<PAGE> 1
Filed Pursuant to Rule 424(a)
Registration Nos. 333-22055
333-22055-01
SUBJECT TO COMPLETION, DATED FEBRUARY 24, 1997
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
PROSPECTUS
520,000 PREFERRED SECURITIES
MVBI CAPITAL TRUST
FLOATING RATE CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
Parent Company of
MISSISSIPPI VALLEY SOUTHWEST BANK
BANCSHARES, INC.
-------------------
$13,000,000 FLOATING RATE SUBORDINATED DEBENTURES OF
MISSISSIPPI VALLEY BANCSHARES, INC.
-------------------
The Floating Rate Cumulative Trust Preferred Securities (the "Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of MVBI Capital Trust, a statutory business trust created under
the laws of the State of Delaware ("MVBI Capital"). Mississippi Valley
Bancshares, Inc., a Missouri corporation (the
(continued on next page)
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the symbol
"MVBIP."
-------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS, ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NON-
BANKING AFFILIATE OF THE COMPANY (EXCEPT TO THE EXTENT THAT PREFERRED
SECURITIES ARE GUARANTEED BY THE COMPANY AS DESCRIBED HEREIN), ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
-------------------
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.
<TABLE>
===================================================================================================================
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC COMMISSION<F1> MVBI CAPITAL<F2>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security.......................... $25.00 $ <F2> $25.00
- -------------------------------------------------------------------------------------------------------------------
Total<F3>....................................... $13,000,000 $ <F2> $13,000,000
===================================================================================================================
<FN>
<F1>MVBI Capital and the Company have each agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
<F2>In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, the Company has
agreed to pay the Underwriter as compensation for its arranging the
investment therein of such proceeds, $ per Preferred Security, or
$ in the aggregate, ($ if the over-allotment option is
exercised in full). See "Underwriting." The Company has also agreed to
pay the expenses of the offering estimated to be $200,000.
<F3>MVBI Capital has granted the Underwriter an option exercisable within 30
days from the date of this Prospectus to purchase up to 78,000 additional
Preferred Securities on the same terms and conditions set forth above to
cover over-allotments, if any. If all such additional Preferred Securities
are purchased, the total Price to Public and Proceeds to MVBI Capital will
be $14,950,000. See "Underwriting."
</TABLE>
-------------------
The Preferred Securities are offered by the Underwriter subject to receipt
and acceptance by it, prior sale and the Underwriter's right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of certificates for the Preferred
Securities will be made on or about , 1997.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
, 1997
<PAGE> 2
(continued from previous page)
"Company"), will own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of MVBI Capital.
State Street Bank and Trust Company is the Property Trustee (as defined
herein) of MVBI Capital. MVBI Capital exists for the purpose of issuing the
Preferred Securities and investing the proceeds thereof in an equivalent amount
of Floating Rate Subordinated Debentures (the "Subordinated Debentures") of
the Company. The Subordinated Debentures will mature on March 31, 2027, which
date may be (i) shortened to a date not earlier than March 31, 2002, or (ii)
extended to a date not later than March 31, 2036 if certain conditions are met
(including, in the case of shortening the Stated Maturity (as defined herein),
the Company having received prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") to do so if then required
under applicable capital guidelines or policies of the Federal Reserve). The
Preferred Securities will have a preference under certain circumstances with
respect to cash distributions and amounts payable on liquidation, redemption or
otherwise over the Common Securities. See "Description of the Preferred
Securities--Subordination of Common Securities."
Holders of Preferred Securities are entitled to receive preferential
cumulative cash distributions (the "Distributions"), at the annual rate equal
to 3-Month Treasury (as defined herein) plus % (the "Distribution Rate")
of the liquidation amount of $25 per Preferred Security (the "Liquidation
Amount"), accruing from the date of original issuance and payable quarterly in
arrears on the last day of March, June, September and December of each year,
commencing June 30, 1997. The Company has the right, so long as no Debenture
Event of Default (as defined herein) has occurred and is continuing, to defer
payment of interest on the Subordinated Debentures at any time or from time to
time for a period not to exceed 20 consecutive quarters with respect to each
deferral period (each, an "Extended Interest Payment Period"); provided that
no Extended Interest Payment Period may extend beyond the Stated Maturity of
the Subordinated Debentures. Upon the termination of any such Extended Interest
Payment Period and the payment of all amounts then due, the Company may elect
to begin a new Extended Interest Payment Period subject to the requirements set
forth herein. If interest payments on the 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 its capital
stock or debt securities that rank pari passu with or junior to the
Subordinated Debentures. DURING AN EXTENDED INTEREST PAYMENT PERIOD, INTEREST
ON THE SUBORDINATED DEBENTURES WILL CONTINUE TO ACCRUE (AND THE AMOUNT OF
DISTRIBUTIONS TO WHICH HOLDERS OF THE PREFERRED SECURITIES ARE ENTITLED WILL
ACCUMULATE) AT THE DISTRIBUTION RATE, COMPOUNDED QUARTERLY, AND HOLDERS OF THE
PREFERRED SECURITIES WILL BE REQUIRED TO INCLUDE INTEREST INCOME IN THEIR GROSS
INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES IN ADVANCE OF RECEIPT OF
THE CASH DISTRIBUTIONS WITH RESPECT TO SUCH DEFERRED INTEREST PAYMENTS. A
HOLDER OF PREFERRED SECURITIES THAT DISPOSES OF ITS PREFERRED SECURITIES
BETWEEN RECORD DATES FOR PAYMENTS OF DISTRIBUTIONS (AND CONSEQUENTLY DOES NOT
RECEIVE A DISTRIBUTION FROM MVBI CAPITAL FOR THE PERIOD PRIOR TO SUCH
DISPOSITION) WILL NEVERTHELESS BE REQUIRED TO INCLUDE ACCRUED BUT UNPAID
INTEREST ON THE SUBORDINATED DEBENTURES THROUGH THE DATE OF DISPOSITION IN
INCOME AS ORDINARY INCOME AND TO ADD SUCH AMOUNT TO ITS ADJUSTED TAX BASIS IN
ITS PRO RATA SHARE OF THE UNDERLYING SUBORDINATED DEBENTURES DEEMED DISPOSED
OF. See "Description of the Subordinated Debentures--Option to Extend Interest
Payment Period," "Certain Federal Income Tax Consequences--Potential
Extension of Interest Payment Period and Original Issue Discount" and
"--Disposition of Preferred Securities."
The Company and MVBI Capital believe that, taken together, the obligations
of the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein)
provide, in the aggregate, a full, irrevocable and unconditional guaranty, on a
subordinated basis, of all of the obligations of MVBI Capital under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
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 MVBI Capital, as described herein. See
"Description of the Guarantee--General." If the Company does not make
interest payments on the Subordinated Debentures held by MVBI Capital, MVBI
Capital will have insufficient funds to pay Distributions on the Preferred
Securities. The Guarantee does not cover payments of Distributions when MVBI
Capital 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 pursuant to the terms of the Indenture to enforce
payments of amounts equal to such Distributions to such holder. See
"Description of the Subordinated Debentures--Enforcement of Certain Rights by
Holders of 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 Debt, Subordinated Debt and Additional Senior Obligations
(each as defined herein) of the Company. The Subordinated Debentures are
unsecured obligations of the Company and are subordinated to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company.
(continued on next page)
<PAGE> 3
(continued from previous page)
The Preferred Securities are subject to mandatory redemption, in whole or
in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve approval, if then
required under applicable capital guidelines or policies of the Federal
Reserve, the Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after March 31, 2002, in whole at any time or
in part from time to time, or (ii) at any time, in whole (but not in part),
within 180 days following the occurrence of a Tax Event, a Capital Treatment
Event or an Investment Company Event (each as defined herein), in each case at
a redemption price equal to the accrued and unpaid interest on the Subordinated
Debentures so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of the Preferred
Securities--Redemption or Exchange."
The Company has the right at any time to dissolve, wind-up or terminate
MVBI Capital 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. In the event of the voluntary or
involuntary dissolution, winding up or termination of MVBI Capital, after
satisfaction of liabilities to creditors of MVBI Capital as required by
applicable law, the holders of 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, which may be in the form of a
Subordinated Debenture having an aggregate principal amount equal to the
Liquidation Amount of such Preferred Securities (and carrying with it
accumulated interest in an amount equal to the accumulated and unpaid
Distributions then due on such Preferred Securities), subject to certain
exceptions. See "Description of the Preferred Securities--Redemption or
Exchange" and "--Liquidation Distribution Upon Termination."
--------------------------------
The Company will provide to the holders of the Preferred Securities
quarterly reports containing unaudited financial statements, if such reports
are furnished to the holders of the Company's Common Stock, and annual reports
containing financial statements audited by the Company's independent auditors.
--------------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
<PAGE> 4
MISSISSIPPI VALLEY BANCSHARES, INC.
PARENT COMPANY OF
SOUTHWEST BANK
ST. LOUIS AREA
[MAP]
* PRESENT SOUTHWEST BANK
LOCATIONS
O PROPOSED SOUTHWEST BANK
LOCATIONS PENDING
REGULATORY APPROVAL
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere (or incorporated by reference) in this
Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriter's over-allotment option will not be exercised.
Prospective investors should carefully consider the information set forth under
the heading "Risk Factors."
THE COMPANY
The Company is a one-bank holding company headquartered in St. Louis
County, Missouri engaged primarily in commercial lending through Southwest Bank
of St. Louis (the "Bank"). The Bank has been nationally recognized for its
frequent practice of reducing its prime rate in advance of industry wide prime
rate cuts. The Bank has five banking offices, all of which are located in the
St. Louis metropolitan statistical area (the "St. Louis MSA"), the
seventeenth largest metropolitan area in the United States, with a population
of approximately 2.5 million. Since acquiring the Bank in 1984, the Company has
expanded the Bank's loan portfolio from $57 million to $731 million at December
31, 1996, or approximately $56 million per year. The Company has earned an
average return on equity of 17.21% over the past five years. The principal
executive office of the Company is 700 Corporate Park Drive, St. Louis,
Missouri 63105, and its telephone number is (314) 268-2580.
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net income............................................... $ 14,096 $ 10,747 $ 8,632 $ 6,347 $ 4,719
Earnings per share (fully diluted)....................... 2.92 2.24 1.81 1.53 1.38
Assets (at period end)................................... 1,065,777 995,048 772,015 653,518 578,687
Deposits (at period end)................................. 918,012 886,565 658,956 546,445 518,855
Shareholders' equity..................................... 75,949 70,107 54,750 49,037 30,138
Return on average total assets........................... 1.40% 1.22% 1.21% 1.05% .88%
Return on average total equity........................... 19.07% 17.34% 16.61% 16.18% 16.85%
</TABLE>
The Company's strategy is to act primarily as a lender to middle market
companies located within 200 miles of St. Louis. These companies tend to be
privately-held and owner-operated, with annual sales of less than $100 million
and with typical borrowing requirements of $500,000 to $3 million.
Management believes that the Company is able to compete effectively in its
market because (i) the Bank's lending officers and senior management maintain
close working relationships with their commercial customers and their
businesses, (ii) the Bank is able to react more quickly to loan requests than
the Company's large competitors yet is able to fund loan amounts which smaller
St. Louis area commercial lenders are unable to fund, (iii) the Bank's
management and loan officers have significant experience within the St. Louis
community, and (iv) industry consolidation has resulted in fewer independent
banks and fewer banks addressing the Bank's target market niche.
The Bank's historical growth strategy has been asset driven, as the Bank
has increased its loan portfolio based on lending opportunities which meet the
Bank's underwriting standards. The Bank has expanded its retail deposit base to
meet lending growth demands through opening new locations and offering
promotional deposit rates, often concurrently. These deposit promotional
activities are usually implemented as the Bank's loan-to-deposit ratio
increases significantly past the 85% level which management targets. The Bank
opened one new location in each of 1990, 1992 and 1995. The Bank is currently
seeking regulatory approval to establish a new banking office in Belleville,
Illinois, which is located in the St. Louis MSA and has acquired land for a new
banking office in West St. Louis County, Missouri; the Belleville office would
be the Bank's first location outside of Missouri. It is anticipated that, if
regulatory approval is obtained, construction will begin on the Belleville
office in the Spring of 1997 and the Bank will occupy and commence operating in
this location in late 1997 or early 1998.
The Company's operating strategy has resulted in a higher cost of funds
(and, consequently, a lower net interest margin) than experienced by other
institutions within its market, due to its rate driven retail deposit gathering
activities. For 1996 and 1995, the Company reported net interest margins of
4.01% and 3.80%, respectively.
On the other hand, this operating strategy has permitted the Company to
achieve consistently lower overhead ratios than other comparable institutions
by (i) operating a small number of offices with a per-office deposit base
averaging $184 million as of December 31, 1996, (ii) emphasizing commercial
loans, which tend to be larger in size
2
<PAGE> 6
than retail loans, (iii) employing an experienced staff, (iv) improving data
processing and operational systems in order to increase productivity, and (v)
outsourcing services where possible. For 1996 and 1995, the Company reported
efficiency ratios (non-interest expense divided by the sum of tax-equivalent
net interest income plus non-interest income) of 41.25% and 45.06%,
respectively. These ratios are significantly better than those of the Company's
peers. The Company's average assets per employee, which was $4.74 million for
1996, has also been consistently better than the industry average.
Mr. Andrew N. Baur, Chairman and Chief Executive Officer of the Company,
and Mr. Linn H. Bealke, President of the Company, control approximately 15.4%
of the capital stock of the Company as of December 31, 1996, and the Board of
Directors and executive officers as a group own approximately 33.8% of the
capital stock of the Company as of December 31, 1996.
MVBI CAPITAL
MVBI Capital is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of February 14, 1997, executed by
the Company, as depositor, and the trustees of MVBI Capital (together with the
Property Trustee, the "Trustees"), and (ii) a certificate of trust filed with
the Secretary of State of the State of Delaware on February 14, 1997. The
initial trust agreement will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement") substantially in the form filed
as an exhibit to the Registration Statement (as defined herein) of which this
Prospectus forms a part. The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Upon issuance of the Preferred Securities, the purchasers thereof will
own all of the Preferred Securities. The Company will acquire all of the Common
Securities which will represent an aggregate liquidation amount equal to at
least 3% of the total capital of MVBI Capital. 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 continuance of an
Event of Default (as defined herein) under the Trust Agreement resulting from a
Debenture Event of Default, the rights of the Company as 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 the Preferred
Securities--Subordination of Common Securities." MVBI Capital exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of MVBI Capital, (ii) investing the gross
proceeds of the Trust Securities in the Subordinated Debentures issued by the
Company, and (iii) engaging in only those other activities necessary,
advisable, or incidental thereto. The Subordinated Debentures and payments
thereunder will be the only assets of MVBI Capital and payments under the
Subordinated Debentures will be the only revenue of MVBI Capital. MVBI Capital
has a term of 55 years, but may terminate earlier as provided in the Trust
Agreement. The principal executive office of MVBI Capital is 700 Corporate Park
Drive, St. Louis, Missouri 63105, and its telephone number is (314) 268-2580.
The number of Trustees will, pursuant to the Trust Agreement, initially be
five. Three of the Trustees (the "Administrative Trustees") will be persons
who are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as institutional trustee under the Trust
Agreement and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). State Street
Bank and Trust Company, a state chartered trust company organized under the
laws of the Commonwealth of Massachusetts, will be the Property Trustee until
removed or replaced by the holder of the Common Securities. For purposes of
compliance with the provisions of the Trust Indenture Act, State Street Bank
and Trust Company will also act as trustee (the "Guarantee Trustee") under
the Guarantee and as Debenture Trustee (as defined herein) under the Indenture.
The fifth trustee will be an entity that maintains its principal place of
business in the State of Delaware (the "Delaware Trustee"). Wilmington Trust
Company, a Delaware chartered trust company, will act as Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and in such capacity will have
the power to exercise all rights, powers and privileges under the Indenture.
The Property Trustee will also maintain exclusive control of a segregated
non-interest-bearing bank account (the "Property Account") to hold all
payments made in respect of the Subordinated Debentures for the benefit of the
holders of the Trust Securities. The Property Trustee will make payments of
Distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities. The Company, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Trustee
3
<PAGE> 7
and to increase or decrease the number of Trustees. The Company will pay all
fees and expenses related to MVBI Capital and the offering of the Trust
Securities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
THE OFFERING
<TABLE>
<S> <C>
Securities Offered............ 520,000 Preferred Securities having a Liquidation Amount of $25 per
Preferred Security. The Preferred Securities represent preferred undivided
beneficial interests in the assets of MVBI Capital, which will consist
solely of the Subordinated Debentures and payments thereunder. MVBI Capital
has granted the Underwriter an option, exercisable within 30 days after the
date of this Prospectus, to purchase up to an additional 78,000 Preferred
Securities at the initial offering price, solely to cover over-allotments,
if any.
Distributions................. The Distributions payable on each Preferred Security will float at the
Distribution Rate applied to the Liquidation Amount of $25 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 June 30, 1997. The Distribution Rate is equal to 3-Month
Treasury (determined as provided herein) plus %. See "Description of
the Preferred Securities--Distributions--
Payment of Distributions" and "--Determination of 3-Month Treasury."
Option to Extend Interest
Payment Period.............. The Company has the right, at any time, so long as no Debenture Event of
Default has occurred and is continuing, to defer payments of interest on
the Subordinated Debentures for a period not exceeding 20 consecutive
quarters; provided, that no Extended Interest Payment Period may extend
beyond the Stated Maturity of the Subordinated Debentures. As a consequence
of the extension by the Company of the interest payment period, quarterly
Distributions on the Preferred Securities will be deferred (though such
Distributions would continue to accrue with interest thereon compounded
quarterly, since interest will continue to accrue and compound on the
Subordinated Debentures) during any such Extended Interest Payment Period.
During an Extended Interest Payment 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 Subordinated Debentures. Upon
the termination of any Extended Interest Payment Period and the payment of
all amounts then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. See "Description of
the Preferred Securities--Distributions--Extension Period" and
"Description of the Subordinated Debentures--Option to Extend Interest
Payment Period."
Should an Extended Interest Payment Period occur, holders of Preferred
Securities will be required to include deferred interest income in their
gross income for United States federal income tax purposes in advance of
receipt of the cash distributions with respect to such deferred interest
payments. See "Certain Federal Income Tax Consequences--Potential
Extension of Interest Payment Period and Original Issue Discount."
4
<PAGE> 8
Optional Redemption........... The Preferred Securities are subject to mandatory redemption, in whole or
in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve approval, if then required
under applicable capital guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to maturity at the option of
the Company (i) on or after March 31, 2002, in whole at any time or in part
from time to time, or (ii) at any time, in whole (but not in part), within
180 days following the occurrence of a Tax Event, a Capital Treatment Event
or an Investment Company Event, in each case at the redemption price equal
to 100% of the principal amount of the Subordinated Debenture, together
with any accrued but unpaid interest to the date fixed for redemption. See
"Description of the Subordinated Debentures--Redemption or Exchange."
Distribution of Subordinated
Debentures.................. The Company has the right at any time to terminate the Preferred Securities
and cause the Subordinated Debentures to be distributed to holders of
Preferred Securities in liquidation of MVBI Capital, 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 the Preferred Securities--Redemption or
Exchange" and "Description of the Preferred Securities--Liquidation
Distribution Upon Termination."
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 MVBI Capital, as described herein. The
Company and MVBI Capital believe that, taken together, the obligations of
the Company under the Guarantee, the Trust Agreement, the Subordinated
Debentures, the Indenture and the Expense Agreement provide, in the
aggregate, a full, irrevocable and unconditional guaranty, on a
subordinated basis, of all of the obligations of MVBI Capital under 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 Debt, Subordinated Debt and Additional Senior Obligations of
the Company. If the Company does not make principal or interest payments on
the Subordinated Debentures, MVBI Capital will not have sufficient funds to
make distributions on the Preferred Securities; in which event, the
Guarantee will not apply to such Distributions until MVBI Capital has
sufficient funds available therefor. See "Description of the Guarantee."
Voting Rights................. The holders of the Preferred Securities generally will have no voting
rights except in limited circumstances. See "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement."
Use of Proceeds............... The proceeds from the sale of the Preferred Securities offered hereby will
be used by MVBI Capital to purchase the Subordinated Debentures issued by
the Company. The Company intends to use the net proceeds from the sale of
the Subordinated Debentures for general corporate purposes, including
possible repurchase of outstanding shares of the Company's common stock,
and will invest the net proceeds in investment securities pending its use
for such purposes. See "Use of Proceeds."
Nasdaq National Market
Symbol...................... Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the symbol
"MVBIP."
</TABLE>
5
<PAGE> 9
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income......... $ 79,719 $ 70,402 $ 53,036 $ 42,756 $ 41,244
Interest expense........ 40,811 38,295 23,883 19,428 20,714
---------- ---------- ---------- ---------- ----------
Net interest income..... 38,908 32,107 29,153 23,328 20,530
Provision for possible
loan losses........... 3,875 2,560 2,680 2,570 3,155
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
possible loan
losses................ 35,033 29,547 26,473 20,758 17,375
Noninterest income...... 5,061 4,095 2,736 2,735 2,824
Noninterest expense..... 18,242 16,438 14,993 13,502 12,844
---------- ---------- ---------- ---------- ----------
Income before provision
for income taxes...... 21,852 17,204 14,216 9,991 7,355
Provision for income
taxes................. 7,756 6,457 5,584 3,644 2,636
---------- ---------- ---------- ---------- ----------
Net income.............. $ 14,096 $ 10,747 $ 8,632 $ 6,347 $ 4,719
========== ========== ========== ========== ==========
DIVIDENDS
Preferred stock......... $ 231 $ 231 $ 231 $ 173 $ --
Common stock............ 2,121 1,514 1,192 885 558
Ratio of total dividends
declared to net
income................ 16.69% 16.24% 16.49% 16.67% 11.82%
PER SHARE DATA<F1>
Earnings per common
share:
Primary.............. $ 3.04 $ 2.35 $ 1.91 $ 1.63 $ 1.42
Fully diluted........ 2.92 2.24 1.81 1.53 1.38
Common stock cash
dividends............. 0.47 0.34 0.2725 0.2325 0.17
Average common shares
and common share
equivalents
outstanding........... 4,561,105 4,468,986 4,389,324 3,797,360 3,333,148
Fully-diluted book value
(period end).......... $ 16.90 $ 14.93 $ 11.73 $ 10.55 $ 8.95
BALANCE SHEET DATA (AT
PERIOD END)
Investment securities... $ 287,651 $ 327,652 $ 176,674 $ 130,362 $ 110,367
Loans, net of unearned
discount.............. 731,019 623,777 563,477 498,650 441,018
Total assets............ 1,065,777 995,048 772,015 653,518 578,687
Total deposits.......... 918,012 886,565 658,956 546,445 518,855
Total long-term debt.... 2,700 2,700 3,240 3,240 12,932
Common shareholders'
equity................ 75,949 67,607 52,250 46,537 30,138
Total shareholders'
equity................ 75,949 70,107 54,750 49,037 30,138
SELECTED RATIOS
Return on average total
assets................ 1.40% 1.22% 1.21% 1.05% .88%
Return on average total
shareholders'
equity................ 19.07% 17.34% 16.61% 16.18% 16.85%
Net interest margin..... 4.01 3.80 4.26 4.06 4.03
Efficiency ratio<F2>.... 41.25 45.06 46.59 51.16 54.19
Average assets per
employee.............. $ 4,740 4,426 3,938 3,486 3,315
ASSET QUALITY RATIOS
Allowance for possible
loan losses to
loans................. 1.73% 1.73% 1.70% 1.56% 1.48%
Nonperforming loans to
loans<F3>............. .92 .75 .39 .88 1.34
Allowance for possible
loan losses to
nonperforming
loans<F3>............. 188.14 230.14 440.64 176.67 111.09
Nonperforming assets to
loans and foreclosed
assets<F4>............ .99 .75 .40 .92 1.51
Net loan charge-offs to
average loans......... .30 .23 .16 .29 .38
CAPITAL RATIOS
Average shareholders'
equity to average
assets................ 7.32% 7.03% 7.29% 6.50% 5.22%
Total risk-based capital
ratio................. 11.45 11.64 11.45 11.21 8.77
Leverage ratio.......... 7.20 6.70 7.33 7.40 5.07
RATIO OF EARNINGS TO
COMBINED FIXED CHARGES
AND PREFERRED STOCK
DIVIDENDS<F5>
Including interest on
deposits.............. 1.52x 1.44x 1.57x 1.49x 1.35x
Excluding interest on
deposits.............. 7.98 5.48 6.79 6.34 4.56
<FN>
- ---------
<F1>All Share and per Share information has been restated to reflect the 1993
four-for-one stock split in the form of a stock dividend.
<F2>The efficiency ratio = noninterest expense (tax-equivalent net interest
income + noninterest income)
<F3>Nonperforming loans consist of nonaccrual loans, loans contractually past
due 90 days or more and loans with restructured terms.
<F4>Nonperforming assets consist of nonperforming loans and foreclosed assets.
<F5>For purposes of calculating the ratio of earnings to combined fixed charges
and preferred stock dividends, earnings consist of income before taxes plus
interest and rent expense. Fixed charges consist of interest and rent
expense.
</TABLE>
6
<PAGE> 10
RISK FACTORS
Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors before purchasing the Preferred Securities offered
hereby. Prospective investors should note, in particular, that this Prospectus
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
that actual results could differ materially from those contemplated by such
statements. These considerations are not intended to represent a complete list
of the general or specific risks that may affect the Preferred Securities, the
Subordinated Debentures or the Company and MVBI Capital. It should be
recognized that other risks may be significant, presently or in the future, and
the risks set forth below may affect the Preferred Securities, the Subordinated
Debentures or the Company and MVBI Capital to a greater extent than indicated.
Prospective investors are referred to the factors discussed under
"Business--Forward Looking Statements" set forth in the Company's annual
report on Form 10-K for the year ended December 31, 1996 which is incorporated
into this Prospectus by reference. See "Incorporation of Certain Documents by
Reference."
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Company under the Guarantee issued for the benefit
of the holders of Preferred Securities and under the Subordinated Debentures
are unsecured and rank subordinate and junior in right of payment to all Senior
Debt, Subordinated Debt and Additional Senior Obligations of the Company. At
December 31, 1996, the aggregate outstanding Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company was approximately $2.7 million.
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of the Bank upon the Bank's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of the Bank, except to the extent that
the Company may itself be recognized as a creditor of the Bank. The
Subordinated Debentures, therefore, will be effectively subordinated to all
existing and future liabilities of the Bank and holders of Subordinated
Debentures and Preferred Securities should look only to the assets of the
Company for payments on the Subordinated Debentures. At December 31, 1996, the
total liabilities of the Bank aggregated $987 million. Neither the Indenture,
the Guarantee nor the Trust Agreement places any limitation on the amount of
secured or unsecured debt, including Senior Debt, Subordinated Debt and
Additional Senior Obligations, that may be incurred by the Company. See
"Description of the Guarantee--Status of the Guarantee" and "Description of
the Subordinated Debentures--Subordination."
The ability of MVBI Capital to pay amounts due on the Preferred Securities
is solely dependent upon the Company making payments on the Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
The Company has the right under the Indenture, so long as no Debenture
Event of Default has occurred and is continuing, to defer the payment of
interest on the Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extended
Interest Payment Period; provided that no Extended Interest Payment Period may
extend beyond the Stated Maturity of the Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by MVBI Capital will be deferred (and the amount of Distributions to
which holders of the Preferred Securities are entitled will accumulate
additional Distributions thereon at the Distribution Rate, compounded quarterly
from the relevant payment date for such Distributions) during any such Extended
Interest Payment Period. During any such Extended Interest Payment 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 (other than the reclassification of any class of
the Company's capital stock into another class of capital stock), (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu with or junior
in interest to the Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extended Interest Payment Period, the Company may
further defer the payment of interest; provided that no Extended Interest
Payment Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of
7
<PAGE> 11
the Subordinated Debentures. Upon the termination of any Extended Interest
Payment Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the Distribution Rate compounded quarterly,
to the extent permitted by applicable law), the Company may elect to begin a
new Extended Interest Payment Period, subject to the above requirements.
Subject to the foregoing, there is no limitation on the number of times that
the Company may elect to begin an Extended Interest Payment Period. See
"Description of the Preferred Securities--
Distributions--Extension Period" and "Description of the Subordinated
Debentures--Option to Extend Interest Payment Period."
Should an Extended Interest Payment Period occur, each holder of Preferred
Securities will be required to accrue and recognize income (in the form of
original issue discount) in respect of its pro rata share of the interest
accruing on the Subordinated Debentures held by MVBI Capital for United States
federal income tax purposes. A holder of Preferred Securities must, as a
result, include such income 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 MVBI Capital if the holder disposes of the
Preferred Securities prior to the record date for the payment of the related
Distributions. See "Certain Federal Income Tax Consequences--Potential
Extension of Interest Payment Period 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
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities
during an Extended Interest Payment Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Preferred
Securities. As a result of the existence of the Company's right to defer
interest payments, the market price of the Preferred Securities may be more
volatile than the market prices of other securities on which original issue
discount accrues that are not subject to such optional deferrals.
TAX EVENT, CAPITAL TREATMENT EVENT OR INVESTMENT COMPANY EVENT; REDEMPTION
The Company has the right to redeem the Subordinated Debentures in whole
(but not in part) within 180 days following the occurrence of a Tax Event,
Capital Treatment Event or Investment Company Event (whether occurring before
or after March 31, 2002), and, therefore, cause a mandatory redemption of the
Preferred Securities. The exercise of such right is 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.
"Tax Event" means the receipt by MVBI Capital 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
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) MVBI Capital is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Subordinated Debentures, (ii) interest
payable by the Company on the Subordinated Debentures is not, or, within 90
days of such opinion, will not be, deductible by the Company, in whole or in
part, for United States federal income tax purposes, or (iii) MVBI Capital is,
or will be within 90 days of the date of the opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges. The
Company must request and receive an opinion with regard to such matters within
a reasonable period of time after it becomes aware of the possible occurrence
of any of the events described in clauses (i) through (iii) above.
"Capital Treatment Event" means the receipt by MVBI Capital 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 thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the
aggregate liquidation amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company.
8
<PAGE> 12
"Investment Company Event" means the receipt by MVBI Capital 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 change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, MVBI Capital 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 becomes effective on or after the date of original
issuance of the Preferred Securities.
See "--Proposed Tax Legislation" for a discussion of certain legislative
proposals that, if adopted, could give rise to a Tax Event, which may permit
the Company to cause a redemption of the Preferred Securities prior to March
31, 2002.
SHORTENING OR EXTENSION OF STATED MATURITY OF SUBORDINATED DEBENTURES
The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than March 31, 2002. The exercise
of such right is 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. The Company also has the right to extend the
maturity of the Subordinated Debentures (whether or not MVBI Capital is
terminated and the Subordinated Debentures are distributed to holders of the
Preferred Securities) to a date no later than March 31, 2036, the 39th
anniversary of the initial issuance of the Preferred Securities. Such right may
only be exercised, however, if at the time such election is made and at the
time of such extension (i) the Company is not in bankruptcy, otherwise
insolvent or in liquidation, (ii) the Company is not in default in the payment
of any interest or principal on the Subordinated Debentures, (iii) MVBI Capital
is not in arrears on payments of Distributions on the Preferred Securities and
no deferred Distributions are accumulated, and (iv) the Company has a Senior
Debt rating of investment grade. See "Description of the Subordinated
Debentures--General."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities, to the
extent not paid by MVBI Capital, (i) any accrued and unpaid Distributions
required to be paid on the Preferred Securities, to the extent that MVBI
Capital has funds available therefor at such time, (ii) the Redemption Price
(as defined herein) with respect to any Preferred Securities called for
redemption, to the extent that MVBI Capital has funds available therefor at
such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of MVBI Capital (other than in connection with the distribution of
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all of the Preferred Securities), the lesser of (a) the amount of the
Liquidation Distribution (as defined herein), to the extent MVBI Capital has
funds available therefor at such time, and (b) the amount of assets of MVBI
Capital remaining available for distribution to holders of the Preferred
Securities in liquidation of MVBI Capital. The holders of not less than 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 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 MVBI Capital,
the Guarantee Trustee or any other Person (as defined in the Guarantee). If the
Company were to default on its obligation to pay amounts payable under the
Subordinated Debentures, MVBI Capital would lack funds for the payment of
Distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of Preferred Securities would not be
able to rely upon the Guarantee for such amounts. In the event, however, that a
Debenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest on or principal of
the 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 the principal of or interest on such Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holder (a "Direct Action"). The exercise by the Company of
its right, as described herein, to defer the payment of interest on the
Subordinated Debentures does not constitute a Debenture Event of Default. In
connection with such Direct Action, the Company will have a right of set-off
under the 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 Subordinated Debentures or
assert directly any other rights in respect of
9
<PAGE> 13
the Subordinated Debentures. See "Description of the Subordinated
Debentures--Enforcement of Certain Rights by Holders of the Preferred
Securities," "Description of the Subordinated Debentures--Debenture Events of
Default" and "Description of the Guarantee." The Trust Agreement provides
that each holder of Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Indenture.
NO VOTING RIGHTS EXCEPT IN LIMITED CIRCUMSTANCES
Holders of Preferred Securities will have no voting rights except in
limited circumstances relating only to the modification of the Preferred
Securities and the exercise of the rights of MVBI Capital as holder of the
Subordinated Debentures and the Guarantee. Holders of Preferred Securities will
not be entitled to vote to appoint, remove or replace the Property Trustee or
the Delaware Trustee, as such voting rights are vested exclusively in the
holder of the Common Securities (except upon the occurrence of certain events
described herein). The Property Trustee, the Administrative Trustees and the
Company may amend the Trust Agreement without the consent of holders of
Preferred Securities to ensure that MVBI Capital will be classified for United
States federal income tax purposes as a grantor trust even if such action
adversely affects the interests of such holders. See "Description of the
Preferred Securities--Voting Rights; Amendment of Trust Agreement" and
"Description of the Preferred Securities--Removal of MVBI Capital Trustees."
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement")
indicating their intent that certain legislative proposals initiated by the
Clinton administration, including the Proposed Legislation, that may be adopted
by either of the tax-writing committees of Congress would have an effective
date that is no earlier than the date of "appropriate Congressional action."
In addition, subsequent to the publication of the Joint Statement, Senator
Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B.
Rangel wrote letters to Treasury Department officials concurring with the views
expressed in the Joint Statement. Neither the 1996 Proposed Legislation nor
similar legislation was enacted during the 104th Congress. On February 6, 1997,
President Clinton proposed in the administration's fiscal year 1998 budget
certain tax law changes (the "1997 Proposed Legislation") that would, among
other things, generally deny corporate issuers a deduction for interest or
original issue discount ("OID") in respect of certain debt obligations if such
debt obligations have a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. The
proposed budget also contains a provision that would deny a deduction to
corporate issuers for interest or OID with respect to debt instruments that
have a maximum term of more than 40 years (including rights to extend, renew or
relend), or are payable in stock of the issuer or a related party. The U.S.
Treasury Department's summary of the 1997 Proposed Legislation states that the
above provisions regarding the deduction of interest would generally be
effective for instruments issued on or after the date of first Congressional
committee action with respect to the 1997 Proposed Legislation. The Ways and
Means Committee began a full committee hearing on the President's fiscal 1998
budget on February 11, 1997. There can be no assurance that the effective date
guidance in the administration's proposal will be adopted if the proposed
change to the tax law is enacted, or that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the Company to
deduct the interest payable on the Subordinated Debentures. Consequently, there
can be no assurance that a Tax Event will not occur. A Tax Event would permit
the Company, upon approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve, to cause a
redemption of the Preferred Securities before, as well as after, March 31,
2002. See "Description of the Subordinated Debentures--Redemption or Exchange--
Tax Event Redemption, Capital Treatment Event Redemption or Investment Company
Event Redemption" and "Certain Federal Income Tax Consequences--Effect of
Proposed Changes in Tax Laws."
10
<PAGE> 14
REDEMPTION; EXCHANGE OF PREFERRED SECURITIES FOR SUBORDINATED DEBENTURES
The Company has the right at any time to dissolve, wind-up or terminate
MVBI Capital and cause the Subordinated Debentures to be distributed to the
holders of the Preferred Securities in exchange therefor in liquidation of MVBI
Capital. The exercise of such right is 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. The Company will have the right,
in certain circumstances, to redeem the Subordinated Debentures in whole or in
part, in lieu of a distribution of the Subordinated Debentures by MVBI Capital,
in which event MVBI Capital will redeem the Trust Securities on a pro rata
basis to the same extent as the Subordinated Debentures are redeemed by the
Company. Any such distribution or redemption prior to the Stated Maturity will
be subject to prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. See
"Description of the Preferred Securities--Redemption or Exchange--Tax Event
Redemption, Capital Treatment Event Redemption or Investment Company Event
Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of MVBI Capital would not be a
taxable event to holders of the Preferred Securities. If, however, MVBI Capital
is characterized as an association taxable as a corporation at the time of the
dissolution of MVBI Capital, the distribution of the Subordinated Debentures
may constitute a taxable event to holders of Preferred Securities. Moreover,
upon occurrence of a Tax Event, a dissolution of MVBI Capital in which holders
of the Preferred Securities receive cash may be a taxable event to such
holders. See "Certain Federal Income Tax Consequences--Receipt of Subordinated
Debentures or Cash Upon Liquidation of MVBI Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of MVBI Capital. The
Preferred Securities or the Subordinated Debentures, may, therefore, 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
Subordinated Debentures, prospective purchasers of Preferred Securities are
also making an investment decision with regard to the Subordinated Debentures
and should carefully review all the information regarding the Subordinated
Debentures contained herein.
If the Subordinated Debentures are distributed to the holders of Preferred
Securities upon the liquidation of MVBI Capital, the Company will use its best
efforts to list the Subordinated Debentures on The Nasdaq Stock Market's
National Market or such stock exchanges, if any, on which the Preferred
Securities are then listed.
TRADING PRICE; ABSENCE OF PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES
The Preferred Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder of Preferred Securities that disposes of its
Preferred Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from MVBI Capital for the period
prior to such disposition) will nevertheless be required to include accrued but
unpaid interest on the Subordinated Debentures through the date of disposition
in income as ordinary income and to add such amount to its adjusted tax basis
in its pro rata share of the underlying Subordinated Debentures deemed disposed
of. Such holder will recognize a capital loss to the extent the selling price
(which may not fully reflect the value of accrued but unpaid interest) is less
than its adjusted tax basis (which will include all accrued but unpaid
interest). Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Disposition of
Preferred Securities."
There is no current public market for the Preferred Securities. Although
application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market, there can be no
assurance that an active public market will develop for the Preferred
Securities or that, if such market develops, the market price will equal or
exceed the public offering price set forth on the cover page of this
Prospectus. The public offering price for the Preferred Securities has been
determined through negotiations between the Company and the Underwriter. Prices
for the Preferred Securities will be determined in the marketplace and may be
influenced by many factors, including prevailing interest rates, the liquidity
of the market for the Preferred Securities, investor perceptions of the Company
and general industry and economic conditions.
11
<PAGE> 15
PREFERRED SECURITIES ARE NOT INSURED
The Preferred Securities are not insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation
or by any other governmental agency.
USE OF PROCEEDS
MVBI Capital will use the gross proceeds received from the sale of the
Preferred Securities to purchase Subordinated Debentures from the Company. The
Company intends to use the net proceeds from the sale of the Subordinated
Debentures for general corporate purposes, including strengthening the
Company's capital base, and positioning the Company to continue to exceed
minimum regulatory capital ratios which will allow for future growth. From time
to time, the Company's Board of Directors considers the advisability of
repurchasing shares of the Company's common stock and, in April 1996,
authorized the Company to repurchase up to 225,545 shares of its common stock
from time to time. While it is possible that a portion of the proceeds will be
used for such repurchases, no such repurchases have been made since such
authorization. The net proceeds from the sale of the Subordinated Debentures
will be invested in investment securities pending its use for the purposes
described above.
MARKET FOR THE PREFERRED SECURITIES
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the symbol MVBIP.
Although Stifel, Nicolaus & Company, Incorporated has informed the Company that
it presently intends to make a market in the Preferred Securities, there can be
no assurance that an active and liquid trading market will develop or, if
developed, that such a market will continue. The offering price and
distribution rate have been determined by negotiations among representatives of
the Company and the Underwriter, and the offering price of the Preferred
Securities may not be indicative of the market price following the offering.
See "Underwriting."
ACCOUNTING TREATMENT
MVBI Capital will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of MVBI Capital will
be included in the consolidated financial statements of the Company. The
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company under the caption "Guaranteed
Preferred Beneficial Interests in Company's Subordinated Debentures," and
appropriate disclosures about the Preferred Securities, the Guarantee and the
Subordinated Debentures will be included in the notes to consolidated financial
statements. The Company will record Distributions payable on the Preferred
Securities as an expense in the consolidated statements of operations for
financial reporting purposes.
All future reports of the Company filed under the Exchange Act will (a)
present the Trust Securities issued by MVBI Capital on the balance sheet as a
separate line-item under Long-Term Debt entitled "Guaranteed preferred
beneficial interests in the Company's subordinated debentures," (b) include in
a footnote to the financial statements disclosure that the sole assets of MVBI
Capital are the Subordinated Debentures (including the outstanding principal
amount, interest rate and maturity date of such Subordinated Debentures), and
(c) include in an audited footnote to the financial statements disclosure that
the Company owns all of the Common Securities of MVBI Capital, the sole assets
of MVBI Capital are the Subordinated Debentures, and the back-up obligations,
in the aggregate, constitute a full and unconditional guarantee by the Company
of the obligations of MVBI Capital under the Preferred Securities.
12
<PAGE> 16
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of the
Company at December 31, 1996 and (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Preferred Securities hereby
offered by MVBI Capital and receipt by the Company of the net proceeds from the
corresponding sale of the Subordinated Debentures to MVBI Capital, as if the
sale of the Preferred Securities had been consummated on December 31, 1996, and
assuming the Underwriter's over-allotment option was not exercised.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
8% Subordinated Convertible Debentures................................................ $ 2,700 $ 2,700
Guaranteed preferred beneficial interests in the Company's subordinated debentures.... -- 13,000
-------- -------
Total long-term debt.......................................................... $ 2,700 $15,700
-------- -------
Common stock, $1.00 par value; 15,000,000 shares authorized; 4,516,956 shares issued
and outstanding...................................................................... 4,517 4,517
Capital surplus....................................................................... 19,752 19,752
Retained earnings..................................................................... 51,159 51,159
Unrealized gain, net of tax, on available for sale securities......................... 521 521
-------- -------
Total shareholders' equity.................................................... 75,949 75,949
-------- -------
Total capitalization.......................................................... $ 78,649 $91,649
======== =======
CAPITAL RATIOS:
Shareholders' equity to total assets.................................................. 7.13% 7.04%
Leverage ratio<F1><F2><F3>............................................................ 7.20 8.34
Risk-based capital ratios:<F3>
Tier 1 capital to risk-weighted assets............................................ 10.20 11.75
Total risk-based capital to risk-weighted assets.................................. 11.45 12.98
<FN>
- --------
<F1>The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
<F2>The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the Preferred Securities, in a manner
consistent with Federal Reserve guidelines.
<F3>Federal Reserve guidelines for calculation of Tier 1 capital to
risk-weighted assets limits the amount of cumulative preferred stock which
can be included in Tier 1 capital to 25% of total Tier 1 capital.
</TABLE>
13
<PAGE> 17
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, State Street Bank and Trust Company,
will act as indenture trustee for the Preferred Securities under the Trust
Agreement for purposes of complying with the provisions of the Trust Indenture
Act. The terms of the Preferred Securities will include those stated in the
Trust Agreement and those made part of the Trust Agreement by the Trust
Indenture Act. The following summary of the material terms and provisions of
the Preferred Securities and the Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Agreement, the Trust Act, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement are referred to, but not
defined herein, such defined terms are incorporated herein by reference. The
form of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Trustees, on behalf of
MVBI Capital, will issue the Trust Securities. All of the Common Securities
will be owned by the Company. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of MVBI Capital 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. The Trust Agreement does not permit the issuance by MVBI Capital of
any securities other than the Trust Securities or the incurrence of any
indebtedness by MVBI Capital.
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." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company for the
benefit of the holders of the Preferred Securities 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 MVBI Capital does not have funds
on hand available to make such payments. State Street Bank and Trust Company,
as Guarantee Trustee, will hold the Guarantee for the benefit of the holders of
the Preferred Securities. See "Description of the Guarantee."
DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on each Preferred Security will be
payable at the Distribution Rate applied to the stated Liquidation Amount of
$25, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to the holders of the Preferred Securities on the
relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). The record date will
be the 15th day of the last month of the calendar quarter in which the relevant
Distribution Date occurs. Distributions will accumulate from the date of
original issuance. The first Distribution Date for the Preferred Securities
will be June 30, 1997. The amount of Distributions payable for any period will
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that 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 (and
without any additional Distributions, 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 due and payable. "Business Day" means any day other than
a Saturday or a Sunday, a day on which banking institutions in The City of New
York are authorized or required by law or executive order to remain closed or a
day on which the corporate trust office of the Property Trustee or the
Debenture Trustee is closed for business.
DETERMINATION OF 3-MONTH TREASURY. The Distribution Rate during any period
beginning on, and including, the date of original issuance, and ending on, but
excluding, the first Distribution Date, and each successive period beginning
on, and including, a Distribution Date, and ending on, but excluding, the next
succeeding Distribution Date (each, a "Distribution Period") in respect of
the Preferred Securities will be a rate per annum determined by reference to
3-Month Treasury, determined as described below, plus %. "3-Month
Treasury" means the yield on United States of America Treasury constant
maturities, adjusted to a constant maturity of three (3)
14
<PAGE> 18
months, reported by the Federal Reserve. 3-Month Treasury, with respect to any
Distribution Period, will be determined by the Debenture Trustee as follows:
(a) On the second Business Day preceding the commencement of such
Distribution Period (each, a "Determination Date"), 3-Month Treasury
will be the current yield for United States of America Treasury Constant
Maturities, adjusted to a constant maturity of three (3) months, which
appears on the applicable Federal Reserve Statistical Release Series H.15
(519) which includes data for such Determination Date, or as then currently
furnished or made available by the Federal Reserve if such Series is no
longer published.
(b) If, with respect to any Determination Date, the Debenture Trustee
is required but unable to determine 3-Month Treasury in the manner
provided in paragraph (a) above, 3-Month Treasury for such Distribution
Period will be 3-Month Treasury as determined on the previous
Determination Date.
The Distribution Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by Missouri law as the same may be
modified by United States law.
All percentages resulting from any calculations referred to in this
Prospectus will be rounded, if necessary, to the nearest multiple of 1/100 of
1% and all dollar amounts used in or resulting from such calculations will be
rounded to the nearest cent (with one-half cent or more being rounded upwards).
DETERMINATION OF DISTRIBUTION RATE AND CALCULATION OF DISTRIBUTION AMOUNT.
The Debenture Trustee will, on each Determination Date, determine the
Distribution Rate and calculate the amount of Distributions payable in respect
of the following Distribution Period (the "Distribution Amount"). The
Distribution Amount will be calculated by applying the Distribution Rate to the
Liquidation Amount of each Preferred Security outstanding at the commencement
of the Distribution Period, multiplying each such amount by the actual number
of days in the Distribution Period concerned (which actual number of days will
include the first day but exclude the last day of such Distribution Period)
divided by 360 and rounding the resultant figure to the nearest cent (with
one-half cent or more being rounded upwards). The determination of the
Distribution Rate and the Distribution Amount by the Debenture Trustee will (in
the absence of willful default, bad faith or manifest error) be final,
conclusive and binding on all concerned.
Upon the request of a holder of a Preferred Security, the Debenture Trustee
will provide the Distribution Rate then in effect and, if determined, the
Distribution Rate for the next Distribution Period with respect to the
Preferred Securities. Each such Distribution Rate may be obtained by
telephoning the Debenture Trustee at (617) 664-5500.
NOTIFICATION OF DISTRIBUTION RATE AND DISTRIBUTION DATE. The Debenture
Trustee will notify the Property Trustee and any securities exchange or
interdealer quotation system on which the Preferred Securities are listed, of
the Distribution Rate and the Distribution Date for each Distribution Period,
in each case as soon as practicable after the determination thereof but in no
event later than the seventh Business Day of the relevant Distribution Period.
Failure to notify the Property Trustee or any applicable securities exchange or
interdealer quotation system, or any defect in said notice, shall not affect
the obligation of the Company to make payment on the Debentures at the
applicable Distribution Rate. Any error in the calculation of the Distribution
Rate by the Debenture Trustee may be corrected at any time by notice delivered
as above provided.
15
<PAGE> 19
CERTIFICATES TO BE FINAL. All certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made
or obtained for the purposes of the provisions relating to the payment and
calculation of Distributions on the Preferred Securities by the Debenture
Trustee will (in the absence of willful default, bad faith or manifest error)
be binding on MVBI Capital, the Company, and all of the holders of the
Preferred Securities, and no liability will (in the absence of willful default,
bad faith or manifest error) attach to the Debenture Trustee or the Property
Trustee in connection with the exercise or non-exercise by either of them of
their respective powers, duties and discretion.
EXTENSION PERIOD. The Company has the right under the Indenture, so long as
no Debenture Event of Default has occurred and is continuing, to defer the
payment of interest on the Subordinated Debentures at any time, or from time to
time (each, an "Extended Interest Payment Period"), which, if exercised,
would defer quarterly Distributions on the Preferred Securities during any such
Extended Interest Payment Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon at the Distribution Rate, compounded quarterly from the relevant
Distribution Date. "Distributions," as used herein, includes any such
additional Distributions. The right to defer the payment of interest on the
Subordinated Debentures is limited, however, to a period, in each instance, not
exceeding 20 consecutive quarters and no Extended Interest Payment Period may
extend beyond the Stated Maturity of the Subordinated Debentures. During any
such Extended Interest Payment 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 (other
than the reclassification of any class of the Company's capital stock into
another class of capital stock), (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Company that rank pari passu with or junior in interest to the Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Subordinated
Debentures (other than payments under the Guarantee), or (iii) redeem, purchase
or acquire less than all of the Subordinated Debentures or any of the Preferred
Securities. Prior to the termination of any such Extended Interest Payment
Period, the Company may further defer the payment of interest; provided that
such Extended Interest Payment Period may not exceed 20 consecutive quarters or
extend beyond the Stated Maturity of the Subordinated Debentures. Upon the
termination of any such Extended Interest Payment Period and the payment of all
amounts then due, the Company may elect to begin a new Extended Interest
Payment Period, subject to the above requirements. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extended Interest Payment Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
SOURCE OF DISTRIBUTIONS. The funds of MVBI Capital available for
distribution to holders of its Preferred Securities will be limited to payments
under the Subordinated Debentures in which MVBI Capital will invest the
proceeds from the issuance and sale of its Trust Securities. See "Description
of the Subordinated Debentures." Distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Subordinated
Debentures in the Property Account for the benefit of the holders of the Trust
Securities. If the Company does not make interest payments on the Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent MVBI Capital has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company. See "Description of the Guarantee." Distributions on the Preferred
Securities will be payable to the holders thereof as they appear on the
register of holders of the Preferred Securities on the relevant record dates,
which will be the 15th day of the month in which the relevant Distribution Date
occurs.
REDEMPTION OR EXCHANGE
GENERAL. The Subordinated Debentures will mature on March 31, 2027. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after March 31, 2002, in whole at any time or in part from time to time, or
(ii) at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event, in each case subject to receipt of prior approval by the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve. The Company will not have the right to purchase the Subordinated
Debentures, in whole or in part, from MVBI Capital until after March 31, 2002.
See "Description of the Subordinated Debentures--General."
16
<PAGE> 20
MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption will be applied by the Property Trustee to redeem a
Like Amount (as defined herein) of the Trust 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 Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). See "Description of the Subordinated
Debentures--Redemption or Exchange." If less than all of the Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption will be allocated to the redemption of the
Trust Securities pro rata.
DISTRIBUTION OF SUBORDINATED DEBENTURES. Subject to the Company having
received prior approval of the Federal Reserve if so required under applicable
capital guidelines or policies of the Federal Reserve, the Company will have
the right at any time to dissolve, wind-up or terminate MVBI Capital and, after
satisfaction of the liabilities of creditors of MVBI Capital as provided by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of Trust Securities in liquidation of MVBI Capital. See "--Liquidation
Distribution Upon Termination."
TAX EVENT REDEMPTION, CAPITAL TREATMENT EVENT REDEMPTION OR INVESTMENT
COMPANY EVENT REDEMPTION. If a Tax Event, a Capital Treatment Event or an
Investment Company Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities in whole (but not in part) at the Redemption Price within 180 days
following the occurrence of such Tax Event, Capital Treatment Event or
Investment Company Event. In the event a Tax Event, a Capital Treatment Event
or an Investment Company Event in respect of the Trust Securities has occurred
and the Company does not elect to redeem the Subordinated Debentures and
thereby cause a mandatory redemption of such Trust Securities or to liquidate
MVBI Capital and cause the Subordinated Debentures to be distributed to holders
of such Trust Securities in liquidation of MVBI Capital as described below
under "--Liquidation Distribution Upon Termination," such Preferred
Securities will remain outstanding and Additional Interest (as defined herein)
may be payable on the Subordinated Debentures.
"Additional Interest" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by MVBI Capital on
the outstanding Trust Securities will not be reduced as a result of any
additional taxes, duties and other governmental charges to which MVBI Capital
has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price
of such Trust Securities, and (ii) with respect to a distribution of
Subordinated Debentures to holders of Trust Securities in connection with a
dissolution or liquidation of MVBI Capital, Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Subordinated Debentures are distributed. Each Subordinated
Debenture distributed pursuant to clause (ii) above will carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Subordinated Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no
longer be deemed to be outstanding, and (ii) any certificates representing
Preferred Securities will be deemed to represent the Subordinated Debentures
having a principal amount equal to the Liquidation Amount of such Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on the Preferred Securities, until such
certificates are presented to the Administrative Trustees or their agent for
transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of MVBI Capital were
to occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of MVBI Capital, may, therefore, trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
17
<PAGE> 21
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Preferred
Securities will be made and the Redemption Price will be payable on each
Redemption Date only to the extent that MVBI Capital has funds on hand
available for the payment of such Redemption Price. See "--Subordination of
Common Securities."
If MVBI Capital gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, eastern standard time, on the Redemption Date,
to the extent funds are available, the Property Trustee will irrevocably
deposit with the paying agent for the Preferred Securities funds sufficient to
pay the aggregate Redemption Price and will give the paying agent for the
Preferred Securities irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption will be payable to the holders of such
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption will 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. In the event that 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 (and without any additional Distribution, interest or other
payment in respect of any such delay) with the same force and effect as if made
on such date. 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 MVBI Capital, or by the Company pursuant to the
Guarantee, Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
MVBI Capital for such Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price. See
"Description of the Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law) and, further provided, that the Company has not and is
not continuing to exercise its right to defer interest payments, the Company or
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable recordholders thereof as they appear on the register
for the Preferred Securities on the relevant record date, which date will be
the date 15 days prior to the Redemption Date or liquidation date, as
applicable.
If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee deems fair and appropriate and which may provide
for the selection for redemption of portions (equal to $25 or an integral
multiple of $25 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25. The Property Trustee will
promptly notify the registrar for the Preferred 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 will relate 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 holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on such Subordinated Debentures
or portions thereof (and Distributions will cease to accrue on the related
Preferred Securities or portions thereof) called for redemption.
18
<PAGE> 22
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of 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 of the outstanding Preferred Securities then called for
redemption, will have been made or provided for, and all funds available to the
Property Trustee will first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Preferred Securities then due and
payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder 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 effect of all such Events of Default with respect to
the Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities has 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 Company, as 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.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The Company will have the right at any time to dissolve, wind-up or
terminate MVBI Capital and cause the Subordinated Debentures to be distributed
to the holders of the Preferred Securities. Such right is subject, however, to
the Company having received prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal
Reserve.
Pursuant to the Trust Agreement, MVBI Capital will automatically terminate
upon expiration of its term and will terminate earlier on the first to occur of
(i) certain events of bankruptcy, dissolution or liquidation of the Company,
(ii) the distribution of a Like Amount of the Subordinated Debentures to the
holders of its Trust Securities, if the Company, as depositor, has given
written direction to the Property Trustee to terminate MVBI Capital (which
direction is optional and wholly within the discretion of the Company, as
depositor), (iii) redemption of all of the Preferred Securities as described
under "Description of the Preferred Securities--Redemption or
Exchange--Mandatory Redemption," or (iv) the entry of an order for the
dissolution of MVBI Capital by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv) of
the preceding paragraph, MVBI Capital will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of MVBI Capital as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of MVBI Capital available for distribution to
holders, after satisfaction of liabilities to creditors of MVBI Capital as
provided by applicable law, an amount equal to, in the case of holders of
Preferred Securities, the aggregate of the Liquidation Amount plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid
only in part because MVBI Capital has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by MVBI Capital on the Preferred Securities will be paid on a pro rata basis.
The Company, as the holder 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, the Preferred Securities will have a priority over
the Common Securities. See "--Subordination of Common Securities."
Under current United States federal income tax law and interpretations and
assuming, as expected, that MVBI Capital is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or
19
<PAGE> 23
other circumstances, however, the distribution could be a taxable event to
holders of the Preferred Securities. See "Certain Federal Income Tax
Consequences--Receipt of Subordinated Debentures or Cash Upon Liquidation of
MVBI Capital." If the Company elects neither to redeem the Subordinated
Debentures prior to maturity nor to liquidate MVBI Capital and distribute the
Subordinated Debentures to holders of the Preferred Securities, the Preferred
Securities will remain outstanding until the repayment of the Subordinated
Debentures.
If the Company elects to liquidate MVBI Capital and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of MVBI Capital, the Company will continue to have
the right to shorten or extend the maturity of such Subordinated Debentures,
subject to certain conditions. See "Description of the Subordinated
Debentures--General."
LIQUIDATION VALUE
The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of MVBI Capital is $25 per Preferred
Security plus accrued and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in Subordinated
Debentures, subject to certain exceptions. See "--Liquidation Distribution
Upon Termination."
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 voluntary
or involuntary or 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 the Subordinated Debentures--Debenture Events of Default"); or
(ii) default by MVBI Capital 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 MVBI Capital 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 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 clauses (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 Trustee(s) 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 and the failure by the Company to appoint a
successor Property Trustee within 60 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 the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees 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, the
Preferred Securities will have a preference over the Common Securities upon
termination of MVBI Capital. See "--Liquidation Distribution Upon
Termination." The existence of an Event of Default does not entitle the
holders of Preferred Securities to accelerate the maturity thereof.
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REMOVAL OF MVBI CAPITAL TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event, however, will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee will be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is 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 (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have power to appoint one or more Persons (as
defined in the Trust Agreement) either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such Trust Property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of the Trust Agreement. In case a
Debenture Event of Default has occurred and is continuing, the Property Trustee
alone will have power to make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person 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 Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF MVBI CAPITAL
MVBI Capital 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 Person, except as described below. MVBI
Capital may, at the request of the Company, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, 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, that (i) such successor entity either
(a) expressly assumes all of the obligations of MVBI Capital 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 rank the same as
the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Company expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee in its capacity as the holder of the
Subordinated Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed (including, if applicable, The Nasdaq Stock Market's
National Market), if any, (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) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Company has received an opinion from independent counsel 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 MVBI Capital nor such successor entity will be required to register as
an "investment company" under the Investment Company Act, and (vi) the
Company owns all of the common securities of such successor entity and
guarantees the
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obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, MVBI
Capital will 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 Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause MVBI Capital or the successor entity to be classified as other than
a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of the
Guarantee--Amendments and Assignment" and as otherwise required by the Trust
Act and the Trust Agreement, the holders of the Preferred Securities will have
no voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) with respect to acceptance of
appointment by a successor trustee, (ii) to cure any ambiguity, correct or
supplement any provisions in such 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 such amendment is not
inconsistent with the other provisions of the Trust Agreement), or (iii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as is necessary to ensure that MVBI Capital will be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that MVBI Capital will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (ii), such action may not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any amendments of such Trust Agreement will become effective
when notice thereof is given to the holders of Trust Securities. The Trust
Agreement may be amended by the Trustees and the Company with (i) the consent
of holders representing not less than a majority in the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) receipt by the Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not affect
MVBI Capital's status as a grantor trust for United States federal income tax
purposes or MVBI Capital's exemption from status as an "investment company"
under the Investment Company Act. Notwithstanding anything in this paragraph to
the contrary, without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (a) 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 (b) restrict the right of a holder of Trust Securities
to institute suit for the enforcement of any such payment on or after such
date.
The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
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 Trustees 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 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 Trustees must obtain an opinion of
counsel experienced in such matters to the effect that MVBI Capital will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of 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
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consent of such holders is to be taken, to be given to each holder of record 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
for MVBI Capital to redeem and cancel its Preferred Securities in accordance
with the Trust Agreement.
Notwithstanding the fact 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 Trustees or any
affiliate of the Company or any Trustee, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made by check
mailed to the address of the holder entitled thereto as such address will
appear on the register of holders of the Preferred Securities. The paying agent
for the Preferred Securities will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The paying agent for the Preferred
Securities may resign as paying agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property Trustee no
longer is the paying agent for the Preferred Securities, the Administrative
Trustees will appoint a successor (which must be a bank or trust company
acceptable to the Administrative Trustees and the Company) to act as paying
agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as the registrar and the transfer agent for
the Preferred Securities. Registration of transfers of Preferred Securities
will be effected without charge by or on behalf of MVBI Capital, but upon
payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. MVBI Capital will not be required to
register or cause to be registered the transfer of Preferred Securities after
such Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
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. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the Trust Agreement or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of Preferred
Securities are entitled under the Trust Agreement to vote, then the Property
Trustee will take such action as is directed by the Company and if not so
directed, will take such action as it deems advisable and in the best interests
of the holders of the Trust Securities and will have no liability except for
its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate MVBI Capital in such a way that MVBI Capital will not
be deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. The Company and the Administrative Trustees are
authorized, in this connection, to take any action, not inconsistent with
applicable law, the certificate of trust of MVBI Capital or the Trust
Agreement, that the Company and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes.
Holders of the Preferred Securities have no preemptive or similar rights.
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The Trust Agreement and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Preferred Securities, MVBI Capital
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Subordinated Debentures issued by the
Company. The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of , 1997 (the "Indenture"),
between the Company and State Street Bank and Trust Company, as trustee (the
"Debenture Trustee"). The Indenture will be qualified as an indenture under
the Trust Indenture Act. The following summary of the material terms and
provisions of the Subordinated Debentures and the Indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, the Indenture and to the Trust Indenture Act. Wherever particular defined
terms of the Indenture are referred to, but not defined herein, such defined
terms are incorporated herein by reference. The form of the Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part.
GENERAL
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $13,402,075 (or $15,412,375 if the option described under the
heading "Underwriting" is exercised by the Underwriter), such amount being
the sum of the aggregate stated Liquidation Amount of the Trust Securities. The
Subordinated Debentures will bear interest at the annual rate equal to 3-Month
Treasury (determined in the same manner as the Distribution Rate, as described
under "Description of the Preferred Securities--Distributions--Determination
of 3-Month Treasury") plus % (the "Interest Rate") 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") beginning
June 30, 1997, to the Person (as defined in the Indenture) in whose name each
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the 15th day of the last month of the calendar quarter in
which the relevant Interest Payment Date occurs. It is anticipated that, until
the liquidation, if any, of MVBI Capital, the Subordinated Debentures will be
held in the name of the Property Trustee in trust for the benefit of the
holders of the Preferred Securities. The amount of interest payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on the date such payment was originally due
and 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 Interest Rate, compounded quarterly. 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 Interest, as applicable.
The Subordinated Debentures will mature on March 31, 2027 (such date, as it
may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than March 31, 2002, 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. Such date may also be extended
at any time at the election of the Company but in no event to a date later than
March 31, 2036, provided that at the time such election is made and at the time
of extension (i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation, (ii) the Company is not in default in the payment of any interest
or principal on the Subordinated Debentures, (iii) MVBI Capital is not in
arrears on payments of Distributions on the Preferred Securities and no
deferred Distributions are accumulated, and (iv) the Company has a Senior Debt
rating of investment grade. In the event that the Company elects to shorten or
extend the Stated Maturity of the Subordinated Debentures, it will give notice
thereof to the Debenture Trustee, MVBI Capital and to the holders of the
Subordinated Debentures no more than 180 days and no less than 90 days prior to
the effectiveness thereof. The Company will not have the right to purchase the
Subordinated Debentures, in whole or in part, from MVBI Capital until after
March 31, 2002, except if a Tax Event, a Capital Treatment Event or an
Investment Company Event has occurred and is continuing.
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of the Bank, upon the Bank's
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liquidation or reorganization or otherwise (and thus the ability of holders of
the Subordinated Debentures to benefit indirectly from such distribution), is
subject to the prior claim of creditors of the Bank, except to the extent that
the Company may itself be recognized as a creditor of such Subsidiary Bank. The
Subordinated Debentures will, therefore, be effectively subordinated to all
existing and future liabilities of the Bank, and holders of Subordinated
Debentures should look only to the assets of the Company for payments on the
Subordinated Debentures. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, including Senior
Debt, Subordinated Debt and Additional Senior Obligations, whether under the
Indenture or any existing indenture or other indenture that the Company may
enter into in the future or otherwise. See "--Subordination."
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture at any time during the term
of the Subordinated Debentures, so long as no Debenture Event of Default has
occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extended Interest Payment Period"). The right to
defer the payment of interest on the Subordinated Debentures is limited,
however, to a period, in each instance, not exceeding 20 consecutive quarters
and no Extended Interest Payment Period may extend beyond the Stated Maturity
of the Subordinated Debentures. At the end of each Extended Interest Payment
Period, the Company must pay all interest then accrued and unpaid (together
with interest thereon at the Interest Rate, compounded quarterly, to the extent
permitted by applicable law). During an Extended Interest Payment Period,
interest will continue to accrue and holders of Subordinated Debentures (or the
holders of Preferred Securities if such securities are then outstanding) will
be required to accrue and recognize income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Potential Extension of
Interest Payment Period and Original Issue Discount."
During any such Extended Interest Payment 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 (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to
the Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extended
Interest Payment Period, the Company may further defer the payment of interest;
provided that no Extended Interest Payment Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Subordinated Debentures.
Upon the termination of any such Extended Interest Payment Period and the
payment of all amounts then due on any Interest Payment Date, the Company may
elect to begin a new Extended Interest Payment Period subject to the above
requirements. No interest will be due and payable during an Extended Interest
Payment Period, except at the end thereof. The Company has no present intention
of exercising its rights to defer payments of interest on the Subordinated
Debentures. The Company must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of such Extended
Interest Payment Period at least two Business Days prior to the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities would
have been payable except for the election to begin such Extended Interest
Payment Period, or (ii) the date MVBI Capital is required to give notice of the
record date, or the date such Distributions are payable, to The Nasdaq Stock
Market's National Market (or other applicable self-regulatory organization) or
to holders of the Preferred Securities, but in any event at least one Business
Day before such record date. Subject to the foregoing, there is no limitation
on the number of times that the Company may elect to begin an Extended Interest
Payment Period.
ADDITIONAL SUMS
If MVBI Capital or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay as additional amounts (referred to herein as
"Additional Interest") on the Subordinated Debentures such additional amounts
as may be required so that the
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net amounts received and retained by MVBI Capital after paying any such
additional taxes, duties or other governmental charges will not be less than
the amounts MVBI Capital would have received had such additional taxes, duties
or other governmental charges not been imposed.
REDEMPTION OR EXCHANGE
The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after March 31, 2002, in whole at any time or in part
from time to time, or (ii) at any time in whole (but not in part), within 180
days following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. Any such
redemption prior to the Stated Maturity will be subject to prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve.
"Tax Event" means the receipt by MVBI Capital 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
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) interest payable by the Company on the Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes, (ii) MVBI Capital is, or will be within 90 days after the
date of such opinion of counsel, subject to United States federal income tax
with respect to income received or accrued on the Subordinated Debentures, or
(iii) MVBI Capital is, or will be within 90 days after the date of such opinion
of counsel, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges. The Company must request and receive
an opinion with regard to such matters within a reasonable period of time after
it becomes aware of the possible occurrence of any of the events described in
clauses (i) through (iii) above.
"Capital Treatment Event" means the receipt by MVBI Capital 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 thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the
aggregate liquidation amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company.
"Investment Company Event" means the receipt by MVBI Capital 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 change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, MVBI Capital is or will be
considered an "investment company" that is required to be registered under
the Investment Company Act, which change becomes effective on or after the date
of original issuance of the Preferred Securities.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Unless the Company defaults in payment
of the redemption price for the Subordinated Debentures, on and after the
redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities--Liquidation
Distribution Upon Termination," under certain circumstances involving the
termination of MVBI Capital, the Subordinated Debentures may be distributed to
the holders of the Preferred Securities in liquidation of MVBI Capital after
satisfaction of liabilities to
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creditors of MVBI Capital as provided by applicable law. Any such distribution
will be subject to receipt of prior approval by the Federal Reserve if then
required under applicable policies or guidelines of the Federal Reserve. If the
Subordinated Debentures are distributed to the holders of Preferred Securities
upon the liquidation of MVBI Capital, the Company will use its best efforts to
list the Subordinated Debentures on The Nasdaq Stock Market's National Market
or such stock exchanges, if any, on which the Preferred Securities are then
listed. There can be no assurance as to the market price of any Subordinated
Debentures that may be distributed to the holders of Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Guarantee,
or (iii) the Company has given notice of its election of an Extended Interest
Payment Period as provided in the Indenture with respect to the Subordinated
Debentures and has not rescinded such notice, or such Extended Interest Payment
Period, or any extension thereof, is continuing, the Company will not (1)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock (other than the reclassification of any class of the Company's capital
stock into another class of capital stock), (2) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to
the Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the
Subordinated Debentures (other than payments under the Guarantee), or (3)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities.
SUBORDINATION
The Indenture provides that the Subordinated Debentures issued thereunder
are subordinated and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceedings of the Company, the holders of Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company will first be entitled to
receive payment in full of principal of (and premium, if any) and interest, if
any, on such Senior Debt, Subordinated Debt and Additional Senior Obligations
of the Company before the holders of Subordinated Debentures will be entitled
to receive or retain any payment in respect of the principal of or interest on
the Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with
respect to any Senior Debt, Subordinated Debt or Additional Senior Obligations
of the Company resulting in the acceleration of the maturity thereof, or if any
judicial proceeding is pending with respect to any such default.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) and
every obligation of the type referred to in clauses (i) through (v) of another
Person and all dividends of another Person the payment of which, in either
case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
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"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debentures
or to other Debt which is pari passu with, or subordinated to, the Subordinated
Debentures; provided, however, that Senior Debt will not be deemed to include
(i) any Debt 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, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv)
any Debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the extent
that payments made to the holders of such Debt by the holders of the
Subordinated Debentures as a result of the subordination provisions of the
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject,
and (v) Debt which constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not such claim for post-petition interest is allowed
in such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to
be junior and subordinate to other Debt of the Company (other than the
Subordinated Debentures).
"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of
payment with the Subordinated Debentures. "Claim," as used herein, has the
meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code
of 1978, as amended.
The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur additional indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
As of December 31, 1996, the Company had aggregate Senior Debt, Subordinated
Debt and Additional Senior Obligations of approximately $2.7 million. Because
the Company is a holding company, the Subordinated Debentures are effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, including obligations to depositors of the Bank.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Subordinated Debentures
will be made at the office of the Debenture Trustee in New York, New York,
except that, at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address appears in the register of holders of the Subordinated Debentures, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record
date. Payment of any interest on Subordinated Debentures will be made to the
Person in whose name such Subordinated Debenture is registered at the close of
business on the regular record date for such interest, except in the case of
defaulted interest. The Company may at any time designate additional paying
agents for the Subordinated Debentures or rescind the designation of any paying
agent for the Subordinated Debentures; however, the Company will at all times
be required to maintain a paying agent in New York, New York and each place of
payment for the Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to
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the Company on May 31 of each year or (if then held in trust by the Company)
will be discharged from such trust and the holder of such Subordinated
Debenture will thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.
REGISTRAR AND TRANSFER AGENT
The Debenture Trustee will act as the registrar and the transfer agent for
the Subordinated Debentures. Subordinated Debentures may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed) in New York, New
York or at the office of the registrar in Boston, Massachusetts. The Company
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts; provided
that the Company maintains a transfer agent in New York, New York. The Company
may at any time designate additional transfer agents with respect to the
Subordinated Debentures. In the event of any redemption, neither the Company
nor the Debenture Trustee will be required to (i) issue, register the transfer
of or exchange Subordinated Debentures during a period beginning at the opening
of business 15 days before the day of selection for redemption of Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.
MODIFICATION OF INDENTURE
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act. The
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 outstanding Subordinated Debentures, to modify the Indenture; provided,
that no such modification may, without the consent of the holder of each
outstanding Subordinated Debenture affected by such proposed modification, (i)
extend the fixed maturity of the Subordinated Debentures, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or (ii) reduce the percentage of principal amount of
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture; provided that so long as any of the
Preferred Securities remain outstanding, no such modification may be made that
requires the consent of the holders of the Subordinated Debentures, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default may be effective, without the prior consent of the holders of at least
a majority of the aggregate Liquidation Amount of the Preferred Securities and
that if the consent of the holder of each Subordinated Debenture is required,
such modification will not be effective until each holder of Trust Securities
has consented thereto.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated
Debentures, when due (subject to the deferral of any due date in the case
of an Extended Interest Payment Period); or
(ii) failure to pay any principal on the Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture
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Trustee. The Debenture Trustee, or the holders of not less than 25% in
aggregate outstanding principal amount of the Subordinated Debentures, may
declare the principal due and payable immediately upon a Debenture Event of
Default. The holders of a majority in aggregate outstanding principal amount of
the Subordinated Debentures may annul such declaration and waive the default if
the default (other than the non-payment of the principal of the Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Preferred Securities will have such right.
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 Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE 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 interest on or
principal of the 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 the principal of or interest on such 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
Indenture to the extent of any payment made by the Company to such holder of
Preferred Securities in the Direct Action. The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities. If the
right to bring a Direct Action is removed, MVBI Capital may become subject to
the reporting obligations under the Exchange Act. The Company has the right
under the 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 will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been
an Event of Default under the Trust Agreement. See "Description of the
Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to
any Person, and any Person may not consolidate with or merge into the Company
or sell, convey, transfer or otherwise dispose of its properties and assets
substantially as an entirety to the Company, unless (i) in the event 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 by
supplemental indenture the Company's obligations on the Subordinated Debentures
issued under the Indenture, (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would become a Debenture Event of Default, has occurred and is
continuing, and (iii) certain other conditions as prescribed in the Indenture
are met.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation (i) have become due and
payable, or (ii) will become due and payable at their Stated Maturity within
one year or are to be called for
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redemption 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 Subordinated
Debentures not previously delivered to the Debenture Trustee for cancellation,
for the principal and interest to the date of the deposit or to the Stated
Maturity or redemption date, as the case may be.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Missouri.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Debenture Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
MISCELLANEOUS
The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of MVBI Capital (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate MVBI Capital, except upon prior approval of the
Federal Reserve if then so required under applicable capital guidelines or
policies of the Federal Reserve, and (a) in connection with a distribution of
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of MVBI Capital, 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 MVBI Capital to remain classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes.
DESCRIPTION OF THE GUARANTEE
The Preferred Securities Guarantee Agreement (the "Guarantee") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities for the benefit of the holders of the Preferred
Securities. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Guarantee Trustee, State Street Bank and Trust Company, will
act as indenture trustee under the Guarantee for purposes of complying with the
provisions of the Trust Indenture Act and will hold the Guarantee for the
benefit of the holders of the Preferred Securities. The following summary of
the material terms and provisions of the Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the Guarantee and the Trust Indenture Act. Wherever
particular defined terms of the Guarantee are referred to, but not defined
herein, such defined terms are incorporated herein by reference. The form of
the Guarantee has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
GENERAL
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, 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 MVBI
Capital 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 MVBI Capital (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that MVBI Capital has funds available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption to the extent that MVBI Capital has funds
available therefor at such time, and (iii) upon a voluntary or involuntary
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dissolution, winding up or liquidation of MVBI Capital (other than in
connection with the distribution of Subordinated Debentures to the holders of
Preferred Securities or a redemption of all of the Preferred Securities), the
lesser of (a) the amount of the Liquidation Distribution, to the extent MVBI
Capital has funds available therefor at such time, and (b) the amount of assets
of MVBI Capital remaining available for distribution to holders of Preferred
Securities in liquidation of MVBI Capital. The obligation of the Company 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
MVBI Capital to pay such amounts to such holders.
The Guarantee will not apply to any payment of Distributions except to the
extent MVBI Capital has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by MVBI Capital, MVBI
Capital will not pay Distributions on the Preferred Securities and will not
have funds legally available therefor.
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 Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a
limitation on the amount of additional Senior Debt, Subordinated Debt or
Additional Senior Obligations that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt, Subordinated Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other Person). The Guarantee will
not be discharged except by payment of the Guarantee Payments in full to the
extent not paid by MVBI Capital or upon distribution of the Subordinated
Debentures to the holders of the Preferred Securities. Because the Company is a
holding company, the right of the Company to participate in any distribution of
assets of the Bank upon the Bank's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of the Bank, except to the extent
the Company may itself be recognized as a creditor of the Bank. The Company's
obligations under the Guarantee, therefore, will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and
claimants should look only to the assets of the Company for payments
thereunder.
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 vote will
be required), the Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate Liquidation Amount of
the outstanding Preferred Securities. See "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee will bind the successors, assigns,
receivers, trustees and representatives of the Company and will 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. The
holders of not less than a majority in aggregate 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 the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any 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 MVBI Capital, the Guarantee
Trustee or any other Person.
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.
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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
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 such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon (a)
full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of MVBI Capital, or (c)
distribution of the Subordinated Debentures to the holders 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 such Preferred Securities or the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of Missouri.
EXPENSE AGREEMENT
The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to whom MVBI
Capital becomes indebted or liable, the full payment of any costs, expenses or
liabilities of MVBI Capital, other than obligations of MVBI Capital to pay to
the holders of the Preferred Securities or other similar interests in MVBI
Capital of the amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be. Third party
creditors of MVBI Capital may proceed directly against the Company under the
Expense Agreement, regardless of whether such creditors had notice of the
Expense Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent MVBI Capital has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and MVBI Capital
believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of MVBI Capital under the Preferred
Securities. If and to the extent that the Company does not make payments on the
Subordinated Debentures, MVBI Capital will not pay Distributions or other
amounts due on the Preferred Securities. The Guarantee does not cover payment
of Distributions when MVBI Capital does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of Preferred Securities is
to institute a legal proceeding directly against the Company for enforcement of
payment of such Distributions to such holder. The obligations of the Company
under the Guarantee are subordinate and junior in right of payment to all
Senior Debt, Subordinated Debt and Additional Senior Obligations of the
Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
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because (i) the aggregate principal amount of the Subordinated Debentures will
be equal to the sum of the aggregate stated Liquidation Amount of the Trust
Securities, (ii) the interest rate and interest and other payment dates on the
Subordinated Debentures will match the Distribution Rate and Distribution and
other payment dates for the Preferred Securities, (iii) the Company will pay
for all and any costs, expenses and liabilities of MVBI Capital (except the
obligations of MVBI Capital to holders of the Preferred Securities), and (iv)
the Trust Agreement further provides that MVBI Capital will not engage in any
activity that is not consistent with the limited purposes of MVBI Capital.
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, MVBI
Capital or any other Person. A default or event of default under any Senior
Debt, Subordinated Debt or Additional Senior Obligations of the Company would
not constitute a default or Event of Default. In the event, however, of payment
defaults under, or acceleration of, Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company, the subordination provisions of
the Indenture provide that no payments may be made in respect of the
Subordinated Debentures until such Senior Debt, Subordinated Debt or Additional
Senior Obligations has been paid in full or any payment default thereunder has
been cured or waived. Failure to make required payments on the Subordinated
Debentures would constitute an Event of Default.
LIMITED PURPOSE OF MVBI CAPITAL
The Preferred Securities evidence a preferred undivided beneficial interest
in the assets of MVBI Capital. MVBI Capital exists for the sole purpose of
issuing the Trust Securities and investing the proceeds thereof in Subordinated
Debentures. A principal difference between the rights of a holder of a
Preferred Security and the rights of a holder of a Subordinated Debenture is
that a holder of a Subordinated Debenture is entitled to receive from the
Company the principal amount of and interest accrued on Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from MVBI Capital (or from the Company under the Guarantee) if
and to the extent MVBI Capital has funds available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
MVBI Capital involving the liquidation of the Subordinated Debentures, the
holders of the Preferred Securities will be entitled to receive, out of assets
held by MVBI Capital, the Liquidation Distribution in cash. See "Description
of the Preferred Securities--Liquidation Distribution Upon Termination." Upon
any voluntary or involuntary liquidation or bankruptcy of the Company, the
Property Trustee, as holder of the Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Senior Debt, Subordinated Debt and Additional Senior Obligations of the Company
(as set forth in the Indenture), but entitled to receive payment in full of
principal and interest before any shareholders of the Company receive payments
or distributions. Since the Company is the guarantor under the Guarantee and
has agreed to pay for all costs, expenses and liabilities of MVBI Capital
(other than the obligations of MVBI Capital to the holders of its Preferred
Securities), the positions of a holder of the Preferred Securities and a holder
of the Subordinated Debentures relative to other creditors and to shareholders
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
The following is a summary of the material United States federal income tax
considerations that may be relevant to the purchasers of Preferred Securities
which has been passed upon by Armstrong, Teasdale, Schlafly & Davis, counsel to
the Company and MVBI Capital insofar as it relates to matters of law and legal
conclusions. The conclusions expressed herein are based upon current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change at any time, with possible retroactive effect. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below. Furthermore, the authorities on which the following summary
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<PAGE> 38
is based are subject to various interpretations, and it is therefore possible
that the United States federal income tax treatment of the purchase, ownership,
and disposition of Preferred Securities may differ from the treatment described
below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who are individual citizens or residents of the United States and
who acquire Preferred Securities on their original issue at their offering
price and hold Preferred Securities as capital assets. The discussion has only
limited application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in
a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the
tax consequences to shareholders, partners or beneficiaries of a holder of
Preferred Securities. Further, it does not include any description of any
alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the Preferred
Securities. Accordingly, each prospective investor should consult, and should
rely exclusively on, such investor's own tax advisors in analyzing the federal,
state, local and foreign tax consequences of the purchase, ownership or
disposition of Preferred Securities.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Company intends to take the position that the Subordinated Debentures
will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a
Preferred Security, each holder covenants to treat the Subordinated Debentures
as indebtedness and the Preferred Securities as evidence of an indirect
beneficial ownership interest in the Subordinated Debentures. No assurance can
be given, however, that such position of the Company will not be challenged by
the Internal Revenue Service or, if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
CLASSIFICATION OF MVBI CAPITAL
Under current law and assuming full compliance with the terms of the Trust
Agreement and Indenture (and certain other documents described herein), MVBI
Capital will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and each holder will be required to include in
its gross income any OID accrued with respect to its allocable share of the
Subordinated Debentures whether or not cash is actually distributed to such
holder.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Because the Company has the option, under the terms of the Subordinated
Debentures, to defer (so long as no Debenture Event of Default has occurred and
is continuing) payments of interest by extending interest payment periods for
up to 20 consecutive quarters, all of the stated interest payments on the
Subordinated Debentures will be treated as OID. Holders of debt instruments
issued with OID must include that discount in income on an economic accrual
basis before the receipt of cash attributable to the interest, regardless of
their method of tax accounting. Generally, all of a holder's taxable interest
income with respect to the Subordinated Debentures will be accounted for as
OID. Actual payments and distributions of stated interest will not, however, be
separately reported as taxable income. The amount of OID that accrues in any
quarter will approximately equal the amount of the interest that accrues on the
Subordinated Debentures in that quarter at the stated interest rate. In the
event that the interest payment period is extended, holders will continue to
accrue OID approximately equal to the amount of the interest payment due at the
end of the extended interest payment period on an economic accrual basis over
the length of the extended interest payment period.
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<PAGE> 39
Because income on the Preferred Securities will constitute interest income
generally and OID specifically, corporate holders of Preferred Securities will
not be entitled to a dividends-received deduction with respect to any income
recognized with respect to the Preferred Securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market
discount" or "acquisition premium" as such phrases are defined for United
States federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF MVBI CAPITAL
Under certain circumstances, as described under "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Termination," the Subordinated Debentures may be distributed to holders
of Preferred Securities upon a liquidation of MVBI Capital. Under current
United States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
aggregate tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's aggregate tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of MVBI Capital would
include the period for which such holder held the Preferred Securities.
If, however, a Tax Event occurs which results in MVBI Capital being treated
as an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the Preferred Securities. Under
certain circumstances described herein, the Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to holders in
redemption of their Preferred Securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Preferred Securities, and a holder would recognize
gain or loss as if the holder sold such Preferred Securities for cash. See
"Description of the Preferred Securities--Redemption or Exchange" and
"--Liquidation Distribution Upon Termination."
DISPOSITION OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the Preferred
Securities and the holder's adjusted tax basis in such Preferred Securities. A
holder's adjusted tax basis in the Preferred Securities generally will be its
initial purchase price increased by OID previously includible in such holder's
gross income to the date of disposition and decreased by payments received on
the Preferred Securities to the date of disposition. Such gain or loss will
generally be a capital gain or loss and will be a long-term capital gain or
loss if the Preferred Securities have been held for more than one year at the
time of sale.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder that disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which basis will include, in the form of OID, all
accrued but unpaid interest), a holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
EFFECT OF PROPOSED CHANGES IN TAX LAWS
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer
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<PAGE> 40
issued a joint statement (the "Joint Statement") indicating their intent that
certain legislative proposals initiated by the Clinton administration,
including the 1996 Proposed Legislation, that may be adopted by either of the
tax-writing committees of Congress would have an effective date that is no
earlier than the date of "appropriate Congressional action." In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters
to Treasury Department officials concurring with the views expressed in the
Joint Statement. Neither the 1996 Proposed Legislation nor similar legislation
was enacted during the 104th Congress. On February 6, 1997, President Clinton
proposed in the administration's fiscal year 1998 budget certain tax law
changes (the "1997 Proposed Legislation") that would, among other things,
generally deny corporate issuers a deduction for interest or OID in respect of
certain debt obligations if such debt obligations have a maximum term in excess
of 15 years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. The proposed budget also contains a provision that
would deny a deduction to corporate issuers for interest or OID with respect to
debt instruments that have a maximum term of more than 40 years (including
rights to extend, renew or relend), or are payable in stock of the issuer or a
related party. The U.S. Treasury Department's summary of the 1997 Proposed
Legislation states that the above provisions regarding the deduction of
interest would generally be effective for instruments issued on or after the
date of first Congressional committee action with respect to the 1997 Proposed
Legislation. The Ways and Means Committee began a full committee hearing on the
President's fiscal 1998 budget on February 11, 1997. There can be no assurance
that the effective date guidance in the administration's proposal will be
adopted if the proposed change to the tax law is enacted, or that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Subordinated
Debentures. Consequently, there can be no assurance that a Tax Event will not
occur. A Tax Event would permit the Company, upon approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve, to cause a redemption of the Preferred Securities before, as
well as after, March 31, 2002. See "Description of the Subordinated
Debentures--Redemption or Exchange" and "Description of the Preferred
Securities--Redemption or Exchange--Tax Event Redemption, Capital Treatment
Event Redemption or Investment Company Event Redemption."
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of OID accrued on the Preferred Securities held of record by
individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Preferred
Securities by January 31 following each calendar year. Payments made on, and
proceeds from the sale of, the Preferred Securities may be subject to a
"backup" withholding tax (currently at 31%) unless the holder complies with
certain identification and other requirements. Any amounts withheld under the
backup withholding rules will be allowed as a credit against the holder's
United States federal income tax liability, provided the required information
is provided to the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED
SECURITIES SHOULD CONSULT THEIR 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.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the
investing fiduciary's determination that the investment in Preferred Securities
satisfies ERISA's fiduciary standards and other requirements applicable to
investments by the Plan.
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<PAGE> 41
In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified
person" (within the meaning of Section 4975 of the Code) with respect to
certain plans (generally, Plans maintained or sponsored by, or contributed to
by, any such persons with respect to which the Company or an affiliate is a
fiduciary or Plans for which the Company or an affiliate provides services).
The acquisition and ownership of Preferred Securities by a Plan (or by an
individual retirement arrangement or other Plans described in Section
4975(e)(1) of the Code) with respect to which the Company or any of its
affiliates is considered a party in interest or a disqualified person may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption. Any other Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their
own counsel.
UNDERWRITING
Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), has agreed,
subject to the terms and conditions set forth in the Underwriting Agreement,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, to purchase from MVBI Capital 520,000 Preferred
Securities. The Underwriter has agreed in the Underwriting Agreement, subject
to the terms and conditions set forth therein, to purchase all the Preferred
Securities offered hereby if any of the Preferred Securities are purchased.
The Underwriter has advised MVBI Capital that it proposes initially 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
Underwriter may allow, and such dealers may reallow, a discount not in excess
of $ per Preferred Security to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation
to the Underwriter arranging the investment therein of such proceeds, an amount
in immediately available funds of $ per Preferred Security (or $ in
the aggregate) for the account of the Underwriter.
MVBI Capital has granted the Underwriter an option to purchase up to an
additional 78,000 Preferred Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriter
exercises its option to purchase additional Preferred Securities, MVBI Capital
will issue and sell to the Company additional Common Securities in such
aggregate Liquidation Amount as is required for the Company to continue to hold
Common Securities in an aggregate liquidation amount equal to at least 3% of
the total capital of MVBI Capital and the Company will issue and sell to MVBI
Capital Subordinated Debentures in an aggregate principal amount equal to the
total aggregate Liquidation Amount of the additional Preferred Securities being
purchased pursuant to the option.
During a period of 30 days from the date of this Prospectus, neither MVBI
Capital nor the Company will, subject to certain exceptions, without the prior
written consent of the Underwriter, directly or indirectly, sell, offer to
sell, grant any option for sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Preferred Securities or Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or equity securities
substantially similar to the Preferred Securities (except for Subordinated
Debentures and the Preferred Securities offered hereby).
Applicaton has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market. The Underwriter has
advised MVBI Capital that it presently intends to make a market in the
Preferred Securities after the commencement of trading on The Nasdaq Stock
Market's National Market, but no assurances can be made as to the liquidity of
such Preferred Securities or that an active and liquid trading market will
develop or, if developed, that it will continue. The offering price and
distribution rate have been determined by negotiations among representatives of
the Company and the Underwriter, and the offering price of the Preferred
Securities may not be indicative of the market price following the offering.
The Underwriter will have no obligation to
38
<PAGE> 42
make a market in the Preferred Securities, however, and may cease market-making
activities, if commenced, at any time.
MVBI Capital and the Company have agreed to indemnify the Underwriter
against, or contribute to payments that the Underwriter may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act.
The Underwriter engages in transactions with, and, from time to time, has
performed services for, the Company and its subsidiaries in the ordinary course
of business.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of MVBI
Capital will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Company and MVBI Capital. Certain legal matters for the Company
and MVBI Capital, including the validity of the Guarantee and the Subordinated
Debentures will be passed upon for the Company and MVBI Capital by Armstrong,
Teasdale, Schlafly & Davis, St. Louis, Missouri, counsel to the Company and
MVBI Capital. Certain legal matters will be passed upon for the Underwriter by
Lewis, Rice & Fingersh, L.C., St. Louis, Missouri. Armstrong, Teasdale,
Schlafly & Davis and Lewis, Rice & Fingersh, L.C., will rely on the opinion of
Richards, Layton & Finger as to matters of Delaware law. Certain matters
relating to United States federal income tax considerations will be passed upon
for the Company by Armstrong, Teasdale, Schlafly & Davis.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document, previously filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to Section 13 of the
Exchange Act, is incorporated herein by reference:
The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
All reports and any definitive proxy or information statements filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Preferred Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO PAUL M. STRIEKER, EXECUTIVE VICE PRESIDENT, CONTROLLER AND CHIEF
FINANCIAL OFFICER, MISSISSIPPI VALLEY BANCSHARES, INC., 700 CORPORATE PARK
DRIVE, ST. LOUIS, MISSOURI 63105. TELEPHONE REQUESTS MAY BE DIRECTED TO (314)
268-2580.
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AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and MVBI Capital with the Commission under
the Securities Act, with respect to the Preferred Securities and the
Subordinated Debentures. This Prospectus does not contain all of the
information set forth in such Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission,
although it does include a summary of the material terms of the Indenture and
the Trust Agreement. Reference is made to such Registration Statement and to
the exhibits relating thereto for further information with respect to the
Company, MVBI Capital, the Preferred Securities and the Subordinated
Debentures. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission or incorporated by reference herein are not necessarily
complete, and, in each instance, reference is made to the copy of such document
so filed for a more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of 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 following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, upon payment of prescribed rates. The Commission
maintains in Internet web site that contains reports, proxy and information
statements and other information regarding issuers who file electronically with
the Commission. The address of that site is http://www.sec.gov. In addition,
reports, proxy statements and other information concerning the Company may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
No separate financial statements of MVBI Capital have been included herein.
The Company does not consider that such financial statements would be material
to holders of Preferred Securities because (i) all of the voting securities of
MVBI Capital will be owned by the Company, a reporting company under the
Exchange Act, (ii) MVBI Capital has no independent operations but exists for
the sole purpose of issuing securities representing undivided beneficial
interests in the assets of MVBI Capital and investing the proceeds thereof in
Subordinated Debentures issued by the Company, and (iii) the obligations of the
Company described herein to provide certain indemnities in respect of and be
responsible for certain costs, expenses, debts and liabilities of MVBI Capital
under the Indenture and pursuant to the Trust Agreement, the Guarantee issued
by the Company with respect to the Preferred Securities, the Subordinated
Debentures purchased by MVBI Capital and the related Indenture, taken together,
constitute, in the belief of the Company and MVBI Capital, a full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of the Subordinated Debentures" and "Description of the
Guarantee."
MVBI Capital is not currently subject to the information reporting
requirements of the Exchange Act. MVBI Capital will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek and expects to receive an exemption therefrom.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................... 2
Selected Consolidated Financial Data......................... 6
Risk Factors................................................. 7
Use of Proceeds.............................................. 12
Market for the Preferred Securities.......................... 12
Accounting Treatment......................................... 12
Capitalization............................................... 13
Description of the Preferred Securities...................... 14
Description of the Subordinated Debentures................... 24
Description of the Guarantee................................. 31
Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee............................... 33
Certain Federal Income Tax Consequences...................... 34
ERISA Considerations......................................... 37
Underwriting................................................. 38
Validity of Securities....................................... 39
Experts...................................................... 39
Incorporation of Certain Documents by Reference.............. 39
Available Information........................................ 40
</TABLE>
------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, MVBI CAPITAL OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
- --------------------------------------------------------------------------------
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520,000 PREFERRED SECURITIES
MVBI CAPITAL TRUST
FLOATING RATE CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
MISSISSIPPI VALLEY
BANCSHARES, INC.
PARENT COMPANY OF
SOUTHWEST BANK
------------------
$13,000,000
FLOATING RATE
SUBORDINATED DEBENTURES
OF
MISSISSIPPI VALLEY
BANCSHARES, INC.
------------------
Prospectus
, 1997
------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
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