsidiary have been duly incorporated or organized
and are validly existing as corporations or banking associations in good
standing under the laws of the jurisdiction of organization, with full corporate
power and authority to own, lease, and operate their respective properties and
conduct their respective businesses as described in the Registration Statement;
the Company and each Subsidiary are qualified to do business as foreign
corporations under the corporation laws of each jurisdiction in which the
Company or such Subsidiary, as the case may be, owns or leases properties, has
an office, or in which business is conducted and such qualification is required,
except where the failure to so qualify would not have a material adverse effect.
3. The Company and the Trust each has full corporate power and authority to
execute, deliver, and perform the Underwriting Agreement and to issue, sell, and
deliver the Preferred Securities to be sold by it to the Underwriters as
provided herein; the Underwriting Agreement has been duly authorized, executed
and delivered by the Company and the Trust, and constitutes a legal, valid, and
binding obligation of each of the Company and the Trust and is enforceable
against each of the Company and the Trust in accordance with its terms, except
as enforceability of this Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by equitable principles limiting the right to specific
performance or other equitable relief and except as the obligations of the
Company under the indemnification and contribution provisions of
<PAGE>
Section 11 of the Agreement may be limited by laws or unenforceable as against
public policy, as to which no opinion is expressed, and an implied covenant of
good faith and fair dealing.
4. The Trust Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5. The Guarantee Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
6. The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act, and is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
7. The Subordinated Debentures have been duly authorized, executed and
delivered by the Company and when duly authenticated in accordance with the
Indenture and delivered and paid for in accordance with the Junior Subordinated
Debenture Purchase Agreement dated as of _____ __, 1997, by and between the
Company and the Trust, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their
- 2 -
<PAGE>
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
8. The Trust is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in Investment Company Act of
1940, as amended.
9. The statements set forth in the Registration Statement under the captions
"Supervision and Regulation," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures," "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee," insofar as they purport to describe the provisions of the
laws referred to therein, fairly summarize the legal matters described therein.
10. The statements of law or legal conclusions and opinions set forth in the
Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
11. The Registration Statement was declared effective under the Securities Act
as of the date and time specified in such opinion and, to such counsel's
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
12. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be, and in
each case at the Closing Date or any Option Closing Date, complied as to form in
all material respects with the requirements of the Securities Act, the Trust
Indenture Act and the applicable rules and regulations under said acts, and such
counsel has no
- 3 -
<PAGE>
reason to believe that the Registration Statement, at the time it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements contained therein, not
misleading, or that the Prospectus, at the time it was filed with the Commission
or at the Closing Date or any Option Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
13. Such counsel knows of no material legal or governmental proceedings pending
to which the Company or any Subsidiary is a party or of which any property of
the Company or any Subsidiary is the subject which are required to be disclosed
in the Registration Statement or which would affect the consummation of the
transactions contemplated in this Agreement, the Indenture or the Preferred
Securities; and such counsel knows of no such proceedings which are threatened
or contemplated by governmental authorities or threatened by others.
14. Such counsel knows of no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described in the Registration
Statement or to be filed as exhibits thereto other than those described therein
or filed or incorporated by reference as exhibits thereto, and such instruments
as are summarized in the Registration Statement are fairly summarized in all
material respects.
15. No approval, authorization, consent, registration, qualification or other
order of any public board or body is required in connection with the execution
and delivery of this Agreement, the Trust Agreement, the Guarantee Agreement,
and the Indenture or the issuance and sale of the Preferred Securities or the
consummation by the Company of the other transactions contemplated by this
Agreement, the Trust Agreement, the Guarantee Agreement, or the Indenture,
except such as have been obtained under the Securities Act, the Exchange Act and
the Trust Indenture Act or such as may be required under the blue sky or
securities laws of various states in connection with the offering and sale of
the Preferred Securities (as to which such counsel need express no opinion).
- 4 -
<PAGE>
16. The execution and delivery of this Agreement, the Trust Agreement, the
Guarantee Agreement, and the Indenture, the issue and sale of the Preferred
Securities and the Subordinated Debentures, the compliance by the Company with
the provisions of the Preferred Securities, the Subordinated Debentures, the
Indenture and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or constitute a breach of, or
default under, the articles of incorporation or by-laws of the Company or a
breach or default under any contract, indenture, mortgage, loan agreement, note,
lease or other instrument known to such counsel to which either the Company or
any Subsidiary is a party or by which either of them or any of their respective
properties may be bound except for such breaches as would not have a material
adverse effect on the Company and its Subsidiaries considered as one enterprise,
nor will such action result in a violation on the part of the Company or any
Subsidiary of any applicable law or regulation or of any administrative,
regulatory or court decree known to such counsel.
- 5 -
<PAGE>
EXHIBIT B
---------
The opinion of counsel to the Trust Company and Trust Delaware to be delivered
pursuant to Section 8(d)(ii) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the State
of New York.
2. The Indenture Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Indenture, and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Guarantee Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly executed
and delivered by the Indenture Trustee and the Guarantee Trustee, respectively,
and constitutes a legal, valid and binding obligation of the Indenture Trustee
and the Guarantee Trustee, respectively, enforceable against the Indenture
Trustee and the Guarantee Trustee, respectively in accordance with its
respective terms, except that certain payment obligations may be enforceable
solely against the assets of the Trust and except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, liquidation,
fraudulent conveyance and transfer or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and by the effect of applicable public
policy on the
<PAGE>
enforceability of provisions relating to indemnification or contribution.
6. The Subordinated Debentures delivered on the date hereof have been duly
authenticated by the Indenture Trustee in accordance with the terms of the
Indenture.
- 2 -
<PAGE>
EXHIBIT C
---------
The opinion of counsel, as special Delaware counsel to the Company and the Trust
to be delivered pursuant to Section 8(d)(iii) of the Underwriting Agreement
shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good standing as
a business trust under the Delaware Business Trust Act, and all filings required
under the laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a business trust have been made.
2. Under the Delaware Business Trust Act and the Trust Agreement the Trust has
the trust power and authority to own its property and to its conduct its
business, all as described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of the
Company and the Trustees, and is enforceable against the Company and the
Trustees, in accordance with its terms.
4. Under the Delaware Business Trust Act and the Trust Agreement, the Trust
has the trust power and authority (i) to execute and deliver, and to perform its
obligations under, the Underwriting Agreement, and (ii) to issue and perform its
obligations under the Preferred Securities and the Common Securities.
5. Under the Delaware Business Trust Act and the Trust Agreement, the
execution and delivery by the Trust of the Underwriting Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust Agreement
and are duly and validly issued and, subject to the qualifications set forth
herein, fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement. The
Holders, as beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders may be obligated,
<PAGE>
pursuant to the Trust Agreement, (i) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers or
exchanges of Preferred Securities Certificates and the issuance of replacement
Preferred Securities Certificates, and (ii) to provide security or indemnity in
connection with requests of or directions to the Property Trustee to exercise
its rights and powers under the Trust Agreement.
7. Under the Delaware Business Trust Act and the Trust Agreement, the issuance
of the Preferred Securities and Common Securities is not subject to preemptive
rights.
8. The Common Securities have been duly authorized by the Trust Agreement and
are duly and validly issued undivided beneficial interests in the assets of the
Trust and are entitled to the benefits of the Trust Agreement.
9. The issuance and sale by the Trust of the Preferred Securities and Common
Securities, the purchase by the Trust of the Subordinated Debentures, the
execution, delivery and performance by the Trust of the Underwriting Agreement,
the consummation by the Trust of the transactions contemplated by the
Underwriting Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the Certificate of
Trust or the Trust Agreement or (ii) any applicable Delaware law or
administrative regulation.
- 2 -
<PAGE>
EXHIBIT D
---------
The opinion of counsel, as special Delaware counsel to Trust Delaware to be
delivered pursuant to Section 8(d)(iv) of the Underwriting Agreement shall be
substantially to the effect that:
1. Trust Delaware is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the State
of Delaware.
2. The Trust Delaware has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
<PAGE>
________________________________________________________________________________
JUNIOR SUBORDINATED INDENTURE
Between
GOLD BANC CORPORATION, INC.
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
________ __, 1997
________________________________________________________________________________
<PAGE>
GBCI CAPITAL TRUST
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Junior Subordinated
Act Section Indenture Section
- - --------------- -------------------
<S> <C>
Section 310(a)(1).......................................... 6.9
(a)(2).................................... 6.9
(a)(3).................................... Not Applicable
(a)(4).................................... Not Applicable
(a)(5).................................... 6.9
(b)....................................... 6.8, 6.10
Section 311(a) .......................................... 6.13
(b)....................................... 6.13
(b)(2).................................... 7.3(a)
Section 312(a) .......................................... 7.1, 7.2(a)
(b)....................................... 7.2(b)
(c)....................................... 7.2(c)
Section 313(a) .......................................... 7.3(a)
(a)(4).................................... 7.3(a)
(b)....................................... 7.3(b)
(c)....................................... 7.3(a)
(d)....................................... 7.3(c)
Section 314(a) .......................................... 7.4
(b)....................................... 7.4
(c)(1).................................... 1.2
(c)(2).................................... 1.2
(c)(3).................................... Not Applicable
(e)....................................... 1.2
Section 315(a) .......................................... 6.1(a)
(b)....................................... 6.2, 7.3
(c)....................................... 6.1(b)
(d)....................................... 6.1(c)
(e)....................................... 5.14
Section 316(a) .......................................... 5.12
(a)(1)(A)................................. 5.12
(a)(1)(B)................................. 5.13
(a)(2).................................... Not Applicable
(b)....................................... 5.8
(c)....................................... 1.4(f)
Section 317(a)(1).......................................... 5.3
(a)(2).................................... 5.4
(b)....................................... 10.3
Section 318(a) .......................................... 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION.................................... 1
SECTION 1.1. Definitions............................................ 1
SECTION 1.2. Compliance Certificate and Opinions.................... 9
SECTION 1.3. Forms of Documents Delivered to Trustee................ 10
SECTION 1.4. Acts of Holders........................................ 10
SECTION 1.5. Notices, Etc. to Trustee and Company................... 12
SECTION 1.6. Notice to Holders; Waiver.............................. 12
SECTION 1.7. Conflict with Trust Indenture Act...................... 13
SECTION 1.8. Effect of Headings and Table of Contents............... 13
SECTION 1.9. Successors and Assigns................................. 13
SECTION 1.10. Separability Clause.................................... 13
SECTION 1.11. Benefits of Indenture.................................. 13
SECTION 1.12. Governing Law.......................................... 13
SECTION 1.13. Non-Business Days...................................... 14
ARTICLE II. SECURITY FORMS......................................... 14
SECTION 2.1. Forms Generally........................................ 14
SECTION 2.2. Form of Face of Security............................... 15
SECTION 2.3. Form of Reverse of Security............................ 18
SECTION 2.4. Additional Provisions Required in Global Security...... 20
SECTION 2.5. Form of Trustee's Certificate of Authentication........ 21
ARTICLE III. THE SECURITIES......................................... 22
SECTION 3.1. Title and Terms........................................ 22
SECTION 3.2. Denominations.......................................... 22
SECTION 3.3. Execution, Authentication, Delivery and Dating......... 22
SECTION 3.4. Temporary Securities................................... 23
SECTION 3.5. Global Securities...................................... 24
SECTION 3.6. Registration, Transfer and Exchange Generally;
Certain Transfers and Exchanges;
Securities Act Legends................................. 25
SECTION 3.7. Mutilated, Lost and Stolen Securities.................. 27
SECTION 3.8. Payment of Interest and Additional Interest;
Interest Rights Preserved.............................. 28
SECTION 3.9. Persons Deemed Owners.................................. 29
SECTION 3.10. Cancellation........................................... 29
SECTION 3.11. Computation of Interest................................ 30
SECTION 3.12. Deferrals of Interest Payment Dates.................... 30
SECTION 3.13. Right of Set-Off....................................... 31
SECTION 3.14. Agreed Tax Treatment................................... 31
SECTION 3.15. CUSIP Numbers.......................................... 31
SECTION 3.16. Shortening of Stated Maturity.......................... 31
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV. SATISFACTION AND DISCHARGE............................. 31
SECTION 4.1. Satisfaction and Discharge of Indenture................ 31
SECTION 4.2. Application of Trust Money............................. 32
ARTICLE V. REMEDIES............................................... 33
SECTION 5.1. Events of Default...................................... 33
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment..... 33
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee............................. 34
SECTION 5.4. Trustee May File Proofs of Claim....................... 35
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities............................... 36
SECTION 5.6. Application of Money Collected......................... 36
SECTION 5.7. Limitation on Suits.................................... 36
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders
of Preferred Securities................................ 37
SECTION 5.9. Restoration of Rights and Remedies..................... 37
SECTION 5.10. Rights and Remedies Cumulative......................... 37
SECTION 5.11. Delay or Omission Not Waiver........................... 37
SECTION 5.12. Control by Holders..................................... 38
SECTION 5.13. Waiver of Past Defaults................................ 38
SECTION 5.14. Undertaking for Costs.................................. 39
SECTION 5.15. Waiver of Usury, Stay or Extension Laws................ 39
ARTICLE VI. THE TRUSTEE............................................ 39
SECTION 6.1. Certain Duties and Responsibilities.................... 39
SECTION 6.2. Notice of Defaults..................................... 40
SECTION 6.3. Certain Rights of Trustee.............................. 40
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. 41
SECTION 6.5. May Hold Securities.................................... 41
SECTION 6.6. Money Held in Trust.................................... 41
SECTION 6.7. Compensation and Reimbursements........................ 42
SECTION 6.8. Disqualification; Conflicting Interests................ 42
SECTION 6.9. Corporate Trustee Required;
Eligibility............................................ 43
SECTION 6.10. Resignation and Removal; Appointment
of Successor........................................... 43
SECTION 6.11. Acceptance of Appointment by
Successor.............................................. 45
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business................................. 45
SECTION 6.13. Preferential Collection of Claims Against
Company................................................ 45
SECTION 6.14. Appointment of Authenticating Agent.................... 45
ARTICLE VII. HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY............................... 46
SECTION 7.1. Company to Furnish Trustee Names and
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Addresses of Holders................................... 46
SECTION 7.2. Preservation of Information,
Communications to Holders.............................. 47
SECTION 7.3. Reports by Trustee and Paying Agent.................... 47
SECTION 7.4. Reports by Company..................................... 47
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE...................................... 48
SECTION 8.1. Company May Consolidate, Etc., Only
on Certain Terms....................................... 48
SECTION 8.2. Successor Company Substituted.......................... 48
ARTICLE IX. SUPPLEMENTAL INDENTURES................................ 49
SECTION 9.1. Supplemental Indentures Without Consent
of Holders............................................. 49
SECTION 9.2. Supplemental Indentures With Consent of
Holders................................................ 50
SECTION 9.3. Execution of Supplemental Indentures................... 51
SECTION 9.4. Effect of Supplemental Indentures...................... 51
SECTION 9.5. Conformity with Trust Indenture Act.................... 51
SECTION 9.6. Reference in Securities to Supplemental
Indentures............................................. 51
ARTICLE X. COVENANTS.............................................. 51
SECTION 10.1. Payment of Principal, Premium and Interest............. 51
SECTION 10.2. Maintenance of Office or Agency........................ 51
SECTION 10.3. Money for Security Payments to be Held in
Trust.................................................. 52
SECTION 10.4. Statement as to Compliance............................. 53
SECTION 10.5. Waiver of Certain Covenants............................ 53
SECTION 10.6. Additional Sums........................................ 53
SECTION 10.7. Additional Covenants................................... 54
SECTION 10.8. Original Issue Discount................................ 55
ARTICLE XI. REDEMPTION OF SECURITIES............................... 55
SECTION 11.1. Applicability of This Article.......................... 55
SECTION 11.2. Election to Redeem; Notice to Trustee.................. 55
SECTION 11.3. Selection of Securities to be Redeemed................. 55
SECTION 11.4. Notice of Redemption................................... 56
SECTION 11.5. Deposit of Redemption Price............................ 57
SECTION 11.6. Payment of Securities Called for Redemption............ 57
SECTION 11.7. Right of Redemption of Securities
Initially Issued to the Issuer Trust................... 57
ARTICLE XII. SINKING FUNDS.......................................... 58
ARTICLE XIII. SUBORDINATION OF SECURITIES............................ 58
SECTION 13.1. Securities Subordinate to Senior Indebtedness.......... 58
SECTION 13.2. No Payment When Senior Indebtedness
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in Default; Payment Over of Proceeds
Upon Dissolution, Etc................................. 58
SECTION 13.3 Payment Permitted If No Default....................... 59
SECTION 13.4. Subrogation to Rights of Holders of
Senior Indebtedness................................... 60
SECTION 13.5. Provisions Solely to Define Relative Rights........... 60
SECTION 13.6. Trustee to Effectuate Subordination................... 60
SECTION 13.7. No Waiver of Subordination Provisions................. 60
SECTION 13.8. Notice to Trustee..................................... 61
SECTION 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent...................... 61
SECTION 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness................................... 62
SECTION 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights........ 62
SECTION 13.12. Article Applicable to Paying Agents................... 62
SECTION 13.13. Certain Conversions or Exchanges
Deemed Payment........................................ 62
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JUNIOR SUBORDINATED INDENTURE
-----------------------------
THIS JUNIOR SUBORDINATED INDENTURE, dated as of ________ __, 1997, between
GOLD BANC CORPORATION, INC., a Kansas Corporation (the "Company"), having its
principal office at 11301 Nall Avenue, Leawood, Kansas 66211, and BANKERS TRUST
COMPANY, as Trustee, having its principal office at Four Albany Street, 4th
Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its unsecured junior subordinated
debentures due _________ __, ____ (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including Securities issued to
evidence loans made to the Company from the proceeds from the issuance from
time to time by GBCI Capital Trust, a Delaware business trust (the "Issuer
Trust") of undivided preferred beneficial interests in the assets of such
Issuer Trust (the "Preferred Securities") and common undivided interests in the
assets of such Issuer Trust (the "Common Securities" and, collectively with the
Preferred Securities, the "Trust Securities"), and to provide the terms and
conditions upon which the Securities are to be authenticated, issued and
delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders (as such term is defined in Section 1.1 hereof) thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, and intending to be legally
bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;
(2) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
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(3) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect at the time of computation;
(5) Whenever the context may require, any gender shall be deemed to
include the other;
(6) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
(7) The words "hereby", "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities like the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed 25% of the Issuer's Tier 1 capital, or any subsequent limitation adopted
by the Federal Reserve.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each Person
appointed in accordance with the Trust Agreement, solely in such Person's
capacity as Administrator of the Issuer Trust and not in such Person's
individual capacity, or any successor Administrator appointed as therein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Global Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities.
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"Board of Directors" means the board of directors of the Company or the
Executive Committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar
functions) or, for purposes of this Indenture, a committee designated by the
board of directors of the Company (or such committee), comprised of two or more
members of the board of directors of the Company or officers of the Company, or
both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or any Assistant Secretary of the Company to have been duly adopted by the
Board of Directors, or such committee of the Board of Directors or officers of
the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of Kansas or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) a day on which the Corporate Trust Office of the Trustee, or, with
respect to the Securities initially issued to the Issuer Trust, the "Corporate
Trust Office" (as defined in the Trust Agreement) of the Property Trustee or
the Delaware Trustee under the Trust Agreement, is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as such term is defined in the Trust
Agreement) of such Preferred Securities as "Tier 1 Capital" (or the then
equivalent thereof), except as otherwise restricted under the 25% Capital
Limitation, for purposes of the risk-based capital adequacy guidelines of the
Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, no par value per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor entity shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time
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its corporate trust business shall be administered.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Delaware Trustee" in the Trust Agreement, solely in its
capacity as Delaware Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
"Discount Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America that, as
at the time of payment, is legal tender for the payment of public and private
debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
"Event of Default," has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated ________ __, 1997, executed by the Company for the benefit of
the Holders of the Preferred Securities issued by the Issuer Trust as modified,
amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
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"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Securities.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel (as defined in the Trust Agreement) experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or a written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Issuer Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change or prospective change becomes effective or would become effective,
as the case may be, on or after the date of the issuance of the Preferred
Securities of the Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman, Chief Executive Officer, President or Vice President,
and by the Treasurer, an Associate Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Trustee. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with;
provided, however, that the Officers' Certificate delivered pursuant to the
provisions of Section 10.4 hereof shall comply with the provisions of Section
314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for or an employee of the Company or any Affiliate of the Company.
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"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or that have been paid
pursuant to Section 3.6, unless proof satisfactory to the Trustee is
presented that any such Securities are held by Holders in whose hands such
Securities are valid, binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities
owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor (other than, for the
avoidance of doubt, the Issuer Trust to which Securities of the applicable
series were initially issued) shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities that the Trustee
knows to be so owned shall be so disregarded. Securities so owned that have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or
such other obligor (other than, for the avoidance of doubt, the Issuer
Trust). Upon the written request of the Trustee, the Company shall furnish
to the Trustee promptly an Officers' Certificate listing and identifying
all Securities,
the account of the Company, or any other obligor on the Securities or any
Affiliate of the Company or such obligor (other than, for the avoidance of
doubt, the Issuer Trust), and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of or interest on, or other amounts in respect of any
Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, places where the principal of and interest on the
Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated, destroyed,
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lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the Trust Agreement, solely in its
capacity as Property Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture or
the terms of such Security.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities means, unless otherwise provided pursuant to
Section 3.1 with respect to the Securities, the close of business on March 15,
June 15, September 15 or December 15 next preceding such Interest Payment Date
(whether or not a Business Day).
"Responsible Officer", when used with respect to the Property Trustee means
any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and having direct responsibility for the administration of this Indenture, and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance by
the Company to all holders of its Common Stock, no par value per share, of
rights entitling the holders thereof to subscribe for or purchase shares of any
class or series of capital stock of the Company which rights (i) are deemed to
be transferred with such shares of such Common Stock, (ii) are not exercisable,
and (iii) are also issued in respect of future issuances of such Common Stock,
in each case until the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
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"Securities Act" means the Securities Act of 1933, as modified, amended or
supplemented from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion of the
assets of the Company and whether or not contingent, (i) every obligation of
the Company for money borrowed; (ii) every obligation of the Company evidenced
by bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
the Company; (iv) every obligation of the Company issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of the Company; (vi) every obligation of the
Company for claims (as defined in Section 101(4) of the United States
Bankruptcy Code of 1978, as amended) in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vi) of another person and all dividends of another person the payment
of which, in either case, the Company has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise. Senior Indebtedness
shall not include (i) any obligations which, by their terms, are expressly
stated to rank pari passu in right of payment with, or to not be superior in
right of payment to, the Junior Subordinated Debentures, (ii) any Senior
Indebtedness of the Company which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (iii) any indebtedness of the
Company to any of its subsidiaries, (iv) indebtedness to any executive officer
or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or
other entity affiliated with the Company that is a financing entity of the
Company in connection with the issuance of such financing entity of securities
that are similar to the Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is due and
payable, as such date may, in the case of such principal, be shortened or
extended as provided pursuant to the terms of such Security and this Indenture.
"Subsidiary" means an entity more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.7 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
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"Tax Event" means the receipt by the Issuer Trust of an Opinion of Counsel
(as defined in the Trust Agreement) experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is announced
on or after the date of issuance of the Preferred Securities of the Issuer
Trust, there is more than an insubstantial risk that (i) the Issuer Trust is, or
will be within 90 days of the delivery of such Opinion of Counsel, subject to
United States federal income tax with respect to income received or accrued on
the corresponding series of Securities issued by the Company to the Issuer
Trust, (ii) interest payable by the Company on the Securities is not, or within
90 days of the delivery of such Opinion of Counsel will not be, deductible by
the Company, in whole or in part, for United States federal income tax purposes,
or (iii) the Issuer Trust is, or will be within 90 days of the delivery of such
Opinion of Counsel, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated as
of ________ __, 1997, as amended, modified or supplemented from time to time,
among the trustees of the Issuer Trust named therein, the Company, as
depositor, and the holders from time to time of undivided beneficial ownership
interests in the assets of the Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities
shall mean the Trustee with respect to Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as modified,
amended or supplemented from time to time, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President," when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such
certificate or opinion that such individual has read such covenant or
condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions of
such individual contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such
individual, he or she has made such examination or investigation as is
necessary to enable him or her to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such
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instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a Person acting in other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next succeeding paragraph. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as defined below) by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 5.2, (iii) any request to institute proceedings referred to in
Section 5.7(2), or (iv) any direction referred to in Section 5.12, in each case
with respect to Securities. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date,
provided that no such
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action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to
prevent the Trustee from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect) and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Company's expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Expiration Date"
and from time to time may change the Expiration Date to any earlier or later
day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6 on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto that
set such record date shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Preferred
Securities or the Company shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, or
(2) the Company by the Trustee, any Holder or any
holder of Preferred Securities shall be sufficient for every purpose
(except as otherwise provided in Section 5.1) hereunder if in writing and
mailed, first class, postage prepaid, to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
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SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail services or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the Securities, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required thereunder to be a part of and govern
this Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
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<PAGE>
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or the Securities) payment of interest or principal or other
amounts in respect of such Security need not be made on such date, but may be
made on the next succeeding Business Day (and no interest shall accrue in
respect of the amounts whose payment is so delayed for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, until such next succeeding Business Day) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day (in each case with the same force and effect
as if made on the Interest Payment Date or Redemption Date or at the Stated
Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be in
substantially the forms set forth in this Article, or in such other form or
forms as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such securities, as evidenced by their execution of the Securities.
If the form of Securities is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by
Section 3.3 with respect to the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Securities distributed to holders of Global Preferred Securities (as
defined in the Trust Agreement) upon the dissolution of the Issuer Trust shall
be distributed in the form of one or more Global Securities registered in the
name of a Depositary or its nominee, and deposited with the Securities
Registrar, as custodian for such Depositary, or with such Depositary, for credit
by the Depositary to the respective accounts of the beneficial owners of the
Securities represented thereby (or such other accounts as they may direct).
Securities distributed to holders of Preferred Securities other
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than Global Preferred Securities upon the dissolution of the Issuer Trust shall
not be issued in the form of a Global Security or any other form intended to
facilitate book-entry trading in beneficial interests in such Securities.
SECTION 2.2. Form of Face of Security.
GOLD BANC CORPORATION, INC.
___% Junior Subordinated Deferrable Interest Debentures due _______ __, ____
[If the Security is a Restricted Security, insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED
INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $
GOLD BANC CORPORATION, INC., a Kansas corporation (hereinafter called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to GBCI
Capital Trust, or registered assigns, the principal sum of _________ Dollars on
_________ __, ____, or such other principal amount represented hereby as may be
set forth in the records of the Securities Registrar hereinafter referred to in
accordance with the Indenture provided that the Company may shorten the Stated
Maturity of the principal of this Security to a date not earlier than _________
__, ____. The Company further promises to pay interest on said principal from
________ __, 1997, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on March 31, June 30, September 30 and December 31
of each year, commencing _________ __, ____ at the rate of ____% per annum,
together with Additional Sums, if any, as provided in Section 10.6 of the
Indenture, until the principal hereof is paid or duly provided for or made
available for payment; provided that any overdue principal, premium or
Additional Sums and any overdue installment of
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interest shall bear Additional Interest at the rate of ____% per annum (to the
extent that the payment of such interest shall be legally enforceable),
compounded quarterly from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on demand. The
amount of interest payable for any period less than a full interest period shall
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full interest period shall be computed by dividing the
applicable rate per annum by four. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest installment, which shall be the 15th day of March,
June, September and December (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 20
consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid including Additional Interest, as provided below; provided
however, that no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security, as then in effect, and no such Extension Period may
end on a date other than an Interest Payment Date; and provided further,
however, that during any such Extension Period, the Company shall not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, or (ii) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu in all respects with or junior in interest to this Security (other
than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
Subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any Rights Plan, or the
issuance of rights, stock or other property under any Rights Plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension
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Period shall exceed 20 consecutive quarterly interest payment periods, extend
beyond the Stated Maturity of the principal of this Security or end on a date
other than an Interest Payment Date. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest
shall be due and payable during an Extension Period, except at the end thereof,
but each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest (to the extent that
the payment of such interest shall be legally enforceable) at the rate of ____%
per annum, compounded quarterly and calculated as set forth in the first
paragraph of this Security, from the date on which such amounts would otherwise
have been due and payable until paid or made available for payment. The Company
shall give the Holder of this Security and the Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on this Security would be
payable but for such deferral or so long as such securities are held by GBCI
Capital Trust, at least one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions on the Preferred Securities of the Issuer
Trust would be payable but for such deferral, and (ii) the date on which the
Property Trustee of the Issuer Trust is required to give notice to holders of
such Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in the United
States, in such coin or currency of the United States of America of payment is
legal tender for payment of public and private debts; provided however, that at
the option of the Company payment of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register, or (ii) if to a Holder of $1,000,000 or more in aggregate
principal amount of this Security, by wire transfer in immediately available
funds upon written request to the Trustee not later than 15 calendar days prior
to the date on which the interest is payable.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the subordination
so provided, and (c) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each Holder hereof, by his or her acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
GOLD BANC CORPORATION, INC.
By:___________________________________
Name:
Title:
Attest:
______________________________________
Secretary or Assistant Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued under the
Junior Subordinated Indenture, dated as of ________ __, 1997 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities, and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. This security is one of the series designated on the face hereof,
limited in aggregate principal amount to $__________.
All terms used in this Security that are defined in the Indenture or in
the Amended and Restated Trust Agreement dated as of ________ __, 1997 (as
modified, amended or supplemented from time to time the "Trust Agreement"),
relating to GBCI Capital Trust (the "Issuer Trust") among the Company, as
Depositor, the Trustees named therein and the Holders from time to time of the
Trust Securities issued pursuant thereto shall have the meanings assigned to
them in the Indenture or the Trust Agreement, as the case may be.
The Company has the right to redeem this Security (i) on or after
_________ __, ____ in whole at any time or in part from time to time, or (ii) in
whole (but not in part), at any time within 90 days following the occurrence and
during the continuation of a Tax Event, Investment Company Event, or Capital
Treatment Event, in each case at the Redemption Price described below, and
subject to possible regulatory approval. The Redemption Price shall equal 100%
of the principal amount hereof being redeemed, together with accrued interest to
but excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
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[If applicable, insert--The Indenture contains provisions for defeasance
at any time [of the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance by the Company with certain conditions set forth in
the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
[If the Security is not a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare the principal amount
of all the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), provided that, if upon
an Event of Default, the Trustee or such Holders fail to declare the principal
of all the Outstanding Securities to be immediately due and payable, the
holders of at least 25% in aggregate Liquidation Amount of the Preferred
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Company and the Trustee; and upon any such declaration
the principal amount of and the accrued interest (including any Additional
Interest) on all the Securities shall become immediately due and payable,
provided that the payment of principal and interest (including any Additional
Interest) on such Securities shall remain subordinated to the extent provided
in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare an amount of
principal of the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
if upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee. The principal
amount payable upon such acceleration shall be equal to [insert formula for
determining the amount]. Upon any such declaration, such amount of the principal
of and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable, provided that the payment
of such principal and interest (including any Additional Interest) on all the
Securities shall remain subordinated to the extent provided in Article XIII of
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal, premium and interest (in
each case to the extent that the payment of such interest shall be legally
enforceable), all
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of the Company's obligations in respect of the payment of the principal of and
premium and interest, if any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest (including
Additional Interest) on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Securities, of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
SECTION 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
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SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:____________ BANKERS TRUST COMPANY,
as Trustee
By:___________________________
Authorized Signatory
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ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is $__________.
The Securities' Stated Maturity shall be _________ __, ____.
The Securities, established pursuant to a Board Resolution, shall bear
interest at a per annum rate equal to ____% from ________ __, 1997 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable quarterly (subject to deferral as set
forth in Section 3.12), in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing _________ __, ____, until the principal
thereof is paid or made available for payment. Interest will compound
quarterly and will accrue at a per annum rate equal to ____% to the extent
permitted by applicable law, on any interest installment in arrears for more
than one quarterly period or during an extension of an interest payment period
as set forth below in Section 3.12.
The principal of and interest on the Securities shall be payable at the
office or agency of the Paying Agent in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Person entitled thereto as specified in the Security Register.
Securities shall be issuable in whole or in part in the form of one or
more Global Securities and, in such case, the Depositary for such Global
Securities shall be The Depository Trust Company.
The securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $__ and any integral multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced or impressed thereon
and attested by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the
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execution and delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities have been established
by or pursuant to one or more Board Resolutions as permitted by Sections 2.1
and 3.1, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such
terms have been established in conformity with the provisions of this
Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and the preceding
paragraph, if all Securities are not to be originally issued at one time, it
shall not be necessary to deliver the Officers' Certificate otherwise required
pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise
required pursuant to such preceding paragraph at or prior to the authentication
of each Security if such documents are delivered at or prior to the
authentication upon original issuance of the first Security to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
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SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon receipt of a Company Order the Trustee shall authenticate and
deliver, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for that purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more definitive securities, of any
authorized denominations having the same Original Issue Date and Stated
Maturity and having the same terms as such temporary Securities. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary advises the Trustee in writing that
such Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and the
Company is unable to locate a qualified successor within ninety days of receipt
of such notice from the Depositary, (ii) the Company executes and delivers to
the Trustee a Company Order stating that the Company elects to terminate the
book-entry system through the Depositary, or (iii) there shall have occurred
and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Securities Registrar for exchange or cancellation as
provided in this Article III. If any Global Security is to be exchanged for
other Securities or cancelled in part, or if another Security is to be
exchanged in whole or in part for a beneficial interest in any Global Security,
then either (i) such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article III or (ii) the principal amount
thereof shall be reduced, or increased by an amount equal to the portion
thereof to be so exchanged or cancelled, or equal to the principal amount of
such other Security to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of
the Securities Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any
such surrender or adjustment accompanied by registration instructions, the
Trustee shall, subject to Section 3.6(b) and as otherwise provided in this
Article III, authenticate and deliver any Securities issuable in exchange for
such Global Security (or any portion
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thereof) in accordance with the instructions of the Depositary. The Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
agent. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the
offices or agencies of the Company designated for that purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount and bearing such restrictive legends as may be required by
this Indenture, upon surrender of the Securities to be exchanged at such office
or agency. Whenever any securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
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Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15 days
before the day of selection for redemption of Securities pursuant to Article XI
and ending at the close of business on the day of mailing of the notice of
redemption, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such
Security to be redeemed in part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture, transfers and exchanges of Securities and
beneficial interests in a Global Security shall be made only in accordance with
this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the Holder
of a Restricted Security (other than a Global Security) wishes at any
time to transfer all or any portion of such Security to a Person who
wishes to take delivery thereof in the form of a beneficial interest in
a Global Security, such transfer may be effected only in accordance with
the provisions of this clause (b)(i) and subject to the Applicable
Procedures. Upon receipt by the Securities Registrar of (A) such
Security as provided in Section 3.6(a) and instructions satisfactory to
the Securities Registrar directing that a beneficial interest in the
Global Security in a specified principal amount not greater than the
principal amount of such Security be credited to a specified Agent
Member's account and (B) a Restricted Securities Certificate duly
executed by such Holder or such Holder's attorney duly authorized in
writing, then the Securities Registrar shall cancel such Security (and
issue a new Security in respect of any untransferred portion thereof) as
provided in Section 3.6(a) and increase the aggregate principal amount
of the Global Security by the specified principal amount as provided in
Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is
not a Global Security may be transferred, in whole or in part, to a
Person who takes delivery in the form of another Security that is not a
Global Security as provided in Section 3.6(a), provided that if the
Security to be transferred in whole or in part is a Restricted Security,
the Securities Registrar shall have received a Restricted Securities
Certificate duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In the case
of Securities initially issued other than in global form, an initial
transfer or exchange of such Securities that does not involve any change
in beneficial ownership may be made to an Institutional Accredited
Investor or Investors as if such transfer or exchange were not an
initial transfer or exchange; provided that
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written certification shall be provided by the transferee and transferor
of such Securities to the Securities Registrar that such transfer or
exchange does not involve a change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section 3.6(c), a
Security or any portion thereof that is exchanged, upon transfer or otherwise,
for a Global Security or any portion thereof shall bear the Restricted
Securities Legend while represented thereby;
(ii) subject to the following clauses of this Section 3.6(c), a
new Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof, upon
transfer or otherwise, shall, if such new Security is required pursuant to
Section 3.6(b)(ii) or (iii) to be issued in the form of a Restricted Security,
bear a Restricted Securities Legend;
(iii) a new Security (other than a Global Security) that does not
bear a Restricted Security Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof that bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the written direction of the Company in the
form of an Officer's Certificate, shall authenticate and deliver such a new
Security as provided in this Article III;
(iv) notwithstanding the foregoing provisions of this Section
3.6(c), a Successor Security of a Security that does not bear a Restricted
Securities Legend shall not bear such form of legend unless the Company has
reasonable cause to believe that such Successor Security is a "restricted
security" within the meaning of Rule 144, in which case the Trustee, at the
written direction of the Company in the form of an Officer's Certificate, shall
authenticate and deliver a new Security bearing a Restricted Securities Legend
in exchange for such Successor Security as provided in this Article III;
(v) Securities distributed to a holder of Preferred Securities
upon dissolution of an Issuer Trust shall bear a Restricted Securities Legend if
the Preferred Securities so held bear a similar legend.
SECTION 3.7. Mutilated, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security, of like tenor and
aggregate principal amount, bearing the same legends, and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security,
of like tenor and aggregate principal amount and bearing the same legends as
such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
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If any such mutilated, destroyed, lost or stolen Security has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.7, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.8. Payment of Interest and Additional Interest; Interest
Rights Preserved.
Interest and Additional Interest on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities, except that, unless otherwise
provided in the Securities, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security that is issued between a
Regular Record Date and the related Interest Payment Date shall be payable as
provided in such Security or in the Board Resolution pursuant to Section 3.1
with respect to the Securities.
Any interest on any Security that is due and payable, but is not timely
paid or duly provided for, on any Interest Payment Date for Securities (herein
called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities in respect of which interest
is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and which shall be fixed at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the
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proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of a Security at the address of such Holder as
it appears in the Securities Register not less than 10 days prior to
such Special Record Date. The Trustee may, in its discretion, in the
name and at the expense of the Company, cause a similar notice to be
published at least once in a newspaper, customarily published in the
English language on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant to
the following clause (2).
(2) The Company may make payment of any Defaulted Interest in lawful
manner not inconsistent with the requirements of any securities exchange
on which the Securities in respect of which interest is in default may
be listed and, upon such notice as may be required by such exchange (or
by the Trustee if the Securities are not listed), if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this
clause 2, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue interest, that were carried by such other
Security.
SECTION 3.9. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depositary or impair, as between a Depositary and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section, except as expressly
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permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
SECTION 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any partial month in such period, and interest on the Securities for a full
period shall be computed by dividing the rate per annum by the number of
interest periods that together constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of the Securities,
from time to time to defer the payment of interest on such Securities for such
period or periods (each an "Extension Period") not to exceed the number of
consecutive quarterly periods that equal five years with respect to each
Extension Period, during which Extension Periods the Company shall have the
right to make partial payments of interest on any Interest Payment Date. No
Extension Period shall end on a date other than an Interest Payment Date. At the
end of any such Extension Period, the Company shall pay all interest then
accrued and unpaid on the Securities (together with Additional Interest thereon,
if any, at the rate specified for the Securities to the extent permitted by
applicable law); provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of the Securities; and provided further,
however, that, during any such Extension Period, the Company shall not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, or (ii) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu in all respects with or junior in interest to the Securities (other
than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
Subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any Rights Plan, or the
issuance of rights, stock or other property under any Rights Plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no Event of
Default has occurred and is continuing and provided further, that no Extension
Period shall exceed the period or periods specified in such Securities, extend
beyond the Stated Maturity of the principal of such Securities or end on a date
other than an Interest Payment Date. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of
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interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest. The Company shall give the Holders of the
Securities and the Trustee notice of its election to begin any such Extension
Period at least one Business Day prior to the next succeeding Interest Payment
Date on which interest on Securities would be payable but for such deferral or,
with respect to any Securities issued to the Issuer Trust, so long as any such
Securities are held by the Issuer Trust, at least one Business Day prior to the
earlier of (i) the next succeeding date on which Distributions on the Preferred
Securities of the Issuer Trust would be payable but for such deferral, and (ii)
the date on which the Property Trustee of the Issuer Trust is required to give
notice to holders of such Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities.
SECTION 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee relating to
such Security or to a holder of Preferred Securities pursuant to an action
undertaken under Section 5.8 of this Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.15. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notice
of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other materials
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
SECTION 3.16. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity of the
principal of the Securities at any time to any date not earlier than _________
__, ____, provided that the Company shall give notice to the Holders, the
Trustee and, in the case of Securities issued to an Issuer Trust, the Issuer
Trust of such shortening no less than 90 days prior to the effectiveness,
thereof.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 3.7 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,and the Company, in the case of subclause (B)(i), (ii) or
(iii) above, has deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities are payable sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for the principal and
interest (including any Additional Interest) to the date of such
deposit (in the case of Securities that have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the
obligations of the Company to any Authenticating Agent under Section 6.14
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 4.2 and the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
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Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest and
Additional Interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security,
including any Additional Interest in respect thereof, when it becomes due
and payable and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Stated Maturity; or
(3) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Securities or in this Indenture for a period of 90 days after the date on
which written notice of such failure, requiring the Company to remedy the
same, shall have been given to the Company by the Trustee by registered or
certified mail or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Securities; or
(4) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect
to the Company or all or substantially all of its property; or a court or
other governmental agency shall enter a decree or order appointing a
receiver or similar official and such decree or order shall remain unstayed
and undischarged for a period of 60 days; or
(5) any other Event of Default provided with respect to the
Securities.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4)) with respect to Securities at the time Outstanding occurs and is
continuing, then, and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
the principal amount (or, if the Securities are Discount Securities, such
portion of the principal amount as may be specified in the terms) of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, if, upon an
Event of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities fail to declare the principal of all the
Outstanding Securities to be immediately
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due and payable, the holders of at least 25% in aggregate Liquidation Amount (as
defined in the Trust Agreement) of the Preferred Securities issued by the Issuer
Trust then outstanding shall have the right to make such declaration by a notice
in writing to the Company and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable. If an Event of Default specified in Section 5.1(4)
with respect to Securities at the time Outstanding occurs, the principal amount
of all the Securities (or, if the Securities are Discount Securities, such
portion of the principal amount such Securities as may be specified by the
terms) shall automatically, and any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable. Payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII notwithstanding
that such amount shall become immediately due and payable as herein provided.
At any time after Securities has been money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in
aggregate principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest on all Securities;
(B) any accrued Additional Interest on all Securities;
(C) the principal of (and premium, if any, on) any Securities that
have become due otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne by the
Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities, other than the non-
payment of the principal of Securities that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.13.
If the Holders of Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount (as defined
in the Trust Agreement) of Preferred Securities issued by the Issuer Trust then
outstanding shall also have the right to rescind and annul such declaration and
its consequences by written notice to the Company and the Trustee, subject to
the satisfaction of the conditions set forth in clauses (1) and (2) above of
this section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
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(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30 days,
or
(2) default is made in the payment of the principal of (and premium,
if any, on) any Security at the Stated Maturity thereof, the Company will,
upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of the Securities, the whole amount then due and payable on the
Securities for principal and interest (including any Additional Interest),
and, in addition thereto, all amounts owing the Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
monies adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest (including any
Additional Interest)) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal and
interest (including any Additional Interest) owing and unpaid in respect to
the Securities and to file such other papers or documents as may be
necessary or advisable and to take any and all actions as are authorized
under the Trust Indenture Act in order to have the claims of the Holders
and any predecessor to the Trustee under Section 6.7 allowed in any such
judicial or administrative proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any monies or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator,
conservator (or other similar official) in any such judicial or administrative
proceeding is hereby authorized by each Holder to make such payments to the
Trustee for distribution in accordance with Section 5.6, and in the event
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that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it and any predecessor Trustee
under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, subject to
Article XIII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to the Securities pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal or interest
(including any Additional Interest), upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon Securities for principal and interest (including any Additional
Interest) in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and interest (including
any Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities;
(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding
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Securities shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities; it being
understood and intended that no one or more of such Holders shall have any
right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Securities, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal and
Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject to Sections 3.8 and 3.12) interest
(including any Additional Interest) on such Security on the Stated Maturity (or
in the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder. Any registered holder of the Preferred Securities
issued by the Issuer Trust shall have the right, upon the occurrence of an Event
of Default described in Section 5.1(1) or 5.1(2), to institute a suit directly
against the Company for enforcement of payment to such holder of principal of
and (subject to Sections 3.8 and 3.12) interest (including any Additional
Interest) on the Securities having a principal amount equal to the aggregate
Liquidation Amount (as defined in the Trust Agreement) of such Preferred
Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued by
the Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or such
holder of Preferred Securities, then, and in every such case, the Company, the
Trustee, such Holders and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Preferred Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no right
or remedy herein conferred upon or reserved to the Trustee or the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in
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equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security with
respect to the Securities or any holder of any Preferred Security to exercise
any right or remedy accruing upon any Event of Default with respect to the
Securities shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding
so directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities affected thereby and, the holders of a majority in
aggregate Liquidation Amount (as defined in the Trust Agreement) of the
Preferred Securities issued by the Issuer Trust may waive any past default
hereunder and its consequences except a default:
(1) in the payment of the principal of or interest (including any
Additional Interest) on any Security (unless such default has been cured
and the Company has paid to or deposited with the Trustee a sum sufficient
to pay all matured installments of interest (including Additional Interest)
and all principal of all Securities due otherwise than by acceleration), or
(2) in respect of a covenant or provision hereof that under Article
IX cannot be modified or amended without the consent of each Holder of any
Outstanding Security affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities, or in the case of waiver by holders of Preferred Securities issued
by the Issuer Trust, by all holders of Preferred Securities issued by the Issuer
Trust.
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Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of or interest (including any Additional Interest) on
any Security on or after the Stated Maturity.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture, but in
the case of any such certificates or opinions that by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
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(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of Holders pursuant to Section 5.12 relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of or
interest (including any Additional Interest) on any Security, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Securities; and
provided further, that, in the case of any default of the character specified in
Section 5.1(3), no such notice to Holders of Securities shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default with respect to the Securities.
SECTION 6.3. Certain Rights
Subject to the provisions of Section 6.1:
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(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
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SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder in such amounts as the
Company and the Trustee shall agree from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense disbursement or advance as may be attributable to its
negligence or bad faith.
(c) Since the Issuer Trust is being formed solely to facilitate an
investment in the Preferred Securities, the Company, as Holder of the Common
Securities, hereby covenants to pay all debts and obligations (other than with
respect to the Preferred Securities and the Common Securities) and all
reasonable costs and expenses of the Issuer Trust (including without limitation
all costs and expenses relating to the organization of the Issuer Trust, the
fees and expenses of the trustees and all reasonable costs and expenses relating
to the operation of the Issuer Trust) and to pay any and all taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed on the Issuer Trust by the United States, or any taxing
authority, so that the net amounts received and retained by the Issuer Trust and
the Property Trustee after paying such expenses will be equal to the amounts the
Issuer Trust and the Property Trustee would have received had no such costs or
expenses been incurred by or imposed on the Issuer Trust. The foregoing
obligations of the Company are for the benefit of, and shall be enforceable by,
any person to whom any such debts, obligations, costs, expenses and taxes are
owed (each, a "Creditor") whether or not such Creditor has received notice
thereof. Any such Creditor may enforce such obligations directly against the
Company, and the Company irrevocably waives any right or remedy to require that
any such Creditor take any action against the Issuer Trust or any other person
before proceeding against the Company. The Company shall execute such additional
agreements as may be necessary or desirable to give full effect to the
foregoing.
(d) The Company shall indemnify the Trustee, its directors, officers,
employees and agents for, and hold them harmless against, any loss, liability
or expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence or bad
faith, arising out of or in connection with the acceptance or administration of
this trust or the performance of its duties hereunder, including the reasonable
costs and expenses of
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defending against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. This indemnification shall
survive the termination of this Indenture or the resignation or removal of the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under the
Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to the
provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall
prevent the Trustee from filing with the Commission the application referred to
in the second to last paragraph of said Section 310(b).
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) an entity organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or District
of Columbia authority, or
(b) an entity or other Person organized and doing business under the laws
of a foreign government that is permitted to act as Trustee pursuant to a rule,
regulation or order of the Commission, authorized under such laws to exercise
corporate trust powers, and subject to supervision or examination by authority
of such foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional trustees; in either case having a combined capital and surplus of
at least $50,000,000, subject to supervision or examination by federal or state
authority. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then, for the purposes of this Section, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. Neither the Company nor any Person
directly or indirectly controlling, controlled by or under common control with
the Company shall serve as Trustee for the Securities issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities by
giving written notice thereof to the Company. If an instrument of acceptance by
a successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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(c) The Trustee may be removed at any time with respect to the Securities
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company, acting pursuant to the authority of
a Board Resolution, may remove the Trustee with respect to the Securities
issued hereunder, or (ii) subject to Section 5.14, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of such
Holder and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to the Securities
issued hereunder and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee with respect to the Securities. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities shall be appointed by Act of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Securities and supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has been
a bona fide Holder of a Security for at least six months may, subject to Section
5.14, on behalf of such Holder and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities and each appointment of a successor
Trustee with respect to the Securities by mailing written notice of such event
by first-class mail, postage prepaid, to the Holders of Securities as their
names and addresses appear in the Securities Register. Each notice shall
include the name of the successor Trustee with respect to the Securities and
the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
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removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in
paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless, at the time
of such acceptance, such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such entity shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated, and in case any Securities shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of any predecessor Trustee or in the name of such successor
Trustee, and in all cases the certificate of authentication shall have the full
force which it is provided anywhere in the Securities or in this Indenture that
the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
the Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be an entity organized and doing business under the laws of the United
States of America, or of any state or territory thereof or of the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said
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supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any entity into which an Authenticating Agent may be merged or converted
with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any entity succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder, provided such entity shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payment, subject to the provisions
of Section 6.7.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:__________________________ BANKERS TRUST COMPANY,
as Trustee
By: _____________________________
As Authenticating Agent
Name:
Title:
By: _____________________________
As Authenticating Agent
Name:
Title:
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Title:
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after March 15, June 15,
September 15, and December 15 in each year, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of such
dates, excluding from any such list names and addresses received by the Trustee
in its capacity as Securities Registrar, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days of January 31 in each
calendar year, commencing with the first January 31 after the issuance of
Securities under this Indenture.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which any Securities are listed and also with the
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Commission. The Company will notify the Trustee when any Securities are listed
on any securities exchange.
(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder
with respect to payments on, or with respect to, the Securities.
SECTION 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed with
the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange Act,
the Company shall file or cause the filing of such information documents or
reports with the Trustee within 15 days after the same is required to be filed
with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:
(1) If the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
assets of the Company substantially as an entirety shall be an entity
organized and existing under the laws of the United States of America or
any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of , and interest (including any Additional
Interest) on all the Securities of every series and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event that, after notice or lapse of time, or
both, would constitute an Event of Default, shall have occurred and be
continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of a transaction subject to this Section
8.1 but not requiring a supplemental indenture under paragraph (1) of
this Section 8.1, an Officer's Certificate or Opinion of Counsel to the
effect that the surviving, resulting or successor entity is legally
bound by the Indenture and the Securities; and
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the Trustee, subject to Section 6.1, may rely upon such Officers'
Certificates and Opinions of Counsel as conclusive evidence that such
transaction complies with this Section 8.1.
SECTION 8.2. Successor Company Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with
Section 8.1, the successor entity formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Company, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver
any Securities that previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication pursuant to such
provisions and any Securities that such successor Person thereafter shall cause
to be executed and delivered to the Trustee on its behalf for the purpose
pursuant to such provisions. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Securities thereafter to
be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may amend
or waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to facilitate the issuance of Securities in certificated or other
definitive form; or
(4) to add to the covenants of the Company for the benefit of the
Holders of the Securities or to surrender any right or power herein conferred
upon the Company; or
(5) to add any additional Events of Default for the benefit of the
Holders of the Securities; or
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(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall not apply to any Outstanding
Securities; or
(7) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities in any material
respect or, in the case of the Securities issued to the Issuer Trust and for so
long as any of the Preferred Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Preferred Securities; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce
the amount of principal of a Discount Security that would be due and
payable upon a declaration of acceleration of the Stated Maturity
thereof pursuant to Section 5.2, or change the place of payment where,
or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in aggregate principal amount of
the Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Section, Section
5.13 or Section 10.5, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security
affected thereby;
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provided, further, that, in the case of the Securities issued to the
Issuer Trust, so long as any of the Preferred Securities issued by the
Issuer Trust remains outstanding, (i) no such amendment shall be made
that adversely affects the holders of such Preferred Securities in any
material respect, and no termination of this Indenture shall occur, and
no waiver of any Event of Default or compliance with any covenant under
this Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount (as
defined in the Trust Agreement) of such Preferred Securities then
outstanding unless and until the principal of (and premium, if any, on)
the Securities and all accrued and (subject to Section 3.8) unpaid
interest (including any Additional Interest) thereon have been paid in
full, and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Preferred
Securities issued by the Issuer Trust provided therein without the prior
consent of the holders of each such Preferred Security then outstanding
unless and until the principal of (and premium, if any, on) the
Securities of such series and all accrued and (subject to Section 3.8)
unpaid interest (including any Additional Interest) thereon have been
paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
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ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal and Interest.
The Company covenants and agrees for the benefit of the Securities that
it will duly and punctually pay the principal of and interest (including any
Additional Interest) on the Securities in accordance with the terms of such
Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail
to maintain such office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to the Securities, it will, on or before each due date of the principal
of or interest (including Additional Interest) on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest (including Additional Interest)
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to 10:00 a.m., New York City time, on each due date of the principal of or
interest, including Additional Interest on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal or interest, including Additional
Interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal or interest, including Additional Interest,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal of or
interest (including Additional Interest) on the Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon such Securities) in the making of any payment of principal or
interest (including Additional Interest) in respect of any Security;
(3) at any time during the continuance of any default with respect to
the Securities, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent.
The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company in trust for the payment of the principal of or interest
(including Additional Interest) on any Security and remaining unclaimed for two
years after such principal or interest (including Additional Interest) has
become due and payable shall (unless otherwise required by mandatory provision
of applicable escheat or abandoned or unclaimed property law) be paid on Company
Request to the Company, or (if then held by the Company) shall (unless otherwise
required by mandatory provision of applicable escheat or abandoned or unclaimed
property law) be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, the City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof of the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
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SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or
9.1(4) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company in respect of any such
covenant or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and except
as otherwise specified as contemplated by Section 2.1 or Section 3.1, if (i) the
Issuer Trust is the Holder of all of the Outstanding Securities, and (ii) a Tax
Event described in clause (i) or (iii) of the definition of "Tax Event" in
Section 1.1 hereof has occurred and is continuing in respect of the Issuer
Trust, the Company shall pay the Issuer Trust (and its permitted successors or
assigns under the Trust Agreement) for so long as the Issuer Trust (or its
permitted successor or assignee) is the registered holder of the Outstanding
Securities, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amounts (as defined in the Trust
Agreement)) then due and payable by the Issuer Trust on the Preferred Securities
and Common Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of such Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.12 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that it
shall not (i) declare or pay any dividends or distributions on, or redeem
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Securities (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period
or other event referred to below, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of
a Subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital
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stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any Rights Plan, or the issuance of rights, stock or
other property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock) if at
such time (i) there shall have occurred any event (A) of which the Company has
actual knowledge that with the giving of notice or the lapse of time, or both,
would constitute an Event of Default with respect to the Securities, and (B)
which the Company shall not have taken reasonable steps to cure, (ii) if the
Securities are held by the Issuer Trust, the Company shall be in default with
respect to its payment of any obligations under the Guarantee relating to the
Preferred Securities issued by the Issuer Trust, or (iii) the Company shall have
given notice of its election to begin an Extension Period with respect to the
Securities as provided herein and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
The Company also covenants with each Holder Issuer Trust (i) to hold,
directly or indirectly, 100% of the Common Securities of the Issuer Trust,
provided that any permitted successor of the Company as provided under Section
8.2 may succeed to the Company's ownership of such Common Securities, (ii) as
holder of such Common Securities, not to voluntarily terminate, windup or
liquidate the Issuer Trust, other than (a) in connection with a distribution of
the Securities to the holders of the Preferred Securities in liquidation of the
Issuer Trust, or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, and (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Issuer Trust to continue not to be taxable as a corporation for United
States federal income tax purposes.
SECTION 10.8. Original Issue Discount.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying
Agent may prepare the information which it is required to report for such year
on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each authorized
minimum denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with such
form of Security and this Article; provided, however, that, if any provision of
any such form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern.
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SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election
of the Company, the Company shall, not less than 30 nor more than 60 days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities held by the Issuer
Trust, the Property Trustee under the Trust Agreement, of such date and of the
principal amount of Securities to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section 11.4; provided that, for so long as such Securities are held by the
Issuer Trust, such notice shall be given not less than 45 nor more than 75 days
prior to such Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the Trust Agreement). In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (if such an
estimate of the Redemption Price is given, a subsequent notice shall be given as
set forth above setting forth the Redemption Price promptly following the
calculation thereof);
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(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Securities to be redeemed;
(d) that, on the Redemption Date, the Redemption Price will become
due and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price;
(f) such other provisions as may be required in respect of the terms
of the Securities; and
(g) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.3) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record
dates according to their terms and the provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a new Security or Securities, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated
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Maturity and terms.
If any Security called for redemption shall not be so paid under
surrender thereof for redemption, the principal of and premium, if any, on such
Security shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
SECTION 11.7. Right of Redemption of Securities Initially Issued to
the Issuer Trust.
The Company, at its option, may redeem such Securities (i) on or after
_________ __, ____, in whole at any time or in part from time to time, or (ii)
upon the occurrence and during the continuation of a Tax Event, an Investment
Company Event or a Capital Treatment Event, at any time within 90 days
following the occurrence and during the continuation of such Tax Event,
Investment Company Event or Capital Treatment Event, in whole (but not in
part), in each case at a Redemption Price specified in such Security, together
with accrued interest (including Additional Interest) to the Redemption Date.
If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of and interest (including any Additional Interest) on each and all of the
Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
If the Company shall default in the payment of any principal of or
interest on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration of
acceleration or otherwise, then, upon written notice of such default to the
Company by the holders of Senior Indebtedness or any trustee therefor, unless
and until such default shall have been cured or waived or shall have ceased to
exist, no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) shall be made or agreed to be made on account of the principal of
or interest (including Additional Interest) on any of the Securities, or in
respect of any redemption, repayment, retirement, purchase or other acquisition
of any of the Securities.
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In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company (each such event, if
any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other entity
provided for by a plan of reorganization or is subordinate, at least to the
extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities shall be paid or delivered directly to the holders of
Senior Indebtedness in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the Securities, shall be entitled to be paid from the remaining assets of
the Company the amounts at the time due and owing on account of unpaid principal
of and interest on the Securities and such other obligations before any payment
or other distribution, whether in cash, property or otherwise, shall be made on
account of any capital stock or any obligations of the Company ranking junior to
the Securities, and such other obligations. If, notwithstanding the foregoing,
any payment or distribution of any character or any security, whether in cash,
securities or other property (other than securities of the Company or any other
entity provided for by a plan of reorganization or readjustment the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any plan of reorganization or readjustment),
shall be received by the Trustee or any Holder in contravention of any of the
terms hereof and before all Senior Indebtedness shall have been paid in full,
such payment or distribution or security shall be received in trust for the
benefit of, and shall be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
such Senior Indebtedness in full. In the event of the failure of the Trustee or
any Holder to endorse or assign any such payment, distribution or security, each
holder of Senior Indebtedness is hereby irrevocably authorized to endorse or
assign the same.
The Trustee and the Holders shall take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of
Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of
a majority in principal amount of the Senior Indebtedness at the time
outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
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The securing of any obligations of the Company, otherwise ranking on a
parity with the Securities or ranking junior to the Securities shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time, except during
the pendency of the conditions described in the first paragraph of Section 13.2
or of any Proceeding referred to in Section 13.2, from making payments at any
time of principal of or interest (including Additional Interest) on the
Securities, or (b) the application by the Trustee of any monies deposited with
it hereunder to the payment of or on account of the principal of or interest
(including any Additional Interest) on the Securities or the retention of such
payment by the Holders, if, at the time of such application by the Trustee, it
did not have knowledge that such payment would have been prohibited by the
provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company that by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium if any) and interest (including Additional Interest) on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as between the Company and the Holders of the
Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
(or to the extent expressly provided herein, the holder of any Preferred
Security) from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, including filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article of
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the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of such Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extent the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 13.8. Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment to or by the Trustee in respect of the Securities. Notwithstanding
the provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any
trustee, agent or representative therefor; provided, however, that if the
Trustee shall not have received the notice provided for in this Section at
least two Business Days prior to the date upon which by the terms hereof any
monies may become payable for any purpose (including, the payment of the
principal of (and premium, if any, on) or interest (including any Additional
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing or
herself to be a holder of Senior Indebtedness (or
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a trustee or attorney-in-fact therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
Person cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
SECTION 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on
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account of the principal of (or premium, if any, on) or interest (including any
Additional Interest) on such Securities or on account of the purchase or other
acquisition of such Securities, and (b) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion or
exchange of a Security shall be deemed to constitute payment on account of the
principal of such security. For the purposes of this Section, the term "junior
securities" means (i) shares of any stock of any class of the Company, and (ii)
securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[Remainder of page left intentionally blank; signatures appear on following
page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest:____________ GOLD BANC CORPORATION, INC.
By:_______________________________
Name:
Title:
Attest:____________ BANKERS TRUST COMPANY, as
Trustee
By:_______________________________
Name:
Title:
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================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
GOLD BANC CORPORATION, INC.
BANKERS TRUST COMPANY
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of ___________ __, 1997
GBCI CAPITAL TRUST
================================================================================
<PAGE>
GBCI CAPITAL TRUST
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
-------------- ---------------
Section 310(a)(1)................................................. 8.7
(a)(2)........................................................ 8.7
(a)(3)........................................................ 8.9
(a)(4)................................................. 2.7(a)(ii)
(b)................................................. 8.8, 10.10(b)
Section 311(a)......................................... 8.13, 10.10(b)
Section 312(a)............................................... 10.10(b)
(b)..................................................10.10(b), (f)
(c)........................................................... 5.7
Section 313(a)................................................ 8.15(a)
(a)(4)....................................................10.10(c)
(b)............................................. 8.15(c), 10.10(c)
(c)................................................ 10.8, 10.10(c)
(d)...................................................... 10.10(c)
Section 314(a)......................................... 8.16, 10.10(d)
(b)................................................ Not Applicable
(c)(1)........................................ 8.17, 10.10(d), (e)
(c)(2)........................................ 8.17, 10.10(d), (e)
(c)(3)........................................ 8.17, 10.10(d), (e)
(e)................................................ 8.17, 10.10(e)
Section 315(a)................................................. 8.1(d)
(b)........................................................... 8.2
(c)........................................................ 8.1(c)
(d)........................................................ 8.1(d)
(e)................................................ Not Applicable
Section 316(a)......................................... Not Applicable
(a)(1)(A).......................................... Not Applicable
(a)(1)(B).......................................... Not Applicable
(a)(2)............................................. Not Applicable
(b).......................................................... 5.13
(c)........................................................... 6.7
Section 317(a)(1)...................................... Not Applicable
(a)(2)....................................................... 8.14
(b).......................................................... 5.10
<PAGE>
Section 318(a)............................................... 10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
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ARTICLE I. DEFINED TERMS
SECTION 1.1. Definitions.................................................................................. 1
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name......................................................................................... 11
SECTION 2.2. Office of the Delaware Trustee;
Principal Place of Business................................................................. 11
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses..................................................................... 11
SECTION 2.4. Issuance of the Preferred Securities......................................................... 12
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures..................................................................... 12
SECTION 2.6. Declaration of Trust......................................................................... 13
SECTION 2.7. Authorization to Enter into Certain
Transactions................................................................................ 13
SECTION 2.8. Assets of Trust.............................................................................. 16
SECTION 2.9. Title to Trust Property...................................................................... 16
ARTICLE III. PAYMENT ACCOUNT
SECTION 3.1. Payment Account.............................................................................. 16
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions................................................................................ 17
SECTION 4.2. Redemption................................................................................... 18
SECTION 4.3. Subordination of Common Securities........................................................... 20
SECTION 4.4. Payment Procedures........................................................................... 20
SECTION 4.5. Tax Returns and Reports...................................................................... 21
SECTION 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust......................................................................... 21
SECTION 4.7. Payments under Indenture or Pursuant
to Direct Actions........................................................................... 21
SECTION 4.8. Liability of the Holder of Common
Securities.................................................................................. 21
ARTICLE V. TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership............................................................................ 22
SECTION 5.2. The Trust Securities Certificates............................................................ 22
SECTION 5.3. Execution and Delivery of Trust
Securities Certificates..................................................................... 22
SECTION 5.4. Global Preferred Security.................................................................... 22
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities
Certificates................................................................................ 24
</TABLE>
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<TABLE>
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SECTION 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates................................................................... 25
SECTION 5.7. Persons Deemed Holders........................................................................... 25
SECTION 5.8. Access to List of Holders'
Names and Addresses............................................................................. 26
SECTION 5.9. Maintenance of Office or Agency.................................................................. 26
SECTION 5.10. Appointment of Paying Agent...................................................................... 26
SECTION 5.11. Ownership of Common Securities
by Depositor.................................................................................... 26
SECTION 5.12. Notices to Clearing Agency....................................................................... 27
SECTION 5.13. Rights of Holders................................................................................ 27
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting
Rights.......................................................................................... 29
SECTION 6.2. Notice of Meetings............................................................................... 30
SECTION 6.3. Meetings of Holders.............................................................................. 30
SECTION 6.4. Voting Rights.................................................................................... 31
SECTION 6.5. Proxies, etc..................................................................................... 31
SECTION 6.6. Holder Action by Written Consent................................................................. 31
SECTION 6.7. Record Date for Voting and Other
Purposes........................................................................................ 31
SECTION 6.8. Acts of Holders.................................................................................. 31
SECTION 6.9. Inspection of Records............................................................................ 32
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee............................................................................ 33
SECTION 7.2. Representations and Warranties of
Depositor....................................................................................... 34
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.............................................................. 34
SECTION 8.2. Certain Notices.................................................................................. 36
SECTION 8.3. Certain Rights of Property Trustee............................................................... 37
SECTION 8.4. Not Responsible for Recitals
or Issuance of Securities....................................................................... 38
SECTION 8.5. May Hold Securities.............................................................................. 38
SECTION 8.6. Compensation; Indemnity; Fees.................................................................... 38
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators.................................................................................. 40
SECTION 8.8. Conflicting Interests............................................................................ 40
SECTION 8.9. Co-Trustees and Separate Trustee................................................................. 40
SECTION 8.10. Resignation and Removal; Appointment
of Successor.................................................................................... 42
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.11. Acceptance of Appointment by
Successor....................................................................................... 43
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business.......................................................................... 43
SECTION 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust............................................................... 43
SECTION 8.14. Trustee May File Proofs of Claim................................................................. 43
SECTION 8.15. Reports by Property Trustee...................................................................... 44
SECTION 8.16. Reports to the Property Trustee.................................................................. 45
SECTION 8.17. Evidence of Compliance with Conditions
Precedent....................................................................................... 45
SECTION 8.18. Number of Issuer Trustees........................................................................ 45
SECTION 8.19. Delegation of Power.............................................................................. 45
SECTION 8.20. Appointment of Administrators.................................................................... 45
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date................................................................. 46
SECTION 9.2. Early Termination................................................................................ 46
SECTION 9.3. Dissolution...................................................................................... 47
SECTION 9.4. Liquidation...................................................................................... 47
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust............................................................. 48
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.................................................................. 49
SECTION 10.2. Amendment........................................................................................ 50
SECTION 10.3. Separability..................................................................................... 51
SECTION 10.4. Governing Law.................................................................................... 51
SECTION 10.5. Payments Due on Non-Business Day................................................................. 51
SECTION 10.6. Successors....................................................................................... 51
SECTION 10.7. Headings......................................................................................... 51
SECTION 10.8. Reports, Notices and Demands..................................................................... 51
SECTION 10.9. Agreement Not to Petition........................................................................ 52
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act............................................................................. 52
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture......................................................................... 54
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
</TABLE>
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<PAGE>
AGREEMENT
Amended and Restated Trust Agreement, dated as of ___________ __, 1997,
among (i) Gold Banc Corporation, Inc., a Kansas corporation (including any
successors or assigns, the "Depositor"), (ii) Bankers Trust Company, a New York
banking corporation, as property trustee, (in such capacity, the "Property
Trustee" and, in its separate corporate capacity and not in its capacity as
Property Trustee, the "Bank"), and (iii) Bankers Trust (Delaware), a Delaware
banking corporation, as Delaware trustee (the "Delaware Trustee") (the Property
Trustee and the Delaware Trustee are referred to collectively herein as the
"Issuer Trustees") and (iv) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as
of _________ __, 1997 (the "Original Trust Agreement"), and by the execution and
filing by the Delaware Trustee with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on _________ __, 1997 (the
"Certificate of Trust"), attached as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and restate
the Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance of the Common Securities by the Issuer
Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities
by the Issuer Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Junior Subordinated Debentures, (iv) the appointment of the
Property Trustee; and (v) the appointment of the Administrators.
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either
<PAGE>
directly or by reference therein, have the meanings assigned to them therein;
(c) The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles as in effect at the time of computation;
(e) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement;
(f) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were originally
issued shall refer to the date the Preferred Securities were originally issued.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with Section
8.20 solely in such Person's capacity as Administrator of the Issuer Trust
heretofore formed and continued hereunder and not in such Person's individual
capacity, or any successor Administrator appointed as herein provided; with the
initial Administrators being Brian J. Ruisinger and Steven E. Rector.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Preferred Security or beneficial interest therein, the rules
and procedures of the Depositary for such Preferred Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
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<PAGE>
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or the
Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Kansas or in the City of New York,
are authorized or required by law or executive order to remain closed or (c) a
day on which the Property Trustee's Corporate Trust Office or the Delaware
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Depositor that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there
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is more than an insubstantial risk that the Depositor will not be entitled to
treat an amount equal to the Liquidation Amount of such Preferred Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the risk-based
capital adequacy guidelines of the Board of Governors of the Federal Reserve
System, as then in effect and applicable to the Depositor, provided, however
that it shall not be deemed to be a Capital Treatment Event if the Depositor is
not entitled to treat the aggregate amount of the Liquidation Amount of such
Preferred Securities as "Tier 1 Capital" due to the restriction imposed by the
Federal Reserve that no more than 25% of Tier 1 Capital can consist of perpetual
preferred stock.
"Certificate Depositary Agreement" means the agreement among the Issuer
Trust, the Depositor and the Depository Trust Company ("DTC"), as the initial
Clearing Agency, dated as of the Closing Date, substantially in the form
attached as Exhibit B, as the same may be amended and supplemented from time to
time.
"Certificate of Trust" has the meaning specified in the preamble to this
Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC
shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means the Time of Delivery for the Firm Securities, which
date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any successor
statute, in each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets of
the Issuer Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Corporate Trust Office" means the principal office of the Property Trustee
located in the City of New York, New York, which at the time of the execution of
this Trust Agreement is located at Four Albany Street, New York, New York 10006;
Attention: Corporate Trust and Agency Group - Corporate Market Services.
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"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor, as trustee under the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means the Depository Trust Company or any successor thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.1.
"DTC" means the Depository Trust Company.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) :
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Issuer Trust in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Issuer Trustees in this Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c) above) and continuation of such default
or breach for a period of 60 days after there has been given, by registered or
certified mail, to the Issuer Trustees and the Depositor by the Holders of at
least 25% in aggregate Liquidation Amount of the Outstanding Preferred
Securities, a written notice
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specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the Property
Trustee or all or substantially all of its property if a successor Property
Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Firm Securities" means an aggregate Liquidation Amount of $__________ of
the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and delivered
by the Depositor and Bankers Trust Company, as trustee, contemporaneously with
the execution and delivery of this Trust Agreement, for the benefit of the
holders of the Preferred Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust Securities
is registered in the Securities Register; any such Person shall be deemed to be
a beneficial owner within the meaning of the Delaware Business Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of
___________ __, 1997, between the Depositor and the Debenture Trustee (as
amended or supplemented from time to time) relating to the issuance of the
Junior Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended or any successor statute, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Preferred Securities.
"Issuer Trust" means GBCI Capital Trust.
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"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount of
the Depositor's ____% junior subordinated deferrable interest debentures, due
________ __, ____, which date may be shortened once at any time by the Company
to any date not earlier than _________ __, ____, issued pursuant to the
Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Preferred Securities based upon the relative Liquidation Amounts of
such classes and (b) with respect to a distribution of Junior Subordinated
Debentures to Holders of Trust Securities in connection with a dissolution or
liquidation of the Issuer Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Debentures
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or "Majority
in Liquidation Amount of the Common Securities" means, except as provided by the
Trust Indenture Act, Preferred Securities or Common Securities, as the case may
be, representing more than 50% of the aggregate Liquidation Amount of all then
Outstanding Preferred Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by The Chairman of the
Board, Chief Executive Officer, President or Vice President and by the Chief
Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary, or an
Assistant Secretary, of the Depositor, and delivered to the party provided
herein. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether
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or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for or an employee of the Depositor or any Affiliate of the Depositor.
"Option Closing Date" shall have the meaning provided in the Underwriting
Agreement.
"Option Securities" means an aggregate Liquidation Amount of $_________ of
the Issuer Trust's ____% preferred securities, issuable to the Underwriters, at
its option, exercisable within 30 days after the date of the Prospectus, solely
to cover over-allotments, if any.
"Original Trust Agreement" has the meaning specified in the preamble to
this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the date of
determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities, provided that if such
Trust Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu of
which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.6 and 5.13; provided, however, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Issuer Trustee, any Administrator or any Affiliate of the Depositor shall be
disregarded and deemed not to be Outstanding, except that (a) in determining
whether any Issuer Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Preferred
Securities that such Issuer Trustee or such Administrator, as the case may be,
knows to be so owned shall be so disregarded and (b) the foregoing shall not
apply at any time when all of the outstanding Preferred Securities are owned by
the Depositor, one or more of the Issuer Trustees, one or more of the
Administrators and/or any such Affiliate. Preferred Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrators the pledgee's right so to
act with respect to such Preferred Securities and that the pledgee is not the
Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global Preferred
Securities as reflected in the records of the Clearing Agency or, if a Clearing
Agency Participant is not the Owner, then as reflected in the records of a
Person maintaining an account with such Clearing Agency, directly or indirectly,
in accordance with the rules of such Clearing Agency.
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"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Property Trustee in its
trust department for the benefit of the Holders in which all amounts paid in
respect of the Junior Subordinated Debentures will be held and from which the
Property Trustee, through the Paying Agent, shall make payments to the Holders
in accordance with Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit D.
"Preferred Security" means a Firm Security or an Option Security, each
constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement solely in its capacity as Property Trustee
of the Issuer Trust formed and continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Junior Subordinated Debenture Redemption Date and the stated
maturity of the Junior Subordinated Debentures shall be a Redemption Date for a
Like Amount of Trust Securities, including but not limited to any date of
redemption pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior Subordinated
Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee means
any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of the
Indenture, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
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"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event or Investment
Company Event.
"Successor Preferred Securities" of any particular Preferred Securities
Certificate means every Preferred Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Preferred Securities Certificate; and, for
the purposes of this definition, any Preferred Securities Certificate executed
and delivered under Section 5.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Preferred Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Preferred Securities Certificate.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement, action or decision is announced on or after the date of
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Issuer Trust is, or will be within 90 days of the delivery of such
Opinion of Counsel, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, (ii) interest
payable by the Depositor on the Junior Subordinated Debentures is not, or within
90 days of the delivery of such Opinion of Counsel will not be, deductible by
the Depositor, in whole or in part, for United States federal income tax
purposes, or (iii) the Issuer Trust is, or will be within 90 days of the
delivery of such Opinion of Counsel, subject to more than a de minimis amount of
other taxes, duties or other governmental changes.
"Time of Delivery" means 9:00 a.m. Eastern Standard Time, either (i) with
respect to the Firm Securities or Common Securities, on the fourth Business Day
(unless postponed in accordance with the provisions of Section 14 of the
Underwriting Agreement) following the date of execution of the Underwriting
Agreement, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Underwriters, the Issuer Trust and the Company,
or (ii) with respect to the Option Securities, the Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all Exhibits hereto, and (ii) for all purposes
of this Amended and Restated Trust Agreement any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Amended and Restated Trust Agreement and any
modification, amendment or supplement, respectively.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 or any
successor statute, in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any cash
on deposit in, or owing to, the Payment Account, and (c) all proceeds and rights
in respect of the foregoing and any other property and assets for the time being
held or deemed to be held by the Property Trustee pursuant to the trusts of this
Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Underwriters" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
_____ __, 1997, among the Issuer Trust, the Depositor and the Underwriters, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "GBCI Capital Trust",
as such name may be modified from time to time by the Administrators following
written notice to the Holders of Trust Securities and the other Issuer Trustees,
in which name the Administrators and the Issuer Trustees may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business
The address of the Delaware Trustee in the State of Delaware is Bankers
Trust (Delaware), 1011 Centre Road, Suite 200, Trust Department, Wilmington, DE
19805-1266, or such other address in the State of Delaware as the Delaware
Trustee may designate by written notice to the Holders and the Depositor. The
principal executive office of the Issuer Trust is in care of Gold Banc
Corporation, Inc., 11301 Nall Avenue, Leawood, Kansas 66211, Attention: Office
of the Secretary.
SECTION 2.3. Initial Contribution of Trust Property, Organizational Expenses
The Property Trustee acknowledges receipt in trust from the Depositor in
connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such reasonable expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
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SECTION 2.4. Issuance of the Preferred Securities.
On ______ __, 1997, the Depositor, both on its own behalf and on behalf of
the Issuer Trust pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrator, on behalf of the Issuer
Trust, shall manually execute in accordance with Section 5.3 and the Property
Trustee shall authenticate in accordance with Section 5.3 and deliver to the
Underwriters, Firm Securities Certificates, registered in the names requested by
the Underwriters, in an aggregate amount of _________ Firm Securities having an
aggregate Liquidation Amount of $_____________, against receipt of the aggregate
purchase price of such Preferred Securities of $______________, by the Property
Trustee. At the option of the Underwriters, within 30 days of the date of the
Prospectus, and solely for the purpose of covering an over-allotment, if any, an
Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.4 and deliver to the Underwriters, Option Securities
Certificates, registered in the names requested by the Underwriters, up to
_________ Option Securities having an aggregate Liquidation Amount of up to
$____________, against receipt of the aggregate purchase price of such Option
Securities of up to $____________, by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase of
Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount of
_________ Common Securities having an aggregate Liquidation Amount of
$___________ against receipt by the Property Trustee of the aggregate purchase
price of such Common Securities of $__________ by the Property Trustee. In the
event of any exercise of an over-allotment option requiring issuance of
additional Preferred Securities Certificates, as described in Section 2.4 above,
a proportionate number of additional Common Securities Certificates, with
corresponding aggregate Liquidation Amount, shall be delivered to the Depositor.
Contemporaneously with the executions, and deliveries of Common Securities
Certificates and any Preferred Securities Certificates, an Administrator, on
behalf of the Issuer Trust, shall subscribe for and purchase from the Depositor
corresponding amounts of Junior Subordinated Debentures, registered in the name
of the Property Trustee and having an aggregate principal amount equal to
$__________, plus, in the event of any exercise of the over-allotment option (i)
a corresponding additional number of Junior Subordinated Debentures not
exceeding an aggregate principal amount of $___________ and (ii) a corresponding
number of Junior Subordinated Debentures not exceeding an aggregate principal
amount equal to the aggregate Liquidation Amount of Common Securities issued
pursuant to such exercise of an over-allotment option; and, in satisfaction of
the purchase price for such Junior Subordinated Debentures, the Property
Trustee, on behalf of the Issuer Trust, shall deliver to the Depositor the sum
of $____________, plus any corresponding over-allotment option amount (being the
sum of the amounts delivered to the Property Trustee pursuant to (i) the second
sentence of Section 2.4, and (ii) the first and second sentences of this Section
2.5) and receive on behalf of the Issuer Trust the Junior Subordinated
Debentures.
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SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a) issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Junior Subordinated Debentures, and (b) engage in only those other activities
necessary or incidental thereto. The Depositor hereby appoints the Issuer
Trustees as trustees of the Issuer Trust, to have all the rights, powers and
duties to the extent set forth herein, and the Issuer Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property in trust upon and subject to the conditions set forth herein for
the benefit of the Issuer Trust and the Holders. The Depositor hereby appoints
the Administrators (as agents of the Issuer Trust), with such Administrators
having all rights, powers and duties set forth herein with respect to
accomplishing the purposes of the Issuer Trust, and the Administrators hereby
accept such appointment, provided, however, that it is the intent of the parties
hereto that such Administrators shall not be trustees or fiduciaries with
respect to the Issuer Trust and this Agreement shall be construed in a manner
consistent with such intent. The Property Trustee shall have the right and power
to perform those duties assigned to the Administrators. The Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or the
Administrators set forth herein. The Delaware Trustee shall be one of the
trustees of the Issuer Trust for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Delaware Business Trust Act and for taking
such actions as are required to be taken by a Delaware trustee under the
Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the affairs
of the Issuer Trust in accordance with the terms of this Trust Agreement.
Subject to the limitations set forth in paragraph (b) of this Section and in
accordance with the following provisions (i), (ii) and (iii), the Issuer
Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following:
(A) the compliance with the Underwriting Agreement regarding the
issuance and sale of the Trust Securities;
(B) the compliance with the Securities Act, applicable state
securities or blue sky laws, and the Trust Indenture Act;
(C) the listing of the Preferred Securities upon such securities
exchange or exchanges or upon the Nasdaq National Market as shall be
determined by the Depositor, with the registration of the Preferred
Securities under the Exchange Act, if required, and the preparation and
filing of all periodic and other reports and other documents pursuant to
the foregoing;
(D) the application for a taxpayer identification number for the
Issuer Trust;
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(E) the preparation of a registration statement and a prospectus
in relation to the Preferred Securities, including any amendments thereto
and the taking of any action necessary or desirable to sell the Preferred
Securities in a transaction or series of transactions subject to the
registration requirements of the Securities Act; and
(F) any action incidental to the foregoing as necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated Debentures;
(C) the receipt and collection of interest, principal and any other
payments made in respect of the Junior Subordinated Debentures in the
Payment Account;
(D) the distribution of amounts owed to the Holders in respect of the
Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures;
(F) the sending of notices of default and other information regarding
the Trust Securities and the Junior Subordinated Debentures to the Holders
in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Issuer Trust and the preparation,
execution and filing of the certificate of cancellation with the Secretary
of State of the State of Delaware; and
(I) after an Event of Default (other than under paragraph (b), (c) or
(d) of the definition of such term if such Event of Default is by or with
respect to the Property Trustee), comply with the provisions of this Trust
Agreement and take any action to give effect to the terms of this Trust
Agreement and protect and conserve the Trust Property for the benefit of
the Holders (without consideration of the effect of any such action on any
particular Holder); provided, however, that nothing in this Section
2.7(a)(ii) shall require the Property Trustee to take any action that is
not otherwise required in this Trust Agreement.
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(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees or Administrators acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Issuer
Trustees nor the Administrators shall (i) acquire any investments or engage in
any activities not authorized by this Trust Agreement, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Issuer Trust to become taxable as a corporation for United States
federal income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt, or (v) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Property Trustee shall
defend all claims and demands of all Persons at any time claiming any Lien on
any of the Trust Property adverse to the interest of the Issuer Trust or the
Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the power and authority to assist the Issuer Trust with
respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation by the Issuer Trust of, and the execution and
delivery of, a registration statement, and a prospectus in relation to the
Preferred Securities, including any amendments thereto and the taking of
any action necessary or desirable to sell the Preferred Securities in a
transaction or a series of transactions subject to the registration
requirements of the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and the determination of any and all such acts, other than
actions that must be taken by or on behalf of the Issuer Trust, and the
advice to the Issuer Trustees of actions they must take on behalf of the
Issuer Trust, and the preparation for execution and filing of any documents
to be executed and filed by the Issuer Trust or on behalf of the Issuer
Trust, as the Depositor deems necessary or advisable in order to comply
with the applicable laws of any such States in connection with the sale of
the Preferred Securities;
(iii) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Preferred
Securities;
(iv) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities; and
(v) compliance with the listing requirements of the Preferred
Securities upon such securities exchange or exchanges, or upon the Nasdaq
National Market, as shall be determined by the Depositor, the registration
of the Preferred Securities under the Exchange Act, if required, and the
preparation and filing of all periodic and other reports and other
documents pursuant to the foregoing.
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(d) Notwithstanding anything herein to the contrary, the Administrators
and the Property Trustee are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation for the United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United States
income tax purposes. In this connection, the Property Trustee, the
Administrators and the Holders of Common Securities are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that the Property Trustee, the Administrators and Holders of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any material
respect the interests of the holders of the Outstanding Preferred Securities. In
no event shall the Administrators or the Issuer Trustees be liable to the Issuer
Trust or the Holders for any failure to comply with this section that results
from a change in law or regulations or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and its agents shall have exclusive
control and sole right of withdrawal with respect to the Payment Account for the
purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Trust Agreement. All monies and other property deposited
or held from time to time in the Payment Account shall be held by the Property
Trustee in the Payment Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
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ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative and
will accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall accumulate
from ___________ __, 1997, and, except in the event (and to the extent)
that the Depositor exercises its right to defer the payment of interest on
the Debentures pursuant to the Indenture, shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on _________ __, ____. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day that
is a Business Day (without any interest or other payment in respect of any
such delay), with the same force and effect as if made on the date on which
such payment was originally payable (each date on which distributions are
payable in accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions payable
at a rate of ____% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period less than a
full Distribution period shall be computed on the basis of a 360-day year
of twelve 30-day months and the actual number of days elapsed in a partial
month in a period. Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by four. The amount of
Distributions payable for any period shall include any Additional Amounts
in respect of such period.
(iii) So long as no Debenture Event of Default has occurred and is
continuing, the Depositor has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time and
from time to time for a period not exceeding 20 consecutive quarterly
periods (an "Extension Period"), provided that no Extension Period may
extend beyond _______ __, ____. As a consequence of any such deferral,
quarterly Distributions on the Trust Securities by the Trust will also be
deferred (and the amount of Distributions to which Holders of the Trust
Securities are entitled will accumulate additional Distributions thereon at
the rate per annum of ____% per annum, compounded quarterly) from the
relevant payment date for such Distributions, computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. Additional Distributions payable for each
full Distribution period will be computed by dividing the rate per annum by
four (4). The term
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"Distributions" as used in Section 4.1 shall include any such additional
Distributions provided pursuant to this Section 4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Issuer Trust has funds then
on hand and available in the Payment Account for the payment of such
Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities at the close of business on the relevant
record date, which shall be at the close of business on the 15th day of March,
June, September or December (whether or not a Business Day).
SECTION 4.2. Redemption.
(a) On each Junior Subordinated Debenture Redemption Date and on the
stated maturity of the Junior Subordinated Debentures, the Issuer Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption Price .
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Trust Securities to be redeemed, at
such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (and if an
estimate is provided, a further notice shall be sent of the actual Redemption
Price on the date, or as soon as practicable thereafter, that notice of such
actual Redemption Price is received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred Securities
affected;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date,
except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be surrendered
for the
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payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP" numbers,
and the Property Trustee shall indicate the "CUSIP" numbers of the Trust
Securities in notices of redemption and related materials as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Trust Securities
or as contained in any notice of redemption and related material.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, with respect to
Preferred Securities held in global form, irrevocably deposit with the Clearing
Agency for such Preferred Securities, to the extent available therefor, funds
sufficient to pay the applicable Redemption Price and will give such Clearing
Agency irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Preferred Securities. With respect to Preferred Securities that
are not held in global form, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
the Paying Agent irrevocable instructions and authority to pay the Redemption
Price to the Holder of the Preferred Securities upon surrender of their
Preferred Securities Certificates. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then, upon the date of such deposit, all rights
of Holders holding Trust Securities so called for redemption will cease, except
the right of such Holders to receive the Redemption Price and any Distribution
payable in respect of the Trust Securities on or prior to the Redemption Date,
but without interest, and such Securities will cease to be Outstanding. In the
event that any date on which any applicable Redemption Price is payable is not a
Business Day, then payment of the applicable Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case, with the same force and
effect as if made on such date. In the event that payment of the Redemption
Price in respect of any Trust Securities called for redemption is improperly
withheld or refused and not paid either by the Issuer Trust or by the Depositor
pursuant to the Guarantee Agreement, Distributions on such Trust Securities will
continue to accumulate, as set forth in Section 4.1, from the Redemption Date
originally established by the Issuer Trust for such Trust Securities to the date
such applicable Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be
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redeemed on a Redemption Date, then the particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Property Trustee from the Outstanding Preferred Securities not previously
called for redemption in such a manner as the Property Trustee shall deem fair
and appropriate.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, the Redemption Price of, and the Liquidation Distribution in respect of, the
Trust Securities, as applicable, shall be made, subject to Section 4.2(e), pro
rata among the Common Securities and the Preferred Securities based on the
Liquidation Amount of such Trust Securities; provided, however, that if on any
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default in Section 5.1(1) or 5.1(2) of the Indenture shall
have occurred and be continuing, no payment of any Distribution (including any
Additional Amounts) on, Redemption Price of, or Liquidation Distribution in
respect of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions
(including any Additional Amounts) on all Outstanding Preferred Securities for
all Distribution periods terminating on or prior thereto, or, in the case of
payment of the Redemption Price, the full amount of such Redemption Price on all
Outstanding Preferred Securities then called for redemption, or in the case of
payment of the Liquidation Distribution the full amount of such Liquidation
Distribution on all Outstanding Preferred Securities, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions (including
any Additional Amounts) on, or the Redemption Price of, Preferred Securities
then due and payable. The existence of an Event of Default does not entitle the
Holders of Preferred Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of the Common Securities shall have
no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred Securities
and not on behalf of the Holder of the Common Securities, and only the Holders
of the Preferred Securities will have the right to direct the Property Trustee
to act on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in respect of
the Preferred Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which will credit the relevant accounts on the applicable Distribution
Dates. Payments of Distributions to Holders of $1,000,000 or more in aggregate
Liquidation Amount of Preferred Securities may be made by wire transfer of
immediately available funds upon written request of such Holder of Preferred
Securities to the Securities Registrar not later than 15 calendar days prior
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to the date on which the Distribution is payable. Payments in respect of the
Common Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrators shall (a) prepare and file (or
cause to be prepared and filed) all Internal Revenue Service forms required to
be filed in respect of the Issuer Trust in each taxable year of the Issuer Trust
and (b) prepare and furnish (or cause to be prepared and furnished) to each
Holder all Internal Revenue Service forms required to be provided by the Issuer
Trust. The Administrators shall provide the Depositor and the Property Trustee
with a copy of all such returns and reports promptly after such filing or
furnishing. The Issuer Trustees and the Administrators shall comply with United
States federal withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to Holders under the Trust
Securities.
On or before December 15 of each year during which any Preferred Securities
are outstanding, the Administrators shall furnish to the Paying Agent such
information as may be reasonably requested by the Property Trustee in order that
the Property Trustee may prepare the information which it is required to report
for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Internal Revenue Code of 1986, as amended. Such information
shall include the amount of original issue discount includible in income for
each outstanding Preferred Security during such year.
SECTION 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional Sums,
the Property Trustee shall promptly pay any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the
Issuer Trust by the United States or any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities shall be
reduced by the amount of any corresponding payment such Holder has directly
received pursuant to Section 5.8 of the Indenture or Section 5.13 of this Trust
Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7(c) of the Indenture
regarding allocation of expenses.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf of the
Issuer Trust by manual or facsimile signature of at least one Administrator
except as provided in Section 5.3. Trust Securities Certificates bearing the
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Issuer Trust, shall be validly
issued and entitled to the benefits of this Trust Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the delivery of such Trust Securities Certificates or did not hold such
offices at the date of delivery of such Trust Securities Certificates. A
transferee of a Trust Securities Certificate shall become a Holder, and shall be
entitled to the rights and subject to the obligations of a Holder hereunder,
upon due registration of such Trust Securities Certificate in such transferee's
name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities Certificates shall
be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of the
Depositary and registered in the name of the Depositary's nominee. Unless and
until it is exchangeable in whole or in part for the Preferred Securities in
definitive form, a global security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
At the Time of Delivery, an Administrator shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and
2.5, to be executed on behalf of the Issuer Trust and delivered to the Property
Trustee and upon such delivery the Property Trustee shall authenticate such
Trust Securities Certificates and deliver such Trust Securities Certificates
upon the written order of the Trust, executed by an Administrator thereof,
without further corporate action by the Trust, in authorized denominations.
SECTION 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement shall
be registered in the name of the nominee of the Clearing Agency and delivered to
such custodian
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therefor, and such Global Preferred Security shall constitute a single Preferred
Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a Global
Preferred Security may not be exchanged in whole or in part for Preferred
Securities registered, and no transfer of the Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency for such Global Preferred Security, or its nominee thereof unless (i)
such Clearing Agency advises the Property Trustee in writing that such Clearing
Agency is no longer willing or able to properly discharge its responsibilities
as Clearing Agency with respect to such Global Preferred Security, and the
Depositor is unable to locate a qualified successor within ninety days of
receipt of such notice from the Depositary, (ii) the Issuer Trust at its option
advises the Depositary in writing that it elects to terminate the book-entry
system through the Clearing Agency, or (iii) there shall have occurred and be
continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part for a
beneficial interest in a Global Preferred Security, then either (i) such Global
Preferred Security shall be so surrendered for exchange or cancellation as
provided in this Article V or (ii) the Liquidation Amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the Liquidation Amount of such other
Preferred Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Security Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Property Trustee shall, subject to
Section 5.4(b) and as otherwise provided in this Article V, authenticate and
deliver any Preferred Securities issuable in exchange for such Global Preferred
Security (or any portion thereof) in accordance with the instructions of the
Clearing Agency. The Property Trustee shall not be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be fully
protected in relying on, such instructions.
(d) Every Preferred Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Preferred Security or
any portion thereof, whether pursuant to this Article V or Article IV or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Preferred Security, unless such Global Preferred Security is registered
in the name of a Person other than the Clearing Agency for such Global Preferred
Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a Global
Preferred Security, shall be considered the Holder of the Preferred Securities
represented by such Global Preferred Security for all purposes under this Trust
Agreement and the Preferred Securities, and owners of beneficial interests in
such Global Preferred Security shall hold such interests pursuant to the
Applicable Procedures and, except as otherwise provided herein, shall not be
entitled to receive physical delivery of any such Preferred Securities in
definitive form and shall not be considered the Holders thereof under this Trust
Agreement. Accordingly, any such owner's beneficial interest in the Global
Preferred Security shall be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee.
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Neither the Property Trustee, the Securities Registrar nor the Depositor shall
have any liability in respect of any transfers effected by the Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange Generally; Certain Transfers
and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its Corporate
Trust Office a register or registers for the purpose of registering Preferred
Securities Certificates and transfers and exchanges of Preferred Securities
Certificates in which the registrar and transfer agent with respect to the
Preferred Securities (the "Securities Registrar"), subject to such reasonable
regulations as it may prescribe, shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to Section
5.11 in the case of Common Securities Certificates) and registration of
transfers and exchanges of Preferred Securities Certificates as herein provided.
Such register is herein sometimes referred to as the "Securities Register." The
Property Trustee is hereby appointed "Securities Registrar" for the purpose of
registering Preferred Securities and transfers of Preferred Securities as herein
provided.
Upon surrender for registration of transfer of any Preferred Security at
the offices or agencies of the Property Trustee designated for that purpose, the
Depositor shall execute and authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities of
the same series of any authorized denominations of like tenor and aggregate
principal amount and bearing such legends as may be required by this Trust
Agreement.
At the option of the Holder, Preferred Securities may be exchanged for
other Preferred Securities of any authorized denominations, of like tenor and
aggregate Liquidation Amount and bearing such legends as may be required by this
Trust Agreement, upon surrender of the Preferred Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Property Trustee shall execute and authenticate and deliver the Preferred
Securities that the Holder making the exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of Preferred
Securities shall be the valid obligations of the Issuer Trust, evidencing the
same debt, and entitled to the same benefits under this Trust Agreement, as the
Preferred Securities surrendered upon such transfer or exchange.
Every Preferred Security presented or surrendered for transfer or exchange
shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Preferred Securities, but the Property Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities.
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Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of or exchange any Preferred Security during a period beginning at the opening
of business 15 days before the day of selection for redemption of Preferred
Securities pursuant to Article IV and ending at the close of business on the day
of mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Preferred Security so selected for redemption in whole or in part,
except, in the case of any such Preferred Security to be redeemed in part, any
portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. Any transfer or purported transfer of any
Trust Security not made in accordance with this Trust Agreement shall be null
and void.
(i) Non Global Security to Non Global Security. A Trust Security
that is not a Global Preferred Security may be transferred, in whole or in
part, to a Person who takes delivery in the form of another Trust Security
that is not a Global Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5, Preferred
Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and Non-Global
Preferred Security. A beneficial interest in a Global Preferred Security
may be exchanged for a Preferred Security that is not a Global Preferred
Security as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrators such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the
Administrators, or any one of them, on behalf of the Issuer Trust shall execute
and make available for delivery, and the Property Trustee shall authenticate, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Administrators or the Securities Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an undivided beneficial interest in the assets of the
Issuer Trust corresponding to that evidenced by the lost, stolen or destroyed
Trust Certificate, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
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SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Securities Registrar or the Depositor shall treat
the Person in whose name any Trust Securities are issued as the owner of such
Trust Securities for the purpose of receiving Distributions and for all other
purposes whatsoever, and none of the Issuer Trustees, the Administrators, the
Securities Registrar nor the Depositor shall be bound by any notice to the
contrary.
SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee, or the Administrators accountable by reason of
the disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office at Four Albany Street, New York, NY 10006, Attention:
Corporate Trust and Agency Group - Corporate Market Services, as its corporate
trust office for such purposes. The Property Trustee shall give prompt written
notice to the Depositor, the Administrators and to the Holders of any change in
the location of the Securities Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable power
to withdraw funds from the Payment Account solely for the purpose of making the
Distributions referred to above. The Property Trustee may revoke such power and
remove any Paying Agent in its sole discretion. The Paying Agent shall initially
be the Property Trustee. Any Person acting as Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrators, and
the Property Trustee. In the event that the Property Trustee shall no longer be
the Paying Agent or a successor Paying Agent shall resign or its authority to
act be revoked, the Property Trustee shall appoint a successor (which shall be a
bank or trust company) that is reasonably acceptable to the Administrators to
act as Paying Agent. Such successor Paying Agent or any additional Paying Agent
appointed by the Administrators shall execute and deliver to the Issuer Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Issuer Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Holders in trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the
Bank also in its role as Paying Agent, for so long as the Bank shall act as
Paying
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Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Trust Agreement to the Paying Agent shall
include any co-paying agent chosen by the Property Trustee unless the context
requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At each Time of Delivery, the Depositor shall acquire and retain beneficial
and record ownership of the Common Securities except (i) in connection with a
consolidation or merger of the Depositor into another corporation or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 8.1 of the
Indenture, or (ii) a transfer to an Affiliate of the Depositor in compliance
with applicable law (including the Securities Act and applicable state
securities and blue sky laws). To the fullest extent permitted by law, any
attempted transfer of the Common Securities shall be void. The Administrators
shall cause each Common Securities Certificate issued to the Depositor to
contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A
SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN
COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators and
the Issuer Trustees shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. Subject to Section 4.8 hereof the Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right to make
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such declaration by a notice in writing to the Property Trustee, the Depositor
and the Debenture Trustee.
At any time after such a declaration of acceleration with respect to the
Junior Subordinated Debentures has been made and before a judgment or decree for
payment of the money due has been obtained by the Debenture Trustee as provided
in the Indenture, the Holders of a majority in Liquidation Amount of the
Preferred Securities, by written notice to the Property Trustee, the Depositor
and the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture Trustee
a sum sufficient to pay
(A) all overdue installments of interest on all of the Junior
Subordinated Debentures,
(B) any accrued Additional Interest on all of the Junior
Subordinated Debentures,
(C) the principal of (and premium, if any, on) any Junior
Subordinated Debentures which have become due otherwise than by such
declaration of acceleration and interest and Additional Interest
thereon at the rate borne by the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Debenture Trustee and the Property Trustee, their
agents and counsel; and
(ii) all Events of Default with respect to the Junior Subordinated
Debentures, other than the non-payment of the principal of the Junior
Subordinated Debentures which has become due solely by such acceleration,
have been cured or waived as provided in Section 5.13 of the Indenture.
If the Property Trustee fails to annul any such declaration and waive such
default, the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Depositor, the
Property Trustee and the Debenture Trustee, subject to the satisfaction of the
conditions set forth in Clause (i) and (ii) of this Section 5.13.
The Holders of at least a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Debentures. No such rescission shall affect any subsequent default
or impair any right consequent thereon.
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Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Preferred
Securities all or part of which is represented by Global Preferred Securities, a
record date shall be established for determining Holders of Outstanding
Preferred Securities entitled to join in such notice, which record date shall be
at the close of business on the day the Property Trustee receives such notice.
The Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such notice, whether or not such Holders
remain Holders after such record date; provided, that, unless such declaration
of acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day which is 90 days after such record date, such notice of
declaration of acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be canceled and of
no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such Holder (a "Direct Action"). Except as set forth in
Sections 5.13(b) and 5.13 (c) of this Trust Agreement, the Holders of Preferred
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Junior Subordinated
Debentures.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture and as
otherwise required by law, no Holder of Preferred Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Issuer Trust or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Trust
Securities Certificates be construed so as to constitute the Holders from time
to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the Property
Trustee on behalf of the Issuer Trust, the Property Trustee shall not (i) direct
the time, method and place of conducting any proceeding for any remedy available
to the Property Trustee, or executing any trust or power conferred on the
Debenture Trustee with respect to such Junior Subordinated Debentures, (ii)
waive any past default that may be waived under Section 5.13 of the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Junior Subordinated
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Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities, provided, however, that where a
consent under the Indenture would require the consent of each Holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
by a subsequent vote of the Holders of Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received with respect to the Junior Subordinated Debentures. In addition
to obtaining the foregoing approvals of the Holders of the Preferred Securities,
prior to taking any of the foregoing actions, the Property Trustees shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that such action will not cause the Issuer Trust to be
taxable as a corporation for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences
or special rights of the Preferred Securities, whether by way of amendment
to the Trust Agreement or otherwise, or (ii) the dissolution of the Issuer
Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Trust Securities as a class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may
be made if, as a result of such amendment, it would cause the Issuer Trust
to be taxable as a corporation for United States federal income tax
purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place and purpose
of the meeting, shall be given by the Property Trustee pursuant to Section 10.8
to each Holder of record, at his registered address, at least 15 days and not
more than 90 days before the meeting. At any such meeting, any business properly
before the meeting may be so considered whether or not stated in the notice of
the meeting. Any adjourned meeting may be held as adjourned without further
notice.
SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The Property Trustee,
however, shall call a meeting of Holders to vote on any matter upon the written
request of the Holders of record of 25% of the aggregate Liquidation Amount of
the Preferred Securities and the Administrators or the Property Trustee may, at
any time in their discretion, call a meeting of Holders of Preferred Securities
to vote on any matters as to which Holders are entitled to vote.
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, present in person or represented by proxy, shall constitute a quorum
at any meeting of Holders of the
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Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders of
record present, in person or by proxy, holding Preferred Securities representing
at least a Majority in Liquidation Amount of the Preferred Securities held by
the Holders present, either in person or by proxy, at such meeting shall
constitute the action of the Holders of Preferred Securities, unless this Trust
Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of Liquidation Amount
represented by their Outstanding Trust Securities in respect of any matter as to
which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote by
proxy, provided that no proxy shall be voted at any meeting unless it shall have
been placed on file with the Property Trustee, or with such other officer or
agent of the Issuer Trust as the Property Trustee may direct, for verification
prior to the time at which such vote shall be taken. Pursuant to a resolution of
the Property Trustee, proxies may be solicited in the name of the Property
Trustee or one or more officers of the Property Trustee. Only Holders of record
shall be entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Trust Securities, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Trust Securities. A proxy purporting to be executed by or on
behalf of a Holder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken without
a meeting if Holders holding at least a Majority in Liquidation Amount of all
Trust Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any other provision of this Trust
Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators or Property Trustee may from time to time fix a date,
not more than 90 days prior to the date of any meeting of Holders or the payment
of a distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
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SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to the Property Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Trust Agreement and (subject to Section 8.1) conclusive
in favor of the Issuer Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Issuer Trustee or Administrator receiving the same deems
sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Issuer Trustees,
the Administrators or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders, the Administrators or the
Issuer Trustees with respect to the authenticity, validity or binding nature of
any request, demand, authorization, direction, consent, waiver or other Act of
such Holder or Issuer Trustee under this Article VI, then the determination of
such matter by the Property Trustee shall be conclusive with respect to such
matter.
A Holder may institute a legal proceeding directly against the Depositor
under the Guarantee Agreement to enforce its rights under the Guarantee
Agreement without first instituting a legal proceeding against the Guarantee
Trustee (as defined in the Guarantee Agreement), the Issuer Trust, any Issuer
Trustee, any Administrator or any person or entity.
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SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee, the
records of the Issuer Trust shall be open to inspection by Holders during normal
business hours for any purpose reasonably related to such Holder's interest as a
Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf of
and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) The Property Trustee is a banking corporation with trust powers, duly
organized, validly existing and in good standing under the laws of New York,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of this Trust Agreement.
(b) The execution, delivery and performance by the Property Trustee of this
Trust Agreement has been duly authorized by all necessary corporate action on
the part of the Property Trustee; and this Trust Agreement has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust Agreement by the
Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not knowingly created
any liens or encumbrances on the Trust Securities.
(e) No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of this Trust
Agreement.
(f) The Delaware Trustee is duly organized, validly existing and in good
standing under the laws of the State of Delaware, with trust power and authority
to execute and deliver, and to carry out and perform its obligations under the
terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware Trustee of this
Trust Agreement has been duly authorized by all necessary corporate action on
the part of the Delaware
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Trustee; and this Trust Agreement has been duly executed and delivered by the
Delaware Trustee, and constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' right generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust Agreement by the
Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(i) No consent, approval or authorization of, or registration with or
notice to any state or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of this Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the Holders
that:
(a) the Trust Securities Certificates issued at the Time of Delivery on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, and, subject to payment therefor, issued and delivered by the
Issuer Trustees pursuant to the terms and provisions of, and in accordance with
the requirements of, this Trust Agreement, and the Holders will be, as of each
such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under the
laws of the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by either the Property Trustee or
the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing,
no provision of this Trust Agreement shall require the Issuer Trustees or the
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether or not
therein expressly so provided, every provision of this Trust Agreement relating
to
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the conduct or affecting the liability of or affording protection to the Issuer
Trustees or the Administrators shall be subject to the provisions of this
Section. Nothing in this Trust Agreement shall be construed to release an
Administrator or the Issuer Trustees from liability for his or its own negligent
action, his or its own negligent failure to act, or his or its own willful
misconduct. To the extent that, at law or in equity, an Issuer Trustee or
Administrator has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee or Administrator shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's or Administrator's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Issuer Trustees and Administrators otherwise existing at law or in equity, are
agreed by the Depositor and the Holders to replace his or such other duties and
liabilities of the Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by his
or its acceptance of a Trust Security, agrees that he or it will look solely to
the revenue and proceeds from the Trust Property to the extent legally available
for distribution to it or him as herein provided and that neither the Issuer
Trustees nor the Administrators are personally liable to it or him for any
amount distributable in respect of any Trust Security or for any other liability
in respect of any Trust Security. This Section 8.1(b) does not limit the
liability of the Issuer Trustees expressly set forth elsewhere in this Trust
Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13 of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Trust Agreement
(including pursuant to Section 10.10), and the Property Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Trust Agreement
(including pursuant to Section 10.10); and
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(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Trust Agreement;
but in the case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of at least a Majority in Liquidation Amount
of the Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Junior Subordinated
Debentures and the Payment Account shall be to deal with such Property in a
similar manner as the Property Trustee deals with similar property for its
own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the Trust
Indenture Act;
(v) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable
for the default or misconduct of any other Issuer Trustee, the
Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Trust
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
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(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders and the Administrators,
unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
In the event the Property Trustee receives notice of the Depositor's
exercise of its right to shorten the stated maturity of the Junior Subordinated
Debentures as provided in Section 3.16 of the Indenture, the Property Trustee
shall give notice of such shortening of the stated maturity to the Holders at
least 30 but not more than 60 days before the effective date thereof.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(c) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any re-recording,
refiling or reregistration thereof;
(d) the Property Trustee may consult with counsel of its own choosing
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
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(e) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers hereunder
or perform any of its duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on any Issuer Trustee or Administrator to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to any Issuer Trustee or
Administrator shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
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SECTION 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in Article
I, the Administrators, any Issuer Trustee or any other agent of any Issuer
Trustee or the Issuer Trust, in its individual or any other capacity, may become
the owner or pledgee of Trust Securities and, subject to Sections 8.8 and 8.13,
may otherwise deal with the Issuer Trust with the same rights it would have if
it were not an Administrator, Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon request
for all reasonable expenses, disbursements and advances incurred or made by the
Issuer Trustees in accordance with any provision of this Trust Agreement
(including the reasonable compensation, expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to their negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax (excluding income taxes, other than
taxes referred to in Sections 4.5 and 4.6 hereunder), penalty, expense or claim
of any kind or nature whatsoever incurred by such Indemnified Person arising out
of or in connection with the creation, operation or dissolution of the Issuer
Trust or any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the business of the Issuer Trust, shall not be
deemed wrongful or improper. Neither the Depositor, any Administrator, nor any
Issuer Trustee shall be obligated to present any particular investment or other
opportunity to the Issuer Trust even if such opportunity is of a character that,
if presented to the Issuer Trust, could be taken by the Issuer Trust, and the
Depositor, any Administrator or any Issuer Trustee shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such
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particular investment or other opportunity. Any Issuer Trustee may engage or be
interested in any financial or other transaction with the Depositor or any
Affiliate of the Depositor, or may act as depository for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Trustees and
Administrators.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is a
national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. At the time of appointment, the Property Trustee must have securities
rated in one of the three highest rating categories by a nationally recognized
statistical rating organization.
(b) There shall at all times be one or more Administrators hereunder. Each
Administrator shall be either a natural person who is at least 21 years of age
or a legal entity that shall act through one or more persons authorized to bind
that entity. An employee, officer or Affiliate of the Depositor may serve as an
Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware Trustee
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
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SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Property Trustee shall have power to appoint, and
upon the written request of the Property Trustee, the Depositor and the
Administrators shall for such purpose join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. Any co-trustee or
separate trustee appointed pursuant to this Section shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States or (ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:
(a) The Trust Securities shall be executed by one or more Administrators,
and the Trust Securities shall be executed and delivered and all rights, powers,
duties, and obligations hereunder in respect of the custody of securities, cash
and other personal property held by, or required to be deposited or pledged
with, the Property Trustees specified hereunder, shall be exercised, solely by
the Property Trustee and not by such co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee and such co-trustee or separate trustee jointly, as shall be provided in
the instrument appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any particular act is to
be performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the
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execution, delivery and performance of all instruments and agreements necessary
or proper to effectuate such resignation or removal. A successor to any co-
trustee or separate trustee so resigned or removed may be appointed in the
manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a co-
trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, a Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. The Relevant
Trustee shall appoint a successor by requesting from at least three Persons
meeting the eligibility requirements its expenses and charges to serve as the
successor Trustee on a form provided by the Administrators, and selecting the
Person who agrees to the lowest expenses and charges, subject to the prior
consent of the Depositor which consent shall not be unreasonably withheld. If
the instrument of acceptance by the successor Trustee required by Section 8.11
shall not have been delivered to the Relevant Trustee within 60 days after the
giving of such notice of resignation, the Relevant Trustee may petition, at the
expense of the Issuer Trust, any court of competent jurisdiction for the
appointment of a successor Trustee.
The Property Trustee or the Delaware Trustee may be removed at any time by
Act of the Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Issuer Trust) (i) for cause, or (ii) if a Debenture Event of
Default shall have occurred and be continuing at any time.
If a resigning Relevant Trustee shall fail to appoint a successor, or if a
Relevant Trustee shall be removed or become incapable of acting as Issuer
Trustee, or if any vacancy shall occur in the office of any Issuer Trustee for
any cause, the Holders of the Preferred Securities, by Act of the Holders of
record of not less than 25% aggregate Liquidation Amount of the Preferred
Securities then Outstanding delivered to such Relevant Trustee, shall promptly
appoint a successor Trustee or Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If no successor
Trustee shall have been so appointed by the Holders of the Preferred Securities
and accepted appointment in the manner required by Section 8.11, any Holder, on
behalf of himself and all others similarly situated, or any other Issuer
Trustee, may petition any court in the State of Delaware for the appointment of
a successor Trustee.
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The Property Trustee shall give notice of each resignation and each removal
of a Relevant Trustee and each appointment of a successor Trustee to all Holders
in the manner provided in Section 10.8 and shall give notice to the Depositor
and to the Administrators. Each notice shall include the name of the Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the Property Trustee following the procedures regarding expenses
and charges set forth above (with the successor in each case being a Person who
satisfies the eligibility requirement for Administrators or Delaware Trustee, as
the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the retiring
Relevant Trustee and each such successor Trustee with respect to the Trust
Securities shall execute, acknowledge and deliver an instrument wherein each
successor Trustee shall accept such appointment and which shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Trust Securities and the Issuer Trust, and
upon the execution and delivery of such instrument the resignation or removal of
the retiring Relevant Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the Relevant Trustee; but, on request of the Issuer Trust or any successor
Trustee such Relevant Trustee shall duly assign, transfer and deliver to such
successor Trustee all Trust Property, all proceeds thereof and money held by
such Relevant Trustee hereunder with respect to the Trust Securities and the
Trust.
Upon request of any such successor Trustee, the Issuer Trust shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
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SECTION 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon the Trust Securities), the Property Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Depositor (or any such other obligor) as is
required by the Trust Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than January 31 of each year commencing with ___________ __,
____, the Property Trustee shall transmit to all Holders in accordance with
Section 10.8, and to the Depositor, a brief report dated as of the immediately
preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect; and
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(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in Section 10.10 of this Trust Agreement. The Depositor and
the Administrators shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all the terms and covenants
applicable to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act as
set forth in Section 10.10 of this Trust Agreement. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property Trustee and
the Delaware Trustee may be the same Person, in which event the number of Issuer
Trustees shall be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a vacancy
shall occur. The vacancy shall be filled with an Issuer Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of an Issuer Trustee shall not operate to
annul the Issuer Trust.
SECTION 8.19. Delegation of Power.
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(a) Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purpose of executing any documents contemplated in Section 2.7(a) or
making any governmental filing; and
(b) The Administrators shall have power to delegate from time to time to
such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators) shall be
appointed by the Holders of a Majority in Liquidation Amount of the Common
Securities and all Administrators (including the initial Administrators) may be
removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any time there
is no Administrator, the Property Trustee or any Holder who has been a Holder of
Trust Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall occur, until
such vacancy is filled by the appointment of an Administrator in accordance with
this Section 8.20, the Administrators in office, regardless of their number (and
notwithstanding any other provision of this Trust Agreement), shall have all the
powers granted to the Administrators and shall discharge all the duties imposed
upon the Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing, or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement, or by applicable
law, any one Administrator may execute any document or otherwise take any action
which the Administrators are authorized to take under this Trust Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically dissolve on
_______ __, ____
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(the "Expiration Date"), following the distribution of the Trust Property in
accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early Termination
Event":
(a) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Depositor or all or substantially all of its property, or a court or other
governmental agency shall enter a decree or order and such decree or order shall
remain unstayed and undischarged for a period of 60 days, unless the Depositor
shall transfer the Common Securities as provided by Section 5.11, in which case
this provision shall refer instead to any such successor Holder of the Common
Securities;
(b) the written direction to the Property Trustee from the Holder of the
Common Securities at any time to dissolve the Issuer Trust and to distribute the
Junior Subordinated Debentures to Holders in exchange for the Preferred
Securities (which direction, subject to Section 9.4(a), is optional and wholly
within the discretion of the Holders of the Common Securities);
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a court
of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees, the
Administrators and the Issuer Trust created and continued hereby shall terminate
upon the latest to occur of the following: (a) the distribution by the Property
Trustee to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2, (b) the payment of any
expenses owed by the Issuer Trust, (c) the discharge of all administrative
duties of the Administrators, including the performance of any tax reporting
obligations with respect to the Issuer Trust or the Holders and (d) the filing
of a certificate of cancellation with the Delaware Secretary of State pursuant
to Section 3810 of the Delaware Business Trust Act.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d). Notice
of liquidation shall be given by the Property Trustee by first-class mail,
postage prepaid, mailed not later than 15 nor more than 45 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
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(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Junior Subordinated Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Junior Subordinated
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Administrators or the Property Trustee shall deem
appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Issuer Trust and distribution of the Junior Subordinated
Debentures to Holders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 30 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Junior Subordinated Debentures in
exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
the Clearing Agency for the Preferred Securities or its nominee, as the
registered holder of the Global Preferred Securities Certificate, shall receive
a registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution with respect to
Preferred Securities held by the Clearing Agency or its nominee, and, (iii) any
Trust Securities Certificates not held by the Clearing Agency for the Preferred
Securities or its nominee as specified in clause (ii) above will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to the
stated Liquidation Amount of the Trust Securities represented thereby and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Trust Securities until such certificates are
presented to the Securities Registrar for transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4, whether
because of an order for dissolution entered by a court of competent jurisdiction
or otherwise, distribution of the Junior Subordinated Debentures is not
practical, or if any Early Termination Event specified in clause (c) of Section
9 occurs, the Trust Property shall be liquidated, and the Issuer Trust shall be
dissolved by the Property Trustee in such manner as the Property Trustee
determines. In such event, on the date of the dissolution of the Issuer Trust,
Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of Liquidation Amount per Trust Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be entitled to
receive Liquidation Distributions upon any such dissolution pro rata
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(determined as aforesaid) with Holders of Preferred Securities, except that, if
a Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities as provided in
Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section
9.5. At the request of the Holders of the Common Securities, and with the
consent of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, however, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities have the same
priority as the Preferred Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) a trustee of such successor
entity possessing the same powers and duties as the Property Trustee is
appointed to hold the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization if the
Preferred Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, (v)
such successor entity has a purpose substantially identical to that of the
Issuer Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act and (vii) the Depositor or
any permitted transferee to whom it has transferred the Common Securities
hereunder own all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death or incapacity of any person
having an interest, beneficial or otherwise, in Trust Securities shall not
operate to terminate this Trust Agreement, nor entitle the legal representatives
or heirs of such person or any Holder for such person, to claim an accounting,
take any action or bring any proceeding in any court for a partition or winding-
up of the arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Any merger or
similar agreement shall be executed by the Administrators on behalf of the
Issuer Trust.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee and the Holders of a Majority in Liquidation Amount of the Common
Securities, without the consent of any Holder of the Preferred Securities (i) to
cure any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Trust Agreement,
provided, however, that such amendment shall not adversely affect in any
material respect the interests of any Holder or (ii) to modify, eliminate or add
to any provisions of this Trust Agreement to such extent as shall be necessary
to ensure that the Issuer Trust will not be taxable as a corporation for United
States federal income tax purposes at any time that any Trust Securities are
Outstanding or to ensure that the Issuer Trust will not be required to register
as an investment company under the Investment Company Act.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee and the Holders of a
Majority in Liquidation Amount of the Common Securities with (i) the consent of
Holders of at least a Majority in Liquidation Amount of the Preferred Securities
and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not cause the Issuer Trust to be taxable
as a corporation for United States federal income tax purposes or affect the
Issuer Trust's exemption from status of an "investment company" under the
Investment Company Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer
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Trust to fail or cease to qualify for the exemption from status as an
"investment company" under the Investment Company Act or be taxable as a
corporation for United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional obligation
on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrators or the Property Trustee shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
(h) Any amendments to this Trust Agreement shall become effective when
notice of such amendment is given to the holders of the Trust Securities.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS,
THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE ADMINISTRATORS WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 4.2(d)), with the same force and effect as though made on
the date fixed for such payment, and no Distributions shall accumulate on such
unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Issuer Trust, the Administrators and any
Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving
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the Depositor that is permitted under Article VIII of the Indenture and pursuant
to which the assignee agrees in writing to perform the Depositor's obligations
hereunder, the Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Holder or the Depositor may be given or served in writing by deposit
thereof, first class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Preferred Securities, to such Holder as such Holder's name and address may
appear on the Securities Register; and (b) in the case of the Holder of Common
Securities or the Depositor, to Gold Banc Corporation, Inc., 11301 Nall Avenue,
Leawood, Kansas 66211, Attention: Office of the Secretary, facsimile no.: (913)
451-8004 or to such other address as may be specified in a written notice by the
Depositor to the Property Trustee. Such notice, demand or other communication to
or upon a Holder shall be deemed to have been sufficiently given or made, for
all purposes, upon hand delivery, mailing or transmission. Such notice, demand
or other communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the
Depositor.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Issuer Trust, the Property Trustee, the Delaware Trustee, the Administrators, or
the Issuer Trust shall be given in writing addressed (until another address is
published by the Issuer Trust) as follows: (a) with respect to the Property
Trustee to Bankers Trust Company, Four Albany Street, 4th Floor, New York, NY
10006, Attention: Corporate Trust and Agency Group Corporate Market Services;
(b) with respect to the Delaware Trustee to Bankers Trust (Delaware), 1011
Centre Road, Suite 200, Trust Department, Wilmington, Delaware 19805-1266, and
(c) with respect to the Administrators, to them at the address above for notices
to the Depositor, marked "Attention: Office of the Secretary". Such notice,
demand or other communication to or upon the Issuer Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Issuer Trust, the Property Trustee, or such
Administrator.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor agree for
the benefit of the Holders that, until at least one year and one day after the
Issuer Trust has been dissolved in accordance with Article IX, they shall not
file, or join in the filing of, a petition against the Issuer Trust under any
bankruptcy, insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws")
or otherwise join in the commencement of any proceeding against the Issuer Trust
under any Bankruptcy Law. In the event the Depositor takes action in violation
of this Section 10.9, the Property Trustee agrees,
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for the benefit of Holders, that at the expense of the Depositor, it shall file
an answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor against the Issuer Trust or the commencement of
such action and raise the defense that the Depositor has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as counsel for the Issuer Trustee or the Issuer Trust
may assert. If any Issuer Trustee or Administrator takes action in violation of
this Section 10.9, the Depositor agrees, for the benefit of the Holders, that at
the expense of the Depositor, it shall file an answer with the bankruptcy court
or otherwise properly contest the filing of such petition by such Person against
the Depositor or the commencement of such action and raise the defense that such
Person has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as counsel for the Issuer
Trustee or the Issuer Trust may assert. The provisions of this Section 10.9
shall survive the termination of this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is subject
to the provisions of the Trust Indenture Act that are required to be a part of
this Trust Agreement and shall, to the extent applicable, be governed by such
provisions; (ii) if and to the extent that any provision of this Trust Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; (iii)
for purposes of this Trust Agreement, the Property Trustee, to the extent
permitted by applicable law and/or the rules and regulations of the Commission,
shall be the only Issuer Trustee which is a trustee for the purposes of the
Trust Indenture Act; and (iv) the application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Preferred Securities and the
Common Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the Depositor
and the Administrators on behalf of the Trust shall provide the Property Trustee
with such information as is required under Section 312(a) of the Trust Indenture
Act at the times and in the manner provided in Section 312(a) and (ii) the
Property Trustee shall comply with its obligations under Sections 310(b), 311
and 312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after May 15 of each
year, the Property Trustee shall provide to the Holders of the Trust Securities
such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form, in the manner and at the times provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor and the
Administrators on behalf of the Issuer Trust shall provide to the Property
Trustee, the Commission and the Holders of the Trust Securities, as applicable,
such documents, reports and information as required by Section 314(a)(1) -(3)
(if any) of the Trust Indenture Act and the compliance certificates required by
Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be provided within 120 days of the end of each fiscal year of the
Issuer Trust).
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(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as to the
names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted which does not specifically refer to Section
312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE
AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS
BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
GOLD BANC CORPORATION, INC.
as Depositor
By:_____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:_____________________________
Name:
Title:
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BANKERS TRUST (DELAWARE),
as Delaware Trustee and not
in its individual capacity
By:_____________________________
Name:
Title:
Subscribed to and Accepted by,
as the Initial Administrators:
_____________________________
_____________________________
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EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE]
<PAGE>
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE
OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
GBCI Capital Trust
____% Common Securities
(liquidation amount $25 per Common Security)
GBCI Capital Trust, a statutory business trust formed under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that Gold Banc
Corporation, Inc. (the "Holder") is the registered owner of _________ (_____)
common securities of the Issuer Trust representing undivided beneficial
interests in the assets of the Issuer Trust and has designated the ____% Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof other than in accordance therewith shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth in, and this certificate and
the Common Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Trust Agreement
of the Issuer Trust, dated as of ___________ __, 1997, as the same may be
amended from time to time (the "Trust Agreement") among Gold Banc Corporation,
Inc. as Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust
(Delaware), as Delaware Trustee, and the Holders of Trust Securities, including
the designation of the terms of the Common Securities as set forth therein. The
Issuer Trust will furnish a copy of the Trust Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place of
business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ___ day of ______________, ____.
<PAGE>
GBCI CAPITAL TRUST
By:_____________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:_____________________________
Name:
Signatory Officer
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<PAGE>
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITIES CERTIFICATE, INSERT -- This Preferred Securities Certificate is a
Global Preferred Securities Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Preferred Security Certificate is
exchangeable for Preferred Securities Certificates registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary, except in
the limited circumstances described in the Trust Agreement.
Unless this Preferred Security Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to GBCI Capital Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security Certificate issued is registered in the name
of such nominee as is requested by an authorized representative of DTC (and any
payment is made to such entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO A PERSON IS WRONGFUL inasmuch as the registered owner hereof, has an interest
herein.]
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
GBCI CAPITAL TRUST
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GBCI Capital Trust, a statutory business trust formed under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that _______________
(the "Holder") is the registered owner of ( ) preferred securities of the
Issuer Trust representing a preferred undivided beneficial interest in the
assets of the Issuer Trust and has designated the GBCI Capital Trust ____%
Preferred Securities (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.5 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Issuer Trust, dated as of ___________ __, 1997, as the
same may be amended from time to time (the "Trust Agreement"), among Gold Banc
Corporation, Inc. as Depositor, Bankers Trust Company, as Property Trustee,
Bankers Trust (Delaware), as Delaware Trustee, and the Holders of Trust
Securities, including the designation of the terms of the Preferred Securities
as set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement entered into by Gold Banc Corporation, Inc., a Kansas corporation, and
Bankers Trust Company, as guarantee trustee, dated as of ___________ __, 1997
(the "Guarantee Agreement"), to the extent provided therein. The Issuer Trust
will furnish a copy of the Issuer Trust Agreement and the Guarantee Agreement to
the Holder without charge upon written request to the Issuer Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this _______ day of ____________, 19__.
<PAGE>
GBCI CAPITAL TRUST
By:_____________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:_____________________________
Name:
Authorized Signatory
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
________________________________________________________________________________
(Insert assignee's social security or tax
identification number)
________________________________________________________________________________
____________________________(Insert address and zip code of assignee)
and irrevocably appoints ___________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:_____________
Signature:__________________________________
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
================================================================================
GUARANTEE AGREEMENT
Between
GOLD BANC CORPORATION, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
_________ __, 1997
================================================================================
<PAGE>
GBCI CAPTIAL TRUST
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
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Trust Indenture Guarantee Agreement
Act Section Section
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<S> <C> <C>
Section 310 (a) (1)........................ 4.1 (a)
(a) (2)........................ 4.1 (a)
(a) (3)........................ Not Applicable
(a) (4)........................ Not Applicable
(b)............................ 2.8, 4.1 (c)
Section 311 (a)............................ Not Applicable
(b)............................ Not Applicable
Section 312 (a)............................ 2.2 (a)
(b)............................ 2.2 (b)
(c)............................ Not Applicable
Section 313 (a)............................ 2.3
(a) (4)........................ 2.3
(b)............................ 2.3
(c)............................ 2.3
(d)............................ 2.3
Section 314 (a)............................ 2.4
(b)............................ 2.4
(c) (1)........................ 2.5
(c) (2)........................ 2.5
(c) (3)........................ 2.5
(e)............................ 1.1, 2.5, 3.2
Section 315 (a)............................ 3.1 (d)
(b)............................ 2.7
(c)............................ 3.1 (c)
(d)............................ 3.1 (d)
(e)............................ Not Applicable
Section 316 (a)............................ 1.1, 2.6, 5.4
(a) (1) (A).................... 5.4
(a) (1) (B).................... 5.4
(a) (2)........................ Not Applicable
(b)............................ 5.3
(c)............................ Not Applicable
Section 317 (a) (1)........................ Not Applicable
(a) (2)........................ Not Applicable
(b)............................ Not Applicable
Section 318 (a)............................ 2.1
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.................................................................................... 1
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application............................................................... 4
Section 2.2. List of Holders................................................................................ 5
Section 2.3. Reports by the Guarantee Trustee............................................................... 5
Section 2.4. Periodic Reports to Guarantee Trustee.......................................................... 5
Section 2.5. Evidence of Compliance with Conditions Precedent............................................... 5
Section 2.6. Events of Default; Waiver...................................................................... 5
Section 2.7. Event of Default; Notice....................................................................... 6
Section 2.8. Conflicting Interests.......................................................................... 6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee..................................................... 6
Section 3.2. Certain Rights of Guarantee Trustee............................................................ 8
Section 3.3. Indemnity...................................................................................... 9
Section 3.4. Expenses....................................................................................... 9
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility................................................................. 9
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.................................. 10
ARTICLE V. GUARANTEE
Section 5.1. Guarantee...................................................................................... 11
Section 5.2. Waiver of Notice and Demand.................................................................... 11
Section 5.3. Obligations Not Affected....................................................................... 11
Section 5.4. Rights of Holders.............................................................................. 12
Section 5.5. Guarantee of Payment........................................................................... 12
Section 5.6. Subrogation.................................................................................... 12
Section 5.7. Independent Obligations........................................................................ 13
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.................................................................................. 13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 6.2. Pari Passu Guarantees.......................................................................... 13
ARTICLE VII. TERMINATION
Section 7.1. Termination ................................................................................... 13
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns......................................................................... 13
Section 8.2. Amendments..................................................................................... 14
Section 8.3. Notices........................................................................................ 14
Section 8.4. Benefit........................................................................................ 15
Section 8.5. Interpretation................................................................................. 15
Section 8.6. Governing Law.................................................................................. 16
Section 8.7. Counterparts................................................................................... 16
</TABLE>
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<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of ________ __, 1997 is executed and
delivered by GOLD BANC CORPORATION, INC., a Kansas corporation (the
"Guarantor"), having its principal office at 11301 Nall Avenue, Leawood, Kansas
66211, and BANKERS TRUST COMPANY, a New York banking corporation, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein) of GBCI
Capital Trust, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of _________ __, 1997, among Gold Banc Corporation, Inc.,
as Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee") (collectively, the "Issuer Trustees") and the Holders from time to
time of preferred undivided beneficial ownership interests in the assets of the
Issuer Trust, the Issuer Trust is issuing up to $28,750,000 aggregate
Liquidation Amount (as defined herein) of its ____% Preferred Securities,
Liquidation Amount $25 per preferred security (the "Preferred Securities"),
representing preferred undivided beneficial ownership interests in the assets of
the Issuer Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust and
the proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Junior Subordinated Debentures due ________ __, ____ (as defined in the Trust
Agreement) (the "Junior Subordinated Debentures") of the Guarantor which will be
deposited with Bankers Trust Company, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of Preferred Securities by
each Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, and intending to be legally bound hereby, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders from time to
time of the Preferred Securities.
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement as in effect on the date hereof.
<PAGE>
"Additional Amounts" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from ___ __, 1997 and payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year, commencing _________ __,
____, at the annual rate of ____% of the Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified, amended
or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer Trust: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time, (ii) the Redemption Price, with respect to the
Preferred Securities called for redemption by the Issuer Trust to the extent
that the Issuer Trust shall have funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary termination, winding-up or liquidation
of the Issuer Trust, unless Junior Subordinated Debentures are distributed to
the Holders, the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment to the extent the
Issuer Trust shall have funds on hand available to make such payment at such
time and (b) the amount of assets of the Issuer Trust remaining available for
distribution to Holders in liquidation of the Issuer Trust (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph of this
Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of the
Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver
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<PAGE>
hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee, or
any Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of _________
__, 1997, between Gold Banc Corporation, Inc. and Bankers Trust Company, as
trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the first paragraph of
this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Preferred Security.
"Majority in Liquidation Amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Preferred Securities representing more
than 50% of the aggregate Liquidation Amount of all then outstanding Preferred
Securities issued by the Issuer Trust.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used to
pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such Junior
Subordinated Debentures are distributed, and (c) with respect to any
distribution of Additional Amounts to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution is
made.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman and Chief Executive Officer, President or a Vice
President, and by the Chief Financial Officer, Treasurer, an Associate
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
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<PAGE>
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
the Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
_____ __, 1997, executed by Gold Banc Corporation, Inc., as Depositor, Bankers
Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as Property
Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Guarantee Agreement as so
modified or excluded, as the case may be.
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<PAGE>
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee:
(i) quarterly, not more than 15 days after March 15, June 15,
September 15 and December 15 in each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses
of the Holders as of such date; and
(ii) at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements of
Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1998, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders such
documents, reports and information, if any, as required by Section 314 of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act, in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
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<PAGE>
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee, unless
such Events of Default have been cured before the giving of such notice;
provided that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the Board of Directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written notice of
such Event of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title and interest of the
Guarantee Trustee, as such, hereunder shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
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(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement (including pursuant to Section 2.1), and the
Guarantee Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or of
the Trust Indenture Act are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) The Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for
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<PAGE>
any remedy available to the Guarantee Trustee, or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) No provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers if the
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document reasonably
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall
be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the advice or written opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such security and
indemnity as would satisfy a reasonable person in the
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<PAGE>
position of the Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any negligence or willful misconduct on the
part of any such agent or attorney appointed with due care by it
hereunder. Nothing herein shall be construed as limiting or
restricting the right of Grantor to bring any action directly against
any agent or attorney appointed by the Guarantee Trustee for any
negligence or willful misconduct on the part of such agent or
attorney.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received and (C) shall be fully protected in acting in accordance
with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee, its directors,
officers, employees and agents for, and to hold them harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on the part of the Guarantee Trustee, its directors, officers, employees
and agents, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the costs and expenses of
defending against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any Guarantee Payments as a result of
any amount due to it under this Guarantee Agreement.
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SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee for
its reasonable expenses and costs (including reasonable attorneys' or agents'
fees) incurred in connection with the performance of its duties hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to the immediately preceding paragraph, a Guarantee
Trustee may resign at any time by giving written notice thereof to the Holders.
The Guarantee Trustee shall appoint a successor by requesting from at least
three Persons meeting the eligibility requirements such Person's expenses and
charges to serve as the Guarantee Trustee, and selecting the Person who agrees
to the lowest expenses and charges. If the instrument of acceptance by the
Successor Guarantee Trustee shall not have been delivered to the Guarantee
Trustee within 60 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the
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<PAGE>
Guarantor, any court of competent jurisdiction for the appointment of a
Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at
least a Majority in Liquidation Amount of the Preferred Securities, delivered to
the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Preferred Securities, by Act
of the Holders of record of not less than 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding delivered to such Guarantee Trustee,
shall promptly appoint a successor Guarantee Trustee. If no Successor Guarantee
Trustee shall have been so appointed by the Holders of the Preferred Securities
and such appointment accepted by the Successor Guarantee Trustee, any Holder, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
the Issuer Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
-11-
<PAGE>
(b) the extension of time for the payment by the Issuer Trust of all
or any portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment period
on the Junior Subordinated Debentures as so provided in the Indenture),
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer Trust granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer Trust or any of the
assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other Person.
-12-
<PAGE>
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures
to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer Trust with respect to the Preferred Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Junior Subordinated Debentures, and the provisions
of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by the Issuer
Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
-13-
<PAGE>
ARTICLE VII. TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely affect
the rights of the Holders (in which case no consent of the Holders will be
required), this Guarantee Agreement may only be amended with the prior approval
of the Holders of not less than a Majority in Liquidation Amount of the
Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number or to the attention of such
other Person as the Guarantor may give notice to the Holders:
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
Facsimile No.: (913) 451-8004
Attention: Office of the Secretary
-14-
<PAGE>
(b) if given to the Issuer Trust, in care of the Guarantee Trustee,
at the Issuer Trust's (and the Guarantee Trustee's) address set forth below or
such other address or telecopy number or to the attention of such other Person
as the Guarantee Trustee on behalf of the Issuer Trust may give notice to the
Holders:
c/o Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
Facsimile No.: (913) 451-8004
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Preferred Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
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<PAGE>
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-16-
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
GOLD BANC CORPORATION, INC.
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual
capacity
By:____________________________
Name:
Title:
-17-
<PAGE>
Exhibit 5(a)
November 6, 1997
GBCI Capital Trust
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawood, Kansas 66211
Dear Ladies and Gentlemen:
We have acted as counsel to Gold Banc Corporation, Inc., (the "Company") in
connection with the preparation and filing by the Company and GBCI Capital Trust
(the "Trust") of a registration statement (the "Registration Statement") on Form
SB-2 under the Securities Act of 1933, as amended (the "Act"), with respect to
the offer and sale of certain of the Trust's Preferred Securities (liquidation
amount $25 per Preferred Security) (the "Preferred Securities") and certain of
the Company's Junior Subordinated Debentures (the "Debentures") and the related
Guarantee Agreement by and between the Company and Bankers Trust Company, as
trustee (the "Guarantee"). In connection therewith, you have requested our
opinion as to certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with the
actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined originals or certified copies of
other documents, including the Registration Statement and the amendment thereto,
as we have deemed relevant and necessary as a basis for the opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures on original documents and the authenticity of all documents submitted
to us as originals, the conformity to original documents of all copies submitted
to us as conformed or photostatic copies, and the authenticity of the originals
of such latter documents. Our opinion is limited to the law of the State of
Kansas and the Federal law of the United States, and we do not express any
opinion herein concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that, when
issued (with respect to the Debentures), or executed and delivered (with respect
to the Guarantee), as set forth in the Registration Statement, the Debentures
and the Guarantee will be the valid and binding obligations of the Company,
enforceable in accordance with their terms, except as the
<PAGE>
GBCI Capital Trust
Gold Banc Corporation, Inc.
November 6, 1997
Page 2
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of bank holding
companies, the accounts of whose subsidiaries are insured by the Federal Deposit
Insurance Corporation, or by general equity principles, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
We consent to the references to this opinion and to Blackwell Sanders
Matheny Weary & Lombardi LLP in the Prospectus included as part of the
Registration Statement under the caption "Validity of Securities," and to the
inclusion of this opinion as an exhibit to the Registration Statement.
Sincerely,
/s/ Blackwell Sanders Matheny Weary & Lombardi LLP
<PAGE>
Exhibit 8
OVERLAND PARK, KANSAS
OMAHA, NEBRASKA
DIRECT: (816) 983-8000 SPRINGFIELD, MISSOURI
LONDON, ENGLAND
November 7, 1997
GBCI Capital Trust
Gold Banc Corporation, Inc.
11301 Nall Avenue
Leawod KS 66211
Ladies and Gentlemen:
We have acted as counsel to Gold Banc Corporation, Inc. (the "Company") and
to GBCI Capital Trust (the "Trust") in connection with the registration
statement of the Company and the Trust on Form SB-2 (the "Registration
Statement"), of which a prospectus ("Prospectus") is a part, filed by the
Company and the Trust with the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended. This opinion is furnished pursuant
to the requirements of Item 601(b)(8) of Regulation S-B.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents to all documents submitted to us as copies, the authenticity
of such copies and the accuracy and completeness of all corporates records made
available to us by the Company and the Trust.
Based solely upon our review of such documents, and upon such information
as the Company has provided to us (which we have not attempted to verify in any
respect), and reliance upon such documents and information, we hereby adopt and
incorporate by reference the opinion set forth in the Prospectus under the
caption "Certain Federal Income Tax Consequences."
Our opinion is limited to the federal income tax matters described above
and does not address any other federal income tax considerations or any state,
local, foreign, or other tax considerations. If any of the information on which
we have relied is incorrect, or if changes in the relevant facts occur after the
date hereof, our opinion could be affected thereby.
<PAGE>
GBCI Capital Trust
Gold Banc Corporation, Inc.
November 7, 1997
Page 2
Moreover, our opinion is based on the Internal Revenue Code of 1986, as amended,
applicable Treasury regulations promulgated thereunder, and Internal Revenue
Service rulings, procedures, and other pronouncements published by the United
States Internal Revenue Service. These authorities are all subject to change,
and such change may be made with retroactive effect. We can give no assurance
that, after such change, our opinion would not be different. We undertake no
responsibility to update or supplement our opinion. This opinion is not binding
on the Internal Revenue Service, and there can be no assurance, and none is
hereby given, that the Internal Revenue Service will not take a position
contrary to one or more of the positions reflected in the foregoing opinion, or
that our opinion will be upheld by the courts if challenged by the Internal
Revenue Service.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
Very truly yours,
/s/ Blackwell, Sanders, Matheny, Weary, & Lombardi LLP
<PAGE>
Exhibit 9(c)
CONSENT AND AGREEMENT
This Consent and Agreement is made and given this 28th day of May, 1997, by
and between MICHAEL W. GULLION ("Gullion") and THE LIFEBOAT FOUNDATION (the
"Foundation").
RECITALS
A. Allen D. Petersen ("Petersen") owns One Hundred Seventy-One Thousand
Eight Hundred and Twenty-Eight (171,828) common shares (the "Shares") of Gold
Banc Corporation, Inc. (the "Corporation").
B. Gullion and Petersen entered into a Proxy Agreement/Shareholder
Agreement dated September 15, 1996, a copy of which is attached as Exhibit "A"
(the "Agreement"), wherein Petersen granted Gullion a right of first refusal to
purchase, and an irrevocable proxy to vote all of the Shares.
C. Petersen desires to transfer the Shares to the Foundation and Gullion
and the Foundation deem it in their respective best interests to consent to and
facilitate the transfer of the Shares.
NOW, THEREFORE, in consideration of the foregoing:
A. Gullion hereby consents to the transfer of the Shares to the
Foundation.
B. The Foundation agrees to be bound by the terms of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the day and year first above written.
/s/ Michael W. Gullion
_________________________________________
MICHAEL W. GULLION
THE LIFEBOAT FOUNDATION
/s/ Jeremy Hobbs
By:______________________________________
Jeremy Hobbs, Secretary
<PAGE>
Exhibit 21
Exchange National Bank
Citizens State Bank and Trust Company
Peoples National Bank
Gold Banc Acquisitions, Inc. II
The Farmers National Bank of Oberlin, Kansas
Provident Bank, f.s.b.
Gold Banc Financial Services, Inc.
KC2-12345.1
<PAGE>
Exhibit 23(a)
ACCOUNTANTS' CONSENT
Board of Directors
Gold Banc Corporation, Inc.
We consent to the use of our report on the consolidated financial
statements of Gold Banc Corporation, Inc. as of and for the years ended December
31, 1996 and 1995 included herein and to the reference to our firm under the
heading "Experts" in the Registration Statement. The consolidated financial
statements give retroactive effect to the merger with Peoples Bancshares, Inc.
effective August 22, 1997. Our opinion on the consolidated financial statements
is based in part on the report of other auditors.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
November 6, 1997
<PAGE>
Exhibit 23(b)
ACCOUNTANTS' CONSENT
We hereby consent to the use of our independent auditors' report dated May
23, 1997 (on the consolidated financial statements of Peoples Bancshares, Inc.
and Subsidiary as of and for the years ended December 31, 1996 and 1995)
included in this Form SB-2 Registration Statement and to the reference to our
firm under the heading "Experts" included herein.
/s/ GRA, Thompson, White & Co., P.C.
Merriam, Kansas
November 6, 1997
<PAGE>
- - --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------
-----------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET 10006
NEW YORK, NEW YORK (Zip Code)
(Address of principal
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
-----------------------
GOLD BANC CORPORATION, INC.
(Exact name of Registrant as specified in its charter)
Kansas 48-1008593
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
11301 Nall Avenue
Leawood, Kansas 66211
(Address, including zip code
of principal executive offices)
GBCI CAPITAL TRUST
(Exact name of Registrant as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization Identification no.)
11301 Nall Avenue
Leawood, Kansas 66211
(Address, including zip code
of principal executive offices)
__% Preferred Securities of GBCI Capital Trust
__% Junior Subordinated Debentures of Gold Banc Corporation, Inc.
Gold Banc Corporation, Inc. Guarantee with respect to Preferred Securities
(Title of the securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3.-15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Company dated
August 7, 1990, Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated June 21, 1995 -
Incorporated herein by reference to Exhibit 1 filed with
Form T-1 Statement, Registration No. 33-65171, Certificate
of Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of Amendment of
the Organization Certificate of Bankers Trust Company dated
June 19, 1997, copy attached.
Exhibit 2 - Certificate of Authority to commence business - Incorporated
herein by reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate trust
powers - Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended on
February 18, 1997, Incorporated herein by reference to
Exhibit 4 filed with Form T-1 Statement, Registration No.
333-24509-01.
-2-
<PAGE>
Exhibit 5 - Not Applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section 321(b) of the
Act. - Incorporated herein by reference to Exhibit 4 filed with
Form T-1 Statement, Registration No 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust Company dated as of
June 30, 1997. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 3rd day
of November, 1997.
BANKERS TRUST COMPANY
By: /s/ Jason Krasilovsky
------------------------
Jason Krasilovsky
Assistant Treasurer
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 3rd day
of November, 1997.
BANKERS TRUST COMPANY
By: /s/ Jason Krasilovsky
Jason Krasilovsky
Assistant Treasurer
-5-
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 6/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial and State-Chartered
Saving Banks for June 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<S> <C> <C> <C>
_____
| C400|
---------------------
Dollar Amounts in Thousands| RCFD Bil Mil Thou |
- - ---------------------------------------------------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Non interest-bearing balances and currency and coin(1)................................. | 0081 1,724,000 | 1.a.
b. Interest-bearing balances(2)........................................................... | 0071 2,648,000 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A)............................. | 1754 0 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........................... | 1773 3,990,000 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in | 1350 26,430,000 | 3.
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold..................................................................... | |
b. Securities purchased under agreements to resell........................................ | |
4. Loans and lease financing receivables: | ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 17,815,000 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses.................... RCFD 3123 723,000 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve........................ RCFD 3128 0 | ////////////////// | 4.c.
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c).................................... | 2125 17,092,000 | 4.d.
5. Assets held in trading accounts........................................................... | 3545 40,350,000 | 5.
6. Premises and fixed assets (including capitalized leases).................................. | 2145 937,000 | 6.
7. Other real estate owned (from Schedule RC-M).............................................. | 2150 195,000 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from | |
Schedule RC-M)............................................................................ | 2130 96,000 | 8.
9. Customers' liability to this bank on acceptances outstanding.............................. | 2155 691,000 | 9.
10. Intangible assets (from Schedule RC-M).................................................... | 2143 85,000 | 10.
11. Other assets (from Schedule RC-F)......................................................... | 2160 4,633,000 | 11.
12. Total assets (sum of items 1 through 11).................................................. | 2170 98,871,000 | 12.
</TABLE>
- - ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 6/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3 |
<S> <C> <C>
Schedule RC--Continued
----------------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
LIABILITIES ////////////////////////
13. Deposits: ////////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E.
part 1)........................................................................ RCON 2200 18,026,000 13.a.
(1) Noninterest-bearing (1)..........................RCON 6631 3,184,000 //////////////////////// 13.a.(1)
(2) Interest-bearing.................................RCON 6636 14,842,000 //////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule ////////////////////////
RC-E, part II)................................................................. RCFN 2200 22,173,000 13.b.
(1) Noninterest-bearing..............................RCFN 6631 1,454,000 ///////////////////// 13.b.(1)
(2) Interest-bearing.................................RCFN 6636 20,719,000 //////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in //// 2800 14,623,000 14.
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBFs: //////////////////////
a. Federal funds purchased........................................................ RCFD 0278
b. Securities sold under agreements to repurchase................................. RCFD 0279 14.b.
15. a. Demand notes issued to the U.S. Treasury....................................... RCON 2840 0 15.a.
b. Trading liabilities............................................................ RCFD 3548 19,819,000 15.b.
16. Other borrowed money: ////////////////////////
a. With original maturity of one year or less..................................... RCFD 2332 6,877,000 16.a.
b. With original maturity of more than one year................................... A547 217,000 16.b.
c. With a remaining maturity of more than three years............................. A548 4,848,000 16.c.
17. Mortgage indebtedness and obligations under capitalized leases....................
18. Bank's liability on acceptance executed and outstanding........................... RCFD 2920 691,000 18.
19. Subordinated notes and debentures................................................. RCFD 3200 1,251,000 19.
20. Other liabilities (from Schedule RC-G)............................................ RCFD 2930 4,872,000 20.
21. Total liabilities (sum of items 13 through 20).................................... RCFD 2948 93,397,000 21.
//////////////////////
22. Limited-life preferred stock and related surplus.................................. RCFD 3282 0 22.
EQUITY CAPITAL //////////////////////
23. Perpetual preferred stock and related surplus..................................... RCFD 3838 1,000,000 23.
24. Common stock...................................................................... RCFD 3230 1,001,000 24.
25. Surplus (exclude all surplus related to preferred stock).......................... RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves......................................... RCFD 3632 3,314,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities......... RCFD 8434 ( 3,000) 26.b.
27. Cumulative foreign currency translation adjustments............................... RCFD 3284 ( 378,000) 27.
28. Total equity capital (sum of items 23 through 27)................................. RCFD 3210 5,474,000 28.
29. Total liabilities limited-life preferred stock, and equity capital (sum of items //////////////////////
21, 22, and 28)................................................................... RCFD 3300 98,871,000 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank by Number
independent external auditors as of any date during 1996......................... RCFD 6724 N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- - -----------
(1) Includes total demand deposits and non interest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New York,
DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF
THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section 8005 of the
Banking Law," dated June 19, 1997, providing for an increase in authorized
capital stock from $1,601,666,670 consisting of 100,166,667 shares with a par
value of $10 each designated as Common Stock and 600 shares with a par value of
$1,000,000 each designated as Series Preferred Stock to $2,001,666,670
consisting of 100,166,667 shares with a par value of $10 each designated as
Common Stock and 1,000 shares with a par value of $1,000,000 each designated as
Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 27th day of June in the Year of our Lord one thousand nine
hundred and ninety-seven.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE>
Exhibit 99
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Peoples Bancshares, Inc.
Clay Center, Kansas
We have audited the accompanying consolidated balance sheets of Peoples
Bancshares, Inc. and subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Peoples
Bancshares, Inc. and subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
GRA, THOMPSON, WHITE & CO., P.C.
Merriam, Kansas
May 23, 1997
