<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1998
REGISTRATION NO. 333-__________
REGISTRATION NO. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<TABLE>
<S> <C>
FIRST WESTERN CORP. FW CAPITAL I
(Name of small business issuer in its charter) (Name of small business co-issuer in its charter)
NEBRASKA DELAWARE
(State or jurisdiction of incorporation or organization) (State or jurisdiction of incorporation or organization)
6712 6719
(Primary Standard Industrial Classification Code Number) (Primary Standard Industrial Classification Code Number)
47-0484682 APPLIED FOR
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
11210 HURON STREET 11210 HURON STREET
NORTHGLENN, COLORADO 80234 NORTHGLENN, COLORADO 80234
(303) 451-1010 (303) 451-1010
(Address and telephone number of principal executive offices) (Address and telephone number of principal executive offices)
</TABLE>
TIMOTHY D. WIENS, VICE CHAIRMAN
FIRST WESTERN CORP.
11210 HURON STREET
NORTHGLENN, COLORADO 80234
(303) 451-1010
(Name, address and telephone number of agent for service)
COPIES TO:
<TABLE>
<S> <C>
Reid A. Godbolt, Esq. Matthew C. Boba, Esq.
Jones & Keller, P.C. Chapman and Cutler
1625 Broadway, Suite 1600 111 West Monroe Street
Denver, Colorado 80202 Chicago, Illinois 60603
(303) 573-1600 (312) 845-3000
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED (1) REGISTERED PER UNIT(1) PRICE FEE
- ---------------------------------------------------------- ------------ ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
% Cumulative Preferred Securities of FW Capital I 2,300,000(2) $ 10.00 $23,000,000 $ 6,394
% Junior Subordinated Debentures of First Western Corp. (3) -- -- --
Guarantee of First Western Corp. with respect to the
% Cumulative Preferred Securities (3) (4) -- -- --
Total Registration Fee -- -- -- $ 6,394
</TABLE>
- ----------
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(a).
(2) Includes 300,000 __% Cumulative Preferred Securities (the "Preferred
Securities") issuable upon exercise of the underwriters'
over-allotment option.
(3) The % Junior Subordinated Debentures (the "Junior Subordinated
Debentures") will be purchased by FW Capital I with the proceeds of
the sale of the Preferred Securities. The Junior Subordinated
Debentures may later be distributed for no additional consideration to
the holders of the Preferred Securities upon FW Capital I's
dissolution and the distribution of its assets.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Debentures of First Western Corp. (the "Company"), the rights of
holders of the Junior Subordinated Debentures of the company under the
Indenture, the rights of holders of the Preferred Securities under the
Trust Agreement, the Guarantee, the Expense Agreement entered into by
the company and certain backup undertakings as described herein. No
separate consideration will be received for the Guarantee or such
backup undertakings.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION, DATED NOVEMBER __, 1998
2,000,000 PREFERRED SECURITIES
FW CAPITAL I
__% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
FIRST WESTERN CORP.
[LOGO]
FW Capital I, a Delaware statutory business trust, is offering the Preferred
Securities. The Preferred Securities represent undivided beneficial interests
in FW Capital I's assets. These assets consist primarily of Junior
Subordinated Debentures issued by First Western Corp. First Western Corp. will
be the owner of the common securities of FW Capital I and will guarantee FW
Capital I's obligations under the Preferred Securities as described in this
prospectus.
An application has been filed to list the Preferred Securities on the American
Stock Exchange under the trading symbol "FWT.Pr.A."
YOU SHOULD CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 8 BEFORE INVESTING IN
THE PREFERRED SECURITIES.
These securities are not savings accounts or deposits and are not insured by
the Federal Deposit Insurance Corporation or any other governmental agency.
<TABLE>
<CAPTION>
Per Preferred
Security Total
----------------- ------------
<S> <C> <C>
Per Preferred Security . . . . . . . . . . . . . . . . . $10 $20,000,000
Proceeds to FW Capital I . . . . . . . . . . . . $10 $20,000,000
</TABLE>
The underwriters are offering the Preferred Securities subject to certain
conditions on a firm commitment basis, which means they must buy all of the
Preferred Securities offered by FW Capital I, if any are purchased. All of the
proceeds to FW Capital I will be used to purchase the Junior Subordinated
Debentures from First Western Corp. First Western Corp. has agreed to pay the
underwriters $_____ per Preferred Security, or a total of $_____, for arranging
the investment in the Junior Subordinated Debentures. The underwriters may,
under certain circumstances, purchase up to an additional 300,000 Preferred
Securities to cover over-allotments.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
HOWE BARNES INVESTMENTS, INC.
_____________, 1998
<PAGE> 3
[INSERT FW LOGO AND MAP]
Banking Locations
Map of the Colorado and Nebraska area indicating the company's banking
locations.
First Western Corp. intends to furnish you with annual reports
containing its audited consolidated financial statements and quarterly reports
for the first three quarters of each fiscal year containing unaudited financial
information. Prior to this offering, First Western Corp. has not been a
reporting company with the Securities and Exchange Commission.
AVAILABLE INFORMATION
First Western Corp. and FW Capital I have filed electronically with
the Commission through EDGAR a registration statement on Form SB-2 in
accordance with the requirements of the Securities Act of 1933 (the "Act")
registering the Preferred Securities. This prospectus does not contain all of
the information set forth in the registration statement and in the exhibits
attached. Certain items were omitted in accordance with the rules and
regulations of the Commission. Anyone may inspect the registration statement
without charge at the public reference facilities of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 and may obtain copies of all or any part
of it from the Commission upon payment of the required fees. Statements
contained in this prospectus which refer to a document filed as an exhibit to
the registration statement are qualified in their entirety by reference to the
copy of that document. The registration statement may also be reviewed on the
Commission's Web Site at http://www.sec.gov.
2
<PAGE> 4
PROSPECTUS SUMMARY
This summary provides an overview of selected information contained
elsewhere in this prospectus and does not contain all the information you
should consider. Therefore, you should also read the more detailed information
set forth in this prospectus, the financial statements of the company and the
other information that is incorporated by reference in this prospectus. Unless
otherwise indicated, all information in this prospectus assumes that the
underwriters' over-allotment option is not exercised.
THE COMPANY
First Western Corp., a multibank holding company, offers full service
community banking through 10 banking locations in metropolitan Denver-northern
Colorado, and two banking locations in western and central Nebraska. The
company was organized in 1963 by its founder and Chairman, Joel H. Wiens, to
purchase the company's first community bank, Firstate Bank, in Kimball,
Nebraska. In 1993 the company began its banking operations in Colorado through
the purchase of a bank in Northglenn, Colorado, which was renamed Firstate Bank
of Colorado. In 1995 the company began its Colorado expansion through
establishing startup branches in areas of metropolitan Denver-northern Colorado
that management believed were well situated for deposit and loan growth. To
date, the company has added seven branches and purchased a two-branch savings
bank that has been assimilated into Firstate Bank of Colorado. The company
plans to open its eleventh Colorado banking branch in early 1999.
The company's growth strategy since 1995 has been to provide community
banking services by establishing startup branches at reasonable costs and
staffing them with experienced bankers to serve as branch presidents and loan
officers. Consolidation within the Colorado banking community has resulted in
the availability of experienced, highly capable bankers with existing customer
relationships who prefer to work in a community banking environment.
Consequently, the company has been able to open branches with highly qualified
personnel who have strong contacts with customers and who initiate immediate
banking business. In addition, the company believes that its management style
and internal culture, along with employee focused participation in decision
making, leads experienced bankers to explore employment with the company.
Also, the company has implemented its Colorado expansion through a central
operating system, and believes that its existing management, systems and
facilities are capable of supporting additional growth without proportionate
increases in operating costs. The company's operating strategy is to continue
to provide high quality community banking services to its customers and
increase market share through active solicitation of new business, repeat
business and referrals from customers, and continuation of selected promotional
strategies.
The company has experienced significant growth since 1995 due to its
expansion strategy. Total assets have increased to $335 million as of
September 30, 1998 from $228 million and $125 million as of December 31, 1997
and 1996, respectively. The company has maintained above average profitability
while achieving strong asset growth. During the same time period, net income
increased to $3.0 million for the nine months ended September 30, 1998, from
$2.5 million for the year ended December 31, 1997 and $1.6 million for the year
ended December 31, 1996. On an annualized basis, as of September 30, 1998,
return on average assets of the company equaled 1.49%, while return on average
equity was 21.47%.
The company's principal executive office is located at 11210 Huron
Street, Northglenn, Colorado, and its telephone number is (303) 451-1010.
3
<PAGE> 5
FW CAPITAL I
FW Capital I is a statutory business trust created under Delaware law
on November 6, 1998. FW Capital I's business and affairs will be conducted by
the Property Trustee, the Delaware Trustee and three individual Administrative
Trustees. The Administrative Trustees are officers or directors of the
company. FW Capital I was created exclusively for the purpose of offering the
Preferred Securities, investing in the Junior Subordinated Debentures and
engaging in the other transactions discussed in this prospectus. All of the
common securities of FW Capital I will be owned by the company. See
"Description of the Preferred Securities -- Subordination of Common Securities
of FW Capital I Held by the Company." FW Capital I will have a term of 30
years, but may be dissolved earlier as provided in the trust agreement.
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS SET OUT IMMEDIATELY
FOLLOWING THIS SUMMARY. THESE RISK FACTORS INCLUDE, BUT ARE NOT LIMITED TO:
o Distributions will be paid by FW Capital I on the Preferred Securities
only if interest payments are made by the company to FW Capital I on
the Junior Subordinated Debentures.
o Interest payments by the company on the Junior Subordinated Debentures
are dependent on the receipt of dividends from its subsidiary banks.
o The company may defer interest payments on the Junior Subordinated
Debentures for up to 20 consecutive quarters. If the company elects a
deferral, distributions will not be made on the Preferred Securities
by FW Capital I during the deferral period.
o Certain tax or regulatory events may trigger the redemption of the
Junior Subordinated Debentures by the company, and prepayment of the
Preferred Securities prior to the stated maturity date.
o Future legislation may be proposed or enacted that may prohibit the
company from deducting its interest payments on the Junior
Subordinated Debentures for tax purposes, making redemption of the
Junior Subordinated Debentures likely.
o None of the governing documents of FW Capital I protect you in the
event of a material adverse change in the company's business or
performance.
o You will have very limited voting rights.
o The company's financial results may be adversely affected by changes in
economic conditions and interest rates.
o The company faces risks in its branching strategy as well as
competition in its banking business.
o There can be no assurance that the company's allowance for loan losses
will be adequate to cover actual losses.
THE OFFERING
Preferred securities issuer . . . . . . . . FW Capital I
Securities offered . . . . . . . . . . . . 2,000,000 Preferred Securities. The
Preferred Securities represent
undivided beneficial interests in
the assets of FW Capital I. These
assets will consist of the Junior
Subordinated Debentures issued and
4
<PAGE> 6
payable by the company and payments
made on them, as well as rights
under an expense agreement.
Distributions . . . . . . . . . . . . . . . The distributions payable on each
preferred security will be:
o fixed at a rate per year of %;
o cumulative;
o accrue from the date of issuance
of the Preferred Securities; and
o payable quarterly in arrears on
the 15th day of January, April,
July and October of each year
that the Preferred Securities
are outstanding, commencing on
April 15, 1999.
The amount of each distribution due
with respect to the Preferred
Securities will include amounts
accrued through the date the
distribution payment is due. See
"Description of the Preferred
Securities -- Distributions."
Extension Periods . . . . . . . . . . . . . So long as no default has occurred
and is continuing, the company will
have the right, at any time, to
defer payments of interest on the
Junior Subordinated Debentures for
a period not exceeding 20
consecutive quarters with respect
to each deferral period. No
deferral may extend beyond the
stated maturity date of the Junior
Subordinated Debentures. If
interest payments are deferred,
distributions on the Preferred
Securities will also be deferred.
During such time, the company will
generally not be permitted to
declare or pay any cash
distributions with respect to its
common stock, and interest will
accrue on the deferred
distributions at the rate of __%
per year and compound quarterly.
Holders of the Preferred Securities
would be required to include
accrued interest in income for
United States federal income tax
purposes. This means that in such
event you would have income from
the Preferred Securities for United
States federal income tax purposes
but that you would not receive any
cash with which to pay the tax that
may be due on that income. See
"Description of Junior Subordinated
Debentures -- Option to Extend
Interest Payment Period," "Certain
Federal Income Tax Consequences --
Interest Income and Original Issue
Discount" and "Risk Factors --
Option to Extend Interest Payment
Period; Tax Consequences."
Stated Maturity Date and Redemption . . . . The Junior Subordinated Debentures
will mature on , 2028. You will be
required to sell your Preferred
Securities to FW Capital I upon the
stated maturity date of the Junior
Subordinated Debentures or earlier
if the Junior Subordinated
Debentures are
5
<PAGE> 7
prepaid. In the case of prepayment,
FW Capital I will redeem your
Preferred Securities on the date of
redemption.
Redemption Events . . . . . . . . . . . . . Final payment may be made prior to
the maturity date if certain
conditions are met (including the
company having received prior
approval of the Federal Reserve, if
required). The company may redeem
the Junior Subordinated Debentures
prior to maturity:
o on or after, ______, 2003, in
whole at any time or in part
from time to time; or
o at any time, in whole (but not
in part), upon the occurrence
of certain events which may
have a material, adverse
effect on the company's
benefits of having the
Preferred Securities
outstanding.
The redemption price will equal the
principal amount of the Junior
Subordinated Debentures redeemed,
plus any accrued but unpaid
interest to the date of redemption.
See "Description of the Preferred
Securities -- Redemption" and
"Description of the Junior
Subordinated Debentures --
Redemption."
Distribution of Junior
Subordinated Debentures . . . . . . . . . . The company has the right at any
time to dissolve or liquidate FW
Capital I. Thereafter, the company
has the right to distribute the
Junior Subordinated Debentures to
holders of Preferred Securities, if
the company has received prior
approval of the Federal Reserve and
paid the creditors of FW Capital I.
Upon such a dissolution or
liquidation you will receive Junior
Subordinated Debentures in exchange
for the same principal amount of
your holdings in Preferred
Securities. See "Description of the
Preferred Securities --
Distribution of Junior Subordinated
Debentures."
Guarantee . . . . . . . . . . . . . . . . . The company will provide a full
guarantee, on a subordinated basis,
of payments by FW Capital I of
amounts due on the Preferred
Securities, to the extent FW
Capital I has received payment on
the Junior Subordinated Debentures.
If FW Capital I has insufficient
funds to pay distributions on the
Preferred Securities (i.e., if the
company has failed to make required
payments under the Junior
Subordinated Debentures) and the
company has not deferred such
payments, you would be entitled to
institute a legal proceeding
directly against the company to
enforce payment of such
distributions. See "Risk Factors --
Limitations on Direct Actions
Against the Company
6
<PAGE> 8
and on Rights Under the Guarantee"
and "Description of Junior
Subordinated Debentures --
Debenture Events of Default," "--
Enforcement of Certain Rights of
Holders of Preferred Securities,"
"Description of Guarantee."
Ranking . . . . . . . . . . . . . . . . . The Preferred Securities will rank
equally with, and payments thereon
will be made proportionately, with
the common securities of FW Capital
I held by the company, except as
described under "Description of the
Preferred Securities -
Subordination of Common Securities
of FW Capital I Held by the
Company." The company's obligations
under its guarantee, the Junior
Subordinated Debentures and other
governing documents described in
this prospectus are unsecured and
rank junior in right of payment to
all current and future senior and
subordinated debt of the company.
As of September 30, 1998, the
aggregate outstanding senior and
subordinated debt of the company
was $5.8 million. In addition,
because the company is a multibank
holding company, all existing and
future liabilities of the company's
subsidiaries, including its banks,
will rank prior to all obligations
of the company relating to the
securities described in this
prospectus. There is no limit on
the amount of preferred securities
or junior subordinated debentures
of the company that may be issued
in the future. In this event, the
company's obligations under the
junior subordinated debentures to
be issued to such other trusts and
the company's guarantees of the
payments by such trusts will rank
equally with the company's
obligations under the Junior
Subordinated Debentures and its
guarantee described above.
Voting Rights . . . . . . . . . . . . . . . You will have very limited voting
rights. These rights relate only to
the dissolution or termination of
FW Capital I and removal of the
Property Trustee and the Indenture
Trustee upon certain events
described in this prospectus. See
"Description of the Preferred
Securities -- Voting Rights;
Amendment of FW Capital I
Agreement."
Proposed American Stock
Exchange Symbol . . . . . . . . . . . . . FWT.Pr.A
Use of Proceeds . . . . . . . . . . . . . The proceeds to FW Capital I from
the sale of the Preferred
Securities will be invested by FW
Capital I in the Junior
Subordinated Debentures. The
company, in turn, intends to use
the net proceeds to pay a note
payable of $5.8 million and
contribute approximately $4.2
million of capital to Firstate Bank
of Colorado, with the remainder of
the proceeds to be used for general
corporate purposes. These
7
<PAGE> 9
purposes may include additional
capital contributions to the
company's banks, purchasing and
establishing future startup bank
branches and possible future
acquisitions of financial
institutions. The company expects
approximately $6.6 million of the
Preferred Securities to qualify as
Tier 1 capital under the capital
guidelines of the Federal Reserve.
The remaining $13.4 million not
qualifying as Tier 1 capital will
be included in total capital of the
company. See "Use of Proceeds" and
"Capitalization."
8
<PAGE> 10
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated statements of income data for the years ended
December 31, 1997 and 1996 and the consolidated balance sheet data as of
December 31, 1997 are derived from the company's consolidated financial
statements and notes thereto which have been audited by Clifton Gunderson
L.L.C., independent public accountants, and are included elsewhere in this
prospectus. The consolidated statements of income data for the year ended
December 31, 1995 and the balance sheet data as of December 31, 1996 and 1995
are derived from the company's unaudited consolidated financial statements not
included herein. The consolidated statement of income data for the nine months
ended September 30, 1998 and 1997, and the consolidated balance sheet data as
of September 30, 1998 and 1997, have been derived from unaudited consolidated
financial statements, which, in the opinion of the company, reflect all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of the financial position and results of operations of the company
for those periods. The consolidated statements of income data for interim
periods are not necessarily indicative of results for subsequent periods or the
full year. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and with the company's consolidated financial statements appearing
elsewhere in this prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS AT OR FOR THE YEAR
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
------------------------ ---------------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME:
INTEREST INCOME ....................................... $ 18,715 $ 11,308 $ 16,263 $ 7,908 $ 6,544
INTEREST EXPENSE ...................................... 8,755 5,109 7,481 3,120 2,655
NET INTEREST INCOME ................................... 9,960 6,199 8,782 4,788 3,889
PROVISION FOR LOAN LOSSES ............................. 180 110 140 15 104
OTHER INCOME .......................................... 1,981 1,205 1,708 1,251 907
OTHER EXPENSES ........................................ 7,043 4,414 6,544 3,749 2,775
INCOME TAX EXPENSE .................................... 1,765 919 1,309 705 475
NET INCOME ............................................ 2,953 1,961 2,497 1,570 1,442
CONSOLIDATED BALANCE SHEET:
TOTAL ASSETS .......................................... $ 335,493 $ 218,813 $ 227,600 $ 125,013 $ 95,975
LOANS ................................................. 248,347 147,266 165,627 68,751 45,580
ALLOWANCE FOR LOAN LOSSES ............................. 1,592 1,290 1,321 851 767
INVESTMENT SECURITIES AVAILABLE-FOR-SALE .............. 35,110 15,920 15,470 15,653 21,579
INVESTMENT SECURITIES HELD-TO-MATURITY ................ 9,241 13,578 13,042 16,135 13,204
NONPERFORMING ASSETS(1) ............................... 1,471 874 1,369 125 138
DEPOSITS .............................................. 294,044 187,979 200,294 101,387 78,041
STOCKHOLDERS' EQUITY .................................. 19,868 16,369 16,911 13,749 12,244
PER COMMON SHARE:
BASIC EARNINGS PER SHARE(2) ........................... $ 21.09 $ 14.89 $ 18.67 $ 12.56 $ 11.54
BOOK VALUE PER SHARE .................................. 141.92 116.92 120.79 109.99 97.96
TANGIBLE BOOK VALUE PER SHARE ......................... 135.79 109.91 114.33 109.99 97.96
KEY RATIOS(3):
NET INTEREST MARGIN (4) ............................... 5.49% 5.34% 5.27% 5.36% 5.11%
NET INTEREST SPREAD (4) ............................... 4.73 4.45 4.39 4.24 4.15
RETURN ON AVERAGE ASSETS .............................. 1.49 1.51 1.35 1.52 1.63
RETURN ON AVERAGE COMMON EQUITY ....................... 21.47 17.43 16.31 11.42 11.78
STOCKHOLDERS' EQUITY TO TOTAL ASSETS .................. 5.92 7.48 7.43 11.00 12.76
TIER 1 RISK-BASED CAPITAL ............................. 7.22 9.59 9.02 17.79 21.01
TOTAL RISK BASED CAPITAL .............................. 7.80 10.36 9.74 18.80 22.21
NONPERFORMING ASSETS TO TOTAL ASSETS .................. 0.44 0.40 0.60 0.10 0.14
NONPERFORMING LOANS TO TOTAL LOANS .................... 0.28 0.29 0.74 0.17 0.30
ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS .............. 0.64 0.88 0.80 1.24 1.68
ALLOWANCE FOR LOAN LOSSES TO NONPERFORMING LOANS ...... 229.73% 179.87% 107.61% 739.65% 555.93%
RATIO OF EARNINGS TO FIXED CHARGES (5):
INCLUDING INTEREST ON DEPOSITS ........................ 1.54X 1.56X 1.51X 1.73X 1.72X
EXCLUDING INTEREST ON DEPOSITS ........................ 9.27X 9.01X 8.69X 15.06X 15.44X
</TABLE>
- ----------
(1) Other real estate, and nonaccrual, impaired and all other loans 90
days or more delinquent.
(2) No difference exists between basic and diluted earnings per share.
(3) The ratios for the nine months ended September 30, 1998 and 1997 have
been annualized and are not necessarily indicative of the results for
the entire year.
(4) On a tax equivalent basis.
(5) For purposes of computing the ratio of earnings to fixed charges,
earnings represent income before income taxes, extraordinary items and
fixed charges. Fixed charges represent interest expense.
9
<PAGE> 11
RISK FACTORS
Prospective investors should consider, among other things, the
following factors in connection with a decision to purchase the Preferred
Securities.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
Ranking of the Company's Obligations Under the Junior Subordinated
Debentures and the Guarantee. FW Capital I's ability to make payments to you
on the Preferred Securities will be dependent upon the company making payments
on the Junior Subordinated Debentures. The Junior Subordinated Debentures are
unsecured; therefore, no collateral is available to back the company's payment
obligation. In addition, the Junior Subordinated Debentures rank subordinate
and junior to all current debt and unlimited future debt of the company (unless
such future debt is subordinate to the Junior Subordinated Debentures).
However, the company does intend to use $5.8 million of the proceeds from this
offering to retire its existing note payable. See "Use of Proceeds." Further,
the company may issue an unlimited amount of additional junior subordinated
debentures in connection with any future offerings of preferred securities, and
any such additional debentures would rank equally with the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures --
Subordination" and "Description of Guarantee -- Status of the Guarantee."
Dependence on Dividends From Subsidiary Banks. A substantial majority
of the company's assets consist of its investments in its subsidiary banks.
Thus, the company's ability to pay interest and principal on the Junior
Subordinated Debentures to FW Capital I depends primarily upon the cash
dividends the company receives from its banks. Dividend payments from the
banks to the company are subject to, among other things: (i) regulatory
limitations, generally based on current and retained earnings and capital
maintenance requirements, imposed by various bank regulatory agencies, (ii)
profitability, financial condition and capital expenditures and other cash flow
requirements of the banks, and (iii) prior claims of creditors of the banks.
If the banks are unable to pay sufficient dividends to the company, then the
company will likely be unable to make payments on the Junior Subordinated
Debentures thereby leaving insufficient funds for FW Capital I to make payments
to you on the Preferred Securities.
Option to Defer Interest Payments. As long as the company is not in
default on the Junior Subordinated Debentures, the company has the right to
defer interest payments on the Junior Subordinated Debentures for up to 20
consecutive quarters, provided that such deferment does not extend beyond the
maturity date of the Junior Subordinated Debentures.
o Option Consequences - In the event of a deferral, quarterly
distributions will not be paid during the deferral. Interest
on all amounts deferred will compound quarterly and accumulate
at the rate of __% per year. During any such deferral, the
company will be prohibited from making certain payments or
distributions with respect to the company's capital stock
(including cash dividends on or redemptions of common or
preferred stock) and from making certain payments with respect
to any debt securities of the company that rank equal with, or
junior to, the Junior Subordinated Debentures, although there
currently are no such debt securities. The company, however,
would have the ability to continue to make payments on debt
that is senior to the Junior Subordinated Debentures. There
is no limitation on the number of times that the company may
elect to defer payments. See "Description of the Preferred
Securities -- Distributions" and "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment
Period."
o Tax Consequences - You will be treated as owning an undivided
beneficial interest in the Junior Subordinated Debentures for
federal income tax purposes. The company believes the
likelihood of it exercising its option to defer payments of
interest as described immediately above is remote. As a
result, you will include interest in taxable income under
10
<PAGE> 12
your own method of tax accounting (i.e., cash or accrual). If
the company exercises its right to defer payments of interest
or if the Internal Revenue Service successfully took the
position that the exercise of such right was not remote at the
time of issuance of the Junior Subordinated Debentures,
certain provisions of the Internal Revenue Code (the original
issue discount provisions) would require you to include in
your taxable income a proportionate amount of interest on the
Junior Subordinated Debentures, calculated under those
original issue discount provisions, regardless of your own
method of tax accounting, and even though you might not
receive any distribution on the Preferred Securities. See
"Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
o Market Consequences - While the company has no current
intention of exercising its right to defer payments of
interest, should the company elect to exercise this right in
the future, the market price of the Preferred Securities is
likely to be affected adversely.
Redemption. Although the Junior Subordinated Debentures have a stated
maturity date of _______, 2028, they may be redeemed by the company prior to
such date, upon the following:
o In whole or in part, on or after ____________, 2003 at the
option of the company.
o In whole upon a change in the federal tax laws or a change in
the interpretation of the tax laws by the courts or the
Internal Revenue Service, which would result in more than an
insubstantial risk that (i) FW Capital I is or will be subject
to federal income tax, (ii) interest paid by the company on
the Junior Subordinated Debentures will not be deductible by
the company for federal income tax purposes, or (iii) FW
Capital I is or will be subject to more than a minimal amount
of other taxes or governmental charges.
o In whole upon a change in the laws or regulations to the
effect that FW Capital I is or will be considered to be an
"investment company" that is required to be registered under
the Investment Company Act of 1940.
o In whole upon a change in the laws or regulations if there is
more than an insubstantial risk that the company will not be
able to treat all or a substantial portion of the Preferred
Securities as "Tier 1 Capital" for purposes of capital
adequacy guidelines of the Federal Reserve.
The exercise of these redemption rights is subject to the company having
received prior approval of the Federal Reserve, if required. See "Description
of the Preferred Securities -- Redemption."
Possible Tax Law Changes Affecting Preferred Securities. Certain
federal legislative proposals were made in 1996 and 1997 which, if enacted,
could have adversely affected the ability of the company to deduct interest
paid on the Junior Subordinated Debentures. While these proposals were not
enacted, there can be no assurance that future legislation will not otherwise
adversely affect the ability of the company to deduct the interest it pays on
the Junior Subordinated Debentures. See "Description of the Preferred
Securities -- Redemption," "Description of Junior Subordinated Debentures --
Redemption," and "Certain Federal Income Tax Consequences."
Possible Distribution of Junior Subordinated Debentures to Holders of
Preferred Securities. The company will have the right at any time to terminate
FW Capital I and distribute the Junior Subordinated Debentures to you in
exchange for the Preferred Securities, subject to the receipt of any required
approval of the Federal Reserve. Because the Junior Subordinated Debentures
may be distributed to you, and also because payments on the Preferred
Securities are reliant on FW Capital I receiving payments on the Junior
Subordinated Debentures, you are also making an investment decision regarding
the Junior
11
<PAGE> 13
Subordinated Debentures. See "Description of the Preferred Securities --
Liquidation Distribution Upon Termination" and "Description of the Junior
Subordinated Debentures."
Limitations on Direct Actions Against the Company and on Rights Under
the Guarantee. The company will guarantee only the payment of distributions by
FW Capital I and payments on liquidation of or redemption of the Preferred
Securities to the extent of funds held by FW Capital I. If FW Capital I has
insufficient funds to pay distributions on the Preferred Securities (i.e., if
the company has failed to make required payments under the Junior Subordinated
Debentures) and the company has not deferred its payments, you would have the
right to institute a legal proceeding directly against the company to enforce
payment. Except as just described and further set forth in this prospectus,
you will not be directly able to exercise any other remedy to collect on
amounts owed to you, and you will be bound to the provisions of the governing
documents. See "Description of Junior Subordinated Debentures -- Enforcement
of Certain Rights of Holders of Preferred Securities" and "-- Debenture Events
of Default" and "Description of Guarantee."
Limited Covenants. The covenants in the governing documents relating
to the Preferred Securities and the Junior Subordinated Debentures are limited.
As a result, the governing documents do not protect you in the event of a
material adverse change in the company's financial condition or results of
operations. Nor do such governing instruments limit the ability of the company
or any of its subsidiaries to incur additional debt. Therefore, you should
not consider the terms of the governing documents to be a significant factor in
evaluating whether the company will be able to comply with its obligations
under the Junior Subordinated Debentures or its guarantee.
Limited Voting Rights. You will have limited voting rights which
relate only to the modification of the Preferred Securities and removal of the
Property Trustee and the Indenture Trustee upon certain events. You will not
have any voting rights with respect to the company or Administrative Trustees.
Trading Characteristics of the Preferred Securities. The Preferred
Securities may trade at a price that does not reflect the value of accrued but
unpaid interest with respect to the underlying Junior Subordinated Debentures.
If you dispose of your Preferred Securities between record dates for payments
on the Preferred Securities, you may have certain adverse tax consequences.
Under such circumstances, you will be required to include accrued but unpaid
interest on the Junior Subordinated Debentures allocable to such Preferred
Securities through the date of disposition in your income as ordinary income.
If interest on the Junior Subordinated Debentures is included in income under
the original issue discount provisions, you would add such amount to your
adjusted tax basis in your share of the underlying Junior Subordinated
Debentures deemed disposed. If your selling price is less than your adjusted
tax basis (which will include all accrued but unpaid original issue discount
interest included in your income), you could recognize a capital loss which
cannot be applied to offset ordinary income for federal income tax purposes
(subject to certain exceptions). See "Certain Federal Income Tax
Considerations -- Interest Income and Original Issue Discount" and "-- Sales
or Redemption of Preferred Securities."
Possible Limited Public Market. While an application for listing is
pending for the Preferred Securities with the American Stock Exchange, there
can be no assurance that the application will be approved. Even if listed on
the American Stock Exchange, an active and liquid trading market for the
Preferred Securities may not develop or be sustained.
Fluctuations in Market Price. Future trading prices of the Preferred
Securities will depend on many factors including prevailing interest rates, the
operating results and financial condition of the company, the exercise of the
company's deferral option, and the market for similar securities. There can be
no assurance as to the market prices for the Preferred Securities or the Junior
Subordinated Debentures that may be distributed in exchange for the Preferred
Securities if the company exercises its right to terminate FW Capital I.
Accordingly, the Preferred Securities, or the Junior Subordinated Debentures
that you may receive in liquidation of FW Capital I, may decline in value.
12
<PAGE> 14
RISK FACTORS RELATING TO THE COMPANY
Economic Conditions. The company's financial results may be
materially and adversely affected by changes in prevailing economic conditions,
including declines in real estate values, rapid changes in interest rates,
adverse employment conditions and the monetary and fiscal policies of the
federal government. Although economic conditions in the company's primary
market area are strong, there can be no assurance that such conditions will
continue to prevail. Moreover, substantially all of the loans of the company
are to individuals and businesses in the Denver metropolitan area, northern
Colorado and western Nebraska, and any decline in the economy of these market
areas could have an adverse impact on the company. There can be no assurance
that positive trends or developments discussed in this prospectus will continue
or that negative trends or developments will not have a material adverse effect
on the company.
Impact of Interest Rates. The profitability of the company is in part
a function of the spread between the interest rates earned on assets and the
interest rates paid on deposits and other interest-bearing liabilities.
Although management believes that the maturities of the company's assets are
moderately balanced in relation to maturities of liabilities, this balance
involves estimates as to how changes in the general level of interest rates
will impact the yields earned on assets and the rates paid on liabilities. A
decrease in interest rate spreads would have a negative effect on the net
interest income and profitability of the company, and there can be no assurance
that a decrease will not occur. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Growth and Expansion Risks. The company has pursued and intends to
continue to pursue an internal growth strategy, the success of which will
depend primarily on generating an increasing level of loans and deposits at
acceptable risk levels and terms without corresponding increases in
non-interest expenses. The company's expansion strategy is primarily the
establishment of new branches. There can be no assurance that the company will
be successful in continuing its growth strategies due to delays and other
impediments resulting from regulatory oversight, lack of qualified personnel,
unavailability of branch sites or poor site selection of bank branches. In
addition, the level of success of the company's growth strategy will depend on
maintaining sufficient regulatory capital levels and on continued favorable
economic conditions in the company's primary market area. Also, the company
does not have any discussions or negotiations underway relating to acquisitions
of financial institutions, but in the future it may review acquisition
opportunities. Competition for acquisitions in the company's primary market
area is highly competitive, and the company may not be able to acquire
institutions on terms beneficial to the company. The company may not be
successful in identifying acquisition candidates, integrating acquired
institutions or preventing deposit erosion at acquired institutions, all of
which could hamper its continued growth.
Allowance for Loan Losses. The inability of borrowers to repay loans
can erode earnings and capital of banks. Like all financial institutions, the
company maintains an allowance for loan losses to provide for loan defaults and
nonperformance. The allowance is based on prior experience with loan losses, as
well as an evaluation of the risks in the current portfolio, and is maintained
at a level considered adequate by management to absorb anticipated losses. The
amount of future losses is susceptible to changes in economic, operating and
other conditions, including changes in interest rates, that may be beyond
management's control, and such losses may exceed current estimates. At September
30, 1998, the company had nonperforming loans of $693,000 and an allowance for
loan losses of $1.6 million or .64% of total loans and 229.73% of nonperforming
loans. State and federal regulatory agencies, as an integral part of their
examination process, review the company's loans and its allowance for loan
losses. Although management believes that the company's allowance for loan
losses is adequate to cover anticipated losses, the loan loss allowance at
September 30, 1998 is lower as a percentage of total loans than historical
levels. Management has determined to increase the monthly provision for loan
losses in anticipation of further loan growth. There can be no assurance,
however, that management will not determine a need to further increase the
allowance for loan losses or that regulators, when reviewing the
13
<PAGE> 15
company's loan portfolios in the future, will not require the company to
increase such allowance, either of which could adversely affect the company's
earnings. Further, there can be no assurance that the company's actual loan
losses will not exceed its allowance for loan losses. Future provisions for
loan losses could materially and adversely affect results of operations of the
company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Competitive Banking Environment. The banking business in the company's
areas of operations is highly competitive. The company competes for loans and
deposits with other local, regional and national commercial banks, savings
banks, savings and loan associations, finance companies, money market funds,
brokerage houses, credit unions and nonfinancial institutions, many of which
have substantially greater financial resources than the company. Interstate
banking is permitted in Colorado and to a lesser extent in Nebraska. As a
result, management believes that the company may experience greater competition
in its market areas.
Year 2000 Compliance. The company faces a significant business issue
regarding how existing application software programs and operating systems can
accommodate the date value for the year 2000. Many existing software application
products, including software application products used by the company and its
suppliers and customers, were designed to accommodate only a two-digit date
value, which represents the year. For example, information relating to the year
1996 is stored in the system as "96." As a result, the year 1999 (i.e., "99")
could be the maximum date value that these systems will be able to process
accurately. In response to concerns about this issue, regulatory agencies have
begun to monitor holding companies' and banks' readiness for the year 2000 as
part of the regular examination process. The company presently believes that
with modifications to existing software and conversion to new software, the year
2000 issue will not pose significant operational problems for the company's
business operations. To date, management believes the company's Nebraska bank is
substantially year 2000 compliant. In addition, the company's primary computer
operations are out-sourced to an unaffiliated computer service provider which is
in the process of implementing modifications and conversions to make its systems
year 2000 compatible. The company is monitoring its computer service provider
and receives quarterly status reports, and the provider has estimated that it
will be year 2000 compliant by mid-1999. The company has also arranged for
another computer service provider to handle the company's computer needs should
its current provider fail to make the necessary modifications on a timely basis.
Nonetheless, the interruption to the company's business could be substantial if
its current provider fails in efforts to become year 2000 compliant. In
addition, failure by suppliers and customers of the company to modify and
convert their own computer systems could have a significant adverse effect on
such suppliers' or customers' operations and profitability, thus inhibiting
their ability to provide services or repay loans to the company. As a practical
matter, the company will unlikely be able to accumulate information on its
suppliers' and customers' year 2000 programs to assess the impact on the
company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Considerations."
Control by Principal Stockholders. Approximately 99.1% of the
outstanding shares of company common stock is owned directly or indirectly by
Joel H. Wiens, the company's Chairman, and Timothy D. Wiens, the company's Vice
Chairman. As a result, the Wiens are able to elect all members of the
company's Board of Directors and direct the policies and decisions of the
company. Such control would make the acquisition of control of the company by
a third party impossible without the Wiens' approval.
Government Regulation and Recent Legislation. The company and its
banks are subject to extensive federal and state legislation, regulation and
supervision which is intended primarily to protect depositors and the Federal
Deposit Insurance Corporation's Bank Insurance Fund, rather than investors.
Recently enacted, proposed and future legislation and regulations designed to
strengthen the banking industry have had and may have a significant impact on
the banking industry. Although some of the legislative and regulatory changes
may benefit the company and its banks, others may increase their costs of doing
business or otherwise adversely affect them and create competitive advantages
for non-bank competitors. See "Supervision and Regulation."
14
<PAGE> 16
CAUTIONARY STATEMENTS
Statements which are not historical facts contained or incorporated by
reference in this prospectus are forward-looking statements that involve risks
and uncertainties that could cause actual results to differ from projected
results. Factors that could cause actual results to differ materially include
the factors discussed in "Risk Factors" as well as continued success of the
company's branching strategy, general economic conditions, economic conditions
in the Denver metropolitan-northern Colorado and western Nebraska areas, the
monetary policy of the Federal Reserve Board, changes in interest rates,
inflation, and changes in the state and federal regulatory regime applicable to
the company's and its banks' operations.
Information included and incorporated by reference in this prospectus
includes "forward looking statements," which can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"believe," "estimate," or "continue," or the negative thereof or other
variations thereon or comparable terminology. The statements in "Risk Factors"
and other statements and disclaimers in this prospectus constitute cautionary
statements identifying important factors, including certain risks and
uncertainties, with respect to such forward-looking statements that could cause
actual results to differ materially from those reflected in such
forward-looking statements.
USE OF PROCEEDS
All of the proceeds from the sale of Preferred Securities will be
invested by FW Capital I in the Junior Subordinated Debentures of the company.
The net proceeds to the company from the sale of the Junior Subordinated
Debentures, after deducting estimated underwriting commissions and offering
expenses, are estimated to be approximately $18.9 million ($21.7 million if the
underwriters' over-allotment option is exercised in full). The company intends
to use the net proceeds to repay all $5.8 million of its outstanding note
payable and contribute approximately $4.2 million of capital to Firstate Bank
of Colorado, with the remainder to be used for general corporate purposes,
which may include, without limitation, additional capital contributions to the
company's banks, purchase and construction of future bank branch locations, and
possible future acquisitions. The $4.2 million additional capital contribution
to Firstate Bank of Colorado will result in an increased legal lending limit
which is designed to further its internal growth objectives. Pending their
application, the net proceeds may be invested in short-term, marketable,
investment grade interest-bearing securities.
The company is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. In 1996, the Federal Reserve
announced that certain qualifying amounts of securities having the
characteristics of the Preferred Securities could be included as Tier 1 capital
for bank holding companies subject to certain limitations. See
"Capitalization." Such Tier 1 capital treatment, together with the company's
ability to deduct, for federal income tax purposes, interest payable on the
Junior Subordinated Debentures, will provide the company with a cost-effective
means of obtaining capital for bank regulatory purposes.
15
<PAGE> 17
ACCOUNTING TREATMENT
For financial reporting purposes, FW Capital I will be treated as a
subsidiary of the company and, accordingly, the accounts of FW Capital I 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 sheets of the company under the caption "Company Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Junior Subordinated Debentures," and appropriate disclosures about the
Preferred Securities, the guarantee of the company and the Junior Subordinated
Debentures will be included in the Notes to Consolidated Financial Statements.
For financial reporting purposes, the company will record distributions payable
on the Preferred Securities as interest expense in the consolidated statements
of income.
Future reports of the company filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") will include a footnote to the
consolidated financial statements stating that (i) FW Capital I is
wholly-owned, (ii) the sole assets of FW Capital I are the Junior Subordinated
Debentures (specifying the principal amount, interest rate and maturity date of
such Junior Subordinated Debentures), and (iii) the obligations of the company
described herein, in the aggregate, constitute a full and unconditional
guarantee on a subordinated basis by the company of the obligations of FW
Capital I under the Preferred Securities. FW Capital I will not provide
separate reports under the Exchange Act.
16
<PAGE> 18
CAPITALIZATION
The following table sets forth the consolidated borrowings and
capitalization of the company at September 30, 1998 and as adjusted to give
effect to the issuance of the Preferred Securities by FW Capital I in this
offering and the use of net proceeds therefrom as described in "Use of
Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------
ACTUAL AS ADJUSTED
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Borrowings:
Securities sold under agreements to repurchase .................................... $ 2,588 $ 2,588
Federal Home Loan Bank borrowings ................................................. 8,500 8,500
Note payable ...................................................................... 5,800 --
------------ ------------
Total borrowings ........................................................... $ 16,888 $ 11,088
============ ============
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely Junior
Subordinated Debentures(1) ........................................................ $ -- $ 20,000
============ ============
Stockholders' equity:
Common Stock, $1.00 par value; 500,000 shares authorized;
140,000 shares issued and outstanding ........................................... $ 140 $ 140
Additional paid-in capital ........................................................ 697 697
Retained earnings ................................................................. 19,038 19,038
Unrealized loss on securities available for sale,
net of income tax effect ....................................................... (7) (7)
------------ ------------
Total stockholders' equity ................................................. $ 19,868 $ 19,868
============ ============
Consolidated regulatory capital ratios:
Total capital to risk-weighted assets ............................................. 7.80% 15.13%
Tier 1 capital to risk-weighted assets(2) ......................................... 7.22 9.62
Tier 1 capital to average assets(2) ............................................... 6.20 8.27
</TABLE>
- ------------
(1) The subsidiary trust is FW Capital I, a wholly-owned subsidiary of the
company that will hold, as its sole asset, $20.6 million principal
amount of Junior Subordinated Debentures, of which $20.0 million will
be purchased with the proceeds of the Preferred Securities issued by FW
Capital I. The remaining $600,000 of Junior Subordinated Debentures
will be purchased with the proceeds of the Common Securities issued by
FW Capital I. The company will own all of the Common Securities. See
"Description of Junior Subordinated Debentures" and "Description of
Preferred Securities." The Junior Subordinated Debentures will mature
on ________, 2028, which date may be shortened to a date not earlier
than ________, 2003 if certain conditions are met. The Preferred
Securities are subject to mandatory redemption upon repayment of the
Junior Subordinated Debentures at maturity or their earlier redemption
in an amount equal to the amount of Junior Subordinated Debentures
maturing or being redeemed at a redemption price equal to the aggregate
Liquidation Amount of the Preferred Securities, plus accumulated and
unpaid Distributions thereon to the date of redemption. See
"Description of the Preferred Securities -- Redemption" and
"Description of Junior Subordinated Debentures -- Redemption."
(2) The Preferred Securities have been structured to qualify as Tier 1
capital. However, they cannot be used to constitute more than 25% of
the company's total Tier 1 capital according to regulatory
requirements. As adjusted for this offering, the company's Tier 1
capital as of September 30, 1998
17
<PAGE> 19
would have been $26.4 million of which $6.6 million would have been
attributable to the Preferred Securities. Any future increases in
other elements of the company's Tier 1 capital, including retained
earnings, should permit the company to include greater portions of the
Preferred Securities proceeds in Tier 1 capital. The remaining $13.4
million not qualifying as Tier 1 capital will be included in total
capital.
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS ENVIRONMENT AND RISK FACTORS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere herein.
The company's future operating results may be affected by various trends and
factors which are beyond the company's control. These include the factors set
forth in "Risk Factors" and "Cautionary Statements." Accordingly, past results
and trends may not be reliable indicators of future results or trends. With
the exception of historical information, the matters discussed below include
forward-looking statements that involve risks and uncertainties. The company
wishes to caution readers that a number of important factors discussed herein
could affect the company's actual results and cause actual results to differ
materially from those in the forward-looking statements.
OVERVIEW
The company has experienced significant growth since 1995 due to its
branch expansion strategy. Total assets have increased to $335 million as of
September 30, 1998 from $228 million and $125 million as of December 31, 1997
and 1996, respectively. The company has maintained above average profitability
while achieving strong asset growth. During the same time period, net income
increased to $3.0 million for the nine months ended September 30, 1998, from
$2.5 million for the year ended December 31, 1997 and $1.6 million for the year
ended December 31, 1996. On an annualized basis, as of September 30, 1998,
return on average assets of the company equaled 1.49%, while return on average
equity was 21.47%.
RESULTS OF OPERATIONS
Net Interest Income. The company's net income is derived primarily
from net interest income. Net interest income is the difference between
interest income, principally from loans, investment securities and funds sold,
and interest expense, principally on customer deposits. Changes in net
interest income result from changes in volume, net interest spread and net
interest margin. Volume refers to the average dollar levels of earning assets
and interest- bearing liabilities. Net interest spread refers to the
difference between the average yield on earning assets and the average cost of
interest-bearing liabilities. Net interest margin refers to net interest
income divided by average earning assets and is influenced by the level and
relative mix of earning assets and interest-bearing liabilities.
The following tables set forth the average balances, net interest
income and expense and average yields and rates for the company's earning
assets and interest-bearing liabilities for the indicated periods on a tax
equivalent basis assuming a 34% tax rate.
19
<PAGE> 21
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------
1998 1997
----------------------------------- -------------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE EARNED YIELD AVERAGE EARNED YIELD
BALANCE OR PAID OR COST(1) BALANCE OR PAID OR COST(1)
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Investment securities:
Taxable ....................................... $ 20,073 $ 831 5.53% $ 22,708 $ 940 5.54%
Tax exempt (tax equivalent) ................... 8,849 560 8.46 8,376 499 7.95
Funds sold and interest-bearing deposits ........ 17,252 707 5.48 10,293 446 5.79
Loans held for sale ............................. 3,048 135 5.92 1,653 84 6.79
Loans(2) ........................................ 199,450 16,672 11.18 117,522 9,509 10.82
Allowance for loan losses ....................... (1,452) -- (1,128) --
---------- ---------- ---------- ----------
Total earning assets ............................ $ 247,220 $ 18,905 10.22 $ 159,424 $ 11,478 9.62
========== ---------- ========== ----------
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Demand, interest-bearing ...................... $ 28,900 $ 658 3.04 $ 22,668 $ 458 2.70
Savings ....................................... 22,677 745 4.39 18,632 583 4.18
Certificates of deposit:
Under $100,000 .............................. 116,821 5,376 6.15 64,710 2,935 6.06
$100,000 and over ........................... 31,567 1,406 5.95 17,608 773 5.87
---------- ---------- ---------- ----------
Total interest-bearing deposits ................. 199,965 8,185 5.47 123,618 4,749 5.14
Federal Home Loan Bank borrowings, federal
funds purchased and securities sold under
agreements to repurchase ...................... 9,916 388 5.23 7,532 311 5.52
Note payable .................................... 3,156 182 7.71 870 49 7.44
---------- ---------- ---------- ----------
Total interest-bearing liabilities .............. $ 213,037 8,755 5.49 $ 132,020 5,109 5.17
========== ---------- ========== ----------
Net interest income (tax equivalent) ........... $ 10,150 $ 6,368
========== ==========
Net interest margin(3) ......................... 5.49% 5.34%
Net interest spread ............................. 4.73% 4.45%
Ratio of average interest-bearing liabilities
to average interest-earning assets ............ 86.17% 82.81%
</TABLE>
- ----------
(1) Yields are annualized.
(2) Loans are net of unearned income. Nonaccrual loans are included in
average loans outstanding. Loan fees are included in interest income
as follows for the nine months ended September 30, 1998 - $1,632,962;
1997 - $837,713.
(3) Net interest margin is net interest income divided by average total
earning assets (on an annualized basis).
Net interest income, on a tax-equivalent basis, was $10.2 million for
the nine months ended September 30, 1998, an increase of $3.8 million from $6.4
million for the same period in 1997. Interest income for the nine months ended
September 30, 1998 and 1997 was $18.9 million and $11.5 million, respectively.
The interest income increase of $7.4 million is primarily due to higher
balances of earning assets. The company achieved an increase of $87.8 million
or 55.08% in average earning assets to $247.2 million for the nine months ended
September 30, 1998 from $159.4 million for the same period in 1997. The
majority of the increase in earning assets was attributable to $81.9 million
increase in average loans outstanding. The majority of the loans in the
company's lending portfolio are floating rate loans tied to the prime rate.
The $7.0 million increase in funds sold represents temporary liquidity to fund
loans committed but unfunded. The average yield on earning assets increased to
10.22% for the nine months ended September 30, 1998 from 9.62% for the
comparable period in 1997.
Interest expense increased $3.7 million to $8.8 million for the nine
months ended September 30, 1998 compared to $5.1 million for the same period in
1997. The significant increase in average balances
20
<PAGE> 22
of certificates of deposit under $100,000 to $116.8 million for the nine months
ended September 30, 1998 from $64.7 million for the comparable period in 1997
was due to core growth at the company's banks as well as promotional campaigns
related to the opening of new branches. The increase in certificates of
deposit of $100,000 and over was due to the branch openings and promotional
campaigns. The increase in the average note payable to $3.2 million for the
nine months ended September 30, 1998 was due to the company's advances on a
note with a commercial lender. The proceeds of these advances were used as
capital injections at Firstate Bank of Colorado. The company expects to pay
off the note with net proceeds from the sale of the Junior Subordinated
Debentures. The cost of interest-bearing liabilities for the nine months ended
September 30, 1998 and 1997 was 5.49% and 5.17%, respectively, and, when
combined with noninterest-bearing deposits, the cost of funds for the nine
months ended September 30, 1998 and 1997 was 4.78% and 4.37%, respectively.
See "-- Deposits." As a result of the foregoing, net interest margin, on a
tax-equivalent basis, increased to 5.49% for the nine months ended September
30, 1998 from 5.34% for the comparable period in 1997.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1997 1996
-------------------------------------- ------------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE EARNED YIELD AVERAGE EARNED YIELD
BALANCE OR PAID OR COST(1) BALANCE OR PAID OR COST(1)
---------- ---------- ---------- ---------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Investment securities:
Taxable ...................................... $ 22,190 $ 1,220 5.50% $ 23,189 $ 1,292 5.57%
Tax exempt (tax equivalent) .................. 8,393 678 8.07 8,573 767 8.95
Funds sold and interest-bearing deposits ....... 12,823 735 5.73 8,307 423 5.09
Loans held for sale ............................ 1,839 121 6.58 508 30 5.91
Loans(1) ....................................... 126,914 13,739 10.83 54,515 5,656 10.38
Allowance for loan losses ...................... (1,176) -- (832) -- --
---------- ---------- ---------- ----------
Total earning assets ........................... $ 170,983 $ 16,493 9.65 $ 94,260 $ 8,168 8.67
========== ---------- ========== ----------
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Demand, interest-bearing ..................... $ 23,097 $ 630 2.73 $ 18,143 $ 467 2.57
Savings ...................................... 18,897 795 4.21 14,894 594 3.99
Certificates of deposit:
Under $100,000 ............................. 72,229 4,412 6.11 26,367 1,484 5.63
$100,000 and over .......................... 19,500 1,149 5.89 7,416 414 5.58
---------- ---------- ---------- ----------
Total interest-bearing deposits ................ 133,723 6,986 5.22 66,820 2,959 4.43
Federal Home Loan Bank borrowings,
federal funds purchased and securities
sold under agreements to repurchase ......... 7,031 382 5.43 3,591 161 4.50
Note payable ................................... 1,500 113 7.53 -- -- --
---------- ---------- ---------- ----------
Total interest-bearing liabilities ............. $ 142,254 $ 7,481 5.26 $ 70,411 $ 3,120 4.43
========== ---------- ========== ----------
Net interest income (tax equivalent) ........... $ 9,012 $ 5,048
========== ==========
Net interest margin(2) ......................... 5.27% 5.36%
Net interest spread ............................ 4.39% 4.24%
Ratio of average interest-bearing liabilities
to average interest-earning assets ........... 83.20% 74.70%
</TABLE>
- ---------
(1) Loans are net of unearned loan fees. Nonaccrual loans are included in
average loans outstanding. Loan fees are included in interest income
as follows: 1997 - $1,218,289; 1996 - $383,628.
(2) Net interest margin is net interest income divided by average total
earning assets.
Net interest income, on a tax-equivalent basis, was $9.0 million for
the year ended December 31, 1997, an increase of $4.0 million from $5.0 million
in 1996. Interest income increased $8.3 million to $16.5
21
<PAGE> 23
million in 1997 from $8.2 million in 1996. This increase resulted primarily
from an increase of $76.7 million in average earning assets to $171.0 million
in 1997 from $94.3 million in 1996. The majority of the asset growth was due to
growth in the loan portfolio. Average loans increased $72.4 million or 132.81%
to $126.9 million in 1997 from $54.5 million in 1996 due primarily to the
establishment of a new branch and to the company's acquisition of a two-branch
savings bank which was assimilated into Firstate Bank of Colorado. The average
yield on earning assets increased to 9.65% in 1997 from 8.67% in 1996.
Interest expense increased $4.4 million to $7.5 million in 1997 from
$3.1 million in 1996. A $57.9 million increase in certificates of deposit
accounted for $3.7 million of the increase. The certificates of deposits
increased due to the addition of a new branch and the acquisition of the
savings bank. Changes in the relative mix of average interest-bearing
liabilities included a $3.4 million average increase in advances from the
Federal Home Loan Bank ("FHLB"). The cost of interest-bearing liabilities for
the years ended December 31, 1997 and 1996 was 5.26% and 4.43%, respectively,
and, when combined with noninterest-bearing deposits, the cost of funds was
4.48% in 1997 compared to 3.56% in 1996. Net interest margin, on a
tax-equivalent basis, decreased to 5.27% in 1997 from 5.36% in 1996, primarily
as a result of higher costs for certificates of deposit.
22
<PAGE> 24
The following table illustrates, for the periods indicated, the
changes in the company's net interest income on a tax-equivalent basis due to
changes in volume and changes in interest rates. Changes in net interest
income due to both volume and rate have been allocated to volume and rate in
proportion to the relationship of the absolute dollar amounts of the change in
each.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
-------------------------- -------------------------- ---------------------------
1998 COMPARED TO 1997: 1997 COMPARED TO 1996: 1996 COMPARED TO 1995:
-------------------------- -------------------------- ---------------------------
INCREASE (DECREASE) IN INCREASE (DECREASE) IN INCREASE (DECREASE) IN
NET INTEREST INCOME NET INTEREST INCOME NET INTEREST INCOME
DUE TO CHANGE IN DUE TO CHANGE IN DUE TO CHANGE IN
-------------------------- -------------------------- ---------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL VOLUME RATE TOTAL
------- ------ ------- ------- ------ ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Investment securities
Taxable .................................. $ (109) $ -- $ (109) $ (55) $ (17) $ (72) $ (191) $ (187) $ (378)
Tax exempt (tax equivalent) .............. 29 33 62 (16) (73) (89) 35 40 75
Fund sold and interest-bearing
deposits ............................... 286 (25) 261 253 59 312 167 (5) 162
Loans held for sale ...................... 63 (12) 51 87 4 91
Loans .................................... 6,839 324 7,163 7,827 256 8,083 1,294 208 1,502
------- ------ ------- ------- ------ ------- ------- ------- -------
Total earning assets ..................... 7,108 320 7,428 8,096 229 8,325 1,305 56 1,361
------- ------ ------- ------- ------ ------- ------- ------- -------
Interest-bearing liabilities:
Demand, interest bearing ................. 137 63 200 134 29 163 12 (19) (7)
Savings .................................. 132 30 162 167 34 201 (10) (13) (23)
Certificates of deposit:
Under $100,000 ......................... 2,396 45 2,441 2,791 137 2,928 304 34 338
$100,000 and over ...................... 623 10 633 711 24 735 130 (1) 129
Federal Home Loan Bank borrowings,
federal funds purchased and securities
sold under agreements to repurchase ... 94 (17) 77 181 40 221 -- 29 29
Note payable ............................. 133 -- 133 113 -- 113 -- -- --
------- ------ ------- ------- ------ ------- ------- ------- -------
Total interest-bearing liabilities ....... 3,515 131 3,646 4,097 264 4,361 436 30 466
------- ------ ------- ------- ------ ------- ------- ------- -------
Net increase (decrease) in net interest
income (tax equivalent) ................ $ 3,593 $ 189 $ 3,782 $ 3,999 $ (35) $ 3,964 $ 869 $ 26 $ 895
======= ====== ======= ======= ====== ======= ======= ======= =======
</TABLE>
23
<PAGE> 25
Other Income. The following table sets forth the company's other income
for the indicated periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------------- ----------------------
1998 1997 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fees for other customer services ................. $ 726 $ 555 $ 761 $ 627
Net gains from sale of loans ..................... 716 475 625 232
Commissions and fees from
brokerage activities ........................... 133 13 29 15
Investment securities transactions, net .......... (3) -- -- 196
Other operating income ........................... 409 162 293 181
---------- ---------- ---------- ----------
Total other income ............................... $ 1,981 $ 1,205 $ 1,708 $ 1,251
========== ========== ========== ==========
</TABLE>
During the nine months ended September 30, 1998, total other income
increased to $2.0 million from $1.2 million for the comparable period in 1997
due primarily to increases in mortgage loan originations and sales, increased
ATM fee income and the company's creation of an investment services division.
Other income for the year ended December 31, 1997 compared to 1996 increased by
approximately $457,000 due primarily to increased income from mortgage loan
originations and sales and increased ATM fee income.
Other Expenses. The following table sets forth the company's operating
expenses for the indicated periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------------- ----------------------
1998 1997 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and employee benefits ................... $ 3,545 $ 2,172 $ 3,296 $ 1,950
Net occupancy expense of premises ................ 1,107 652 989 464
Purchased services ............................... 906 627 842 327
Office supplies .................................. 233 126 182 137
Minority interest in income of
consolidated subsidiaries ...................... 93 86 101 184
Other operating expenses ......................... 1,159 751 1,134 687
---------- ---------- ---------- ----------
Total other expenses ....................... $ 7,043 $ 4,414 $ 6,544 $ 3,749
========== ========== ========== ==========
</TABLE>
During the nine months ended September 30, 1998 total other expenses
increased by $2.6 million over the comparable 1997 period to $7.0 million,
primarily as a result of opening and operating four additional branches.
Salaries and employee benefits increased by $1.4 million due to staffing of new
branch locations, additions of corporate overhead and increases in the volume
of commission-based mortgage lending. The increase in net occupancy expenses
for each period is a direct result of the increased number of branches.
Purchased services reflect outside services, primarily data processing,
purchased by the company to conduct operations. During the year ended December
31, 1997, total operating expenses increased $2.8 million from 1996, with
increases occurring among the various components due primarily to the company's
purchase of the savings bank, establishment of an additional branch and other
internally generated growth.
Federal Income Tax. The company's consolidated income-tax rate varies
from statutory rates principally due to interest income from tax-exempt
securities. The provision for income taxes increased
24
<PAGE> 26
by $846,000 to $1.8 million for the nine months ended September 30, 1998 from
$919,000 for the comparable period in 1997, reflecting the increase of income
before income taxes for the period. The company recorded income tax expenses
totaling $1.3 million in 1997 and $705,000 in 1996.
FINANCIAL CONDITION
Loan Portfolio Composition. The following table sets forth the
composition of the company's loan portfolio by type of loan at the dates
indicated. Management believes that the balance sheet information as of the
dates indicated should be read in conjunction with the average balance
information in the tables above under "- Net Interest Income."
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---------------------- -------------------------------------------------
1998 1997 1996
---------------------- ---------------------- ----------------------
AMOUNT % AMOUNT % AMOUNT %
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL, FINANCIAL AND
AGRICULTURAL(1) ................................ $ 50,070 20.3% $ 41,500 25.3% $ 27,343 40.3%
REAL ESTATE CONSTRUCTION ......................... 68,624 27.8 37,235 22.7 10,062 14.8
REAL ESTATE MORTGAGE ............................. 120,850 49.0 79,499 48.4 25,946 38.2
INSTALLMENT LOANS TO INDIVIDUALS ................. 9,393 3.8 7,693 4.7 5,226 7.7
OTHER ............................................ 167 0.0 132 0.0 332 0.5
--------- --------- --------- --------- --------- ---------
TOTAL FACE AMOUNT OF LOANS ..................... 249,104 100.9 166,059 101.1 68,909 101.5
UNEARNED LOAN FEES ............................... (757) (0.3) (432) (0.3) (158) (0.2)
--------- --------- --------- --------- --------- ---------
LOANS ............................................ 248,347 100.6 165,627 100.8 68,751 101.3
LESS ALLOWANCE FOR LOAN LOSSES ................... (1,592) (0.6) (1,321) (0.8) (851) (1.3)
--------- --------- --------- --------- --------- ---------
NET LOANS ........................................ $ 246,755 100.0 % $ 164,306 100.0% $ 67,900 100.0%
========= ========= ========= ========= ========= =========
</TABLE>
- ----------
(1) Agricultural loan balances were $15.2 million at September 30, 1998,
$13.9 million at December 31, 1997 and $11.7 million at December 31,
1996.
As of September 30, 1998, loans were $248.3 million, or $82.7 million
greater than loans of $165.6 million as of December 31, 1997. The company's
two primary categories of loans, real estate mortgage loans and construction
loans (constituting 76.8% of loans as of September 30, 1998) trended upward as
indicated as of the stated dates. These loans as a group were $189.5 million
as of September 30, 1998, $72.8 million over the $116.7 million combined
balance as of December 31, 1997, which in turn was $80.7 million greater than
such loans as of December 31, 1996. Installment loans increased modestly, with
a balance of $9.4 million as of September 30, 1998 compared to $7.7 million as
of December 31, 1997 and $5.2 million at December 31, 1996. The significant
loan portfolio growth over the indicated periods is due primarily to the
company's success in attracting and retaining experienced bank personnel who
possessed existing customer relationships. Loans as of December 31, 1997 were
up $96.9 million compared to December 31, 1996, due to greater amounts of
commercial and residential construction and commercial real estate loans, which
reflect the company's growth.
Although the risk of non-payment exists for a variety of reasons with
respect to all loans, certain other more specific risks are associated with
each type of loan. Risks associated with real estate mortgage loans include
the borrower's inability to pay and deterioration in value of real estate held
as collateral. Several risks are present in construction loans, including
economic conditions in the building industry, fluctuating land values, failure
of the contractor to complete work and the borrower's inability to repay.
Risks associated with commercial, financial and agricultural loans are the
quality of the borrower's management and the impact of local economic factors
as well as prices received for products. Installment loans additionally face
the risk of a borrower's unemployment as a result of deteriorating economic
conditions as well as the personal circumstances of the borrower. Management
believes that risk levels associated with the various types of loans are
dependent upon the existence of the risks at any particular time (for example,
economic conditions in the building industry).
25
<PAGE> 27
The company believes that its philosophy in extending credit is
relatively conservative in nature, with a presumption that most credit should
have both a primary and a secondary source of repayment, and that the primary
source should generally be operating cash flows, while the secondary source
should generally be disposition of collateral. The company engages in very
little unsecured lending, and generally requires personal guarantees of
principals for business obligations. The company practices a system of
concurrence in the approval of commercial credit whereby the documented
concurrence of a senior credit officer and/or a loan committee at certain
lending thresholds is obtained in addition to that of the recommending loan
officer.
At September 30, 1998, net loans totaled approximately 83.92% of total
deposits and approximately 73.55% of total assets.
Loan Maturities. The following tables present, at September 30, 1998 and
December 31, 1997, loans by maturity in each major category of the company's
portfolio based on contractual repricing schedules. Unearned loan fee income
has been matched with its respective loan categories and assigned to maturity
categories consistent with the underlying loans. Actual maturities may differ
from the contractual repricing maturities shown below as a result of renewals
and prepayments. Loan renewals are evaluated in the same manner as new credit
applications.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------
OVER ONE YEAR THROUGH FIVE YEARS OVER FIVE YEARS
ONE YEAR ---------------------------------------- ---------------------------
OR LESS FIXED RATE FLOATING RATE FIXED RATE FLOATING RATE TOTAL
---------- ---------- ------------- ---------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural ........................ $ 45,762 $ 3,469 $ 66 $ 516 $ -- $ 49,813
Real estate construction .............. 68,624 -- -- -- -- 68,624
Real estate mortgage .................. 87,674 16,120 13,147 3,409 -- 120,350
Installment loans to individuals
and other .......................... 5,368 4,060 5 127 -- 9,560
---------- ---------- ---------- ---------- ---------- ----------
Total loans ......................... $ 207,428 $ 23,649 $ 13,218 $ 4,052 $ -- $ 248,347
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------------------------------------------------
OVER ONE YEAR THROUGH FIVE YEARS OVER FIVE YEARS
ONE YEAR ---------------------------------------- ---------------------------
OR LESS FIXED RATE FLOATING RATE FIXED RATE FLOATING RATE TOTAL
---------- ---------- ------------- ---------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural ........................ $ 38,129 $ 2,950 $ 101 $ 173 $ -- $ 41,353
Real estate construction .............. 37,235 -- -- -- -- 37,235
Real estate mortgage .................. 48,728 14,227 12,609 3,650 -- 79,214
Installment loans to individuals
and other .......................... 4,431 3,271 21 102 -- 7,825
---------- ---------- ---------- ---------- ---------- ----------
Total loans ......................... $ 128,523 $ 20,448 $ 12,731 $ 3,925 $ -- $ 165,627
========== ========== ========== ========== ========== ==========
</TABLE>
Nonperforming Loans. Nonperforming loans consist of loans 90 days or
more delinquent and still accruing interest, nonaccrual loans and restructured
loans. When, in the opinion of management, a reasonable doubt exists as to the
collectibility of interest, regardless of the delinquency status of a loan, the
accrual of interest income is discontinued and accrued but unpaid interest is
reversed through a charge to current year's earnings. While the loan is on
nonaccrual status, interest income is recognized only upon receipt and then
only if, in the judgment of management, there is no reasonable doubt as to the
collectibility of the principal balance. Loans 90 days or more delinquent
generally are changed to nonaccrual status unless the loan is in the process of
collection and management determines that full collection of principal and
accrued interest is probable.
26
<PAGE> 28
Restructured loans are those for which concessions, including the
reduction of interest rates below a rate otherwise available to the borrower or
the deferral of interest or principal, have been granted due to the borrower's
weakened financial condition. Interest on restructured loans is accrued at the
restructured rates when it is anticipated that no loss of original principal
will occur. The company did not have any restructured loans as of September
30, 1998, or December 31, 1997, 1996 and 1995.
The following table sets forth information concerning the nonperforming
assets of the company at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------------------------------------
1998 1997 1996 1995
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
NONACCRUAL LOANS: ..................................... $ 414 $ 484 $ 93 $ 110
OTHER LOANS 90 DAYS PAST DUE .......................... 279 744 22 28
---------- ---------- ---------- ----------
TOTAL NONPERFORMING LOANS ............................. 693 1,228 115 138
OTHER REAL ESTATE ..................................... 778 141 10 --
---------- ---------- ---------- ----------
TOTAL NONPERFORMING ASSETS ............................ $ 1,471 $ 1,369 $ 125 $ 138
========== ========== ========== ==========
RATIO OF TOTAL NONPERFORMING LOANS TO
TOTAL LOANS ......................................... 0.28% 0.74% 0.17% 0.30%
RATIO OF TOTAL NONPERFORMING ASSETS TO
TOTAL LOANS PLUS OTHER REAL ESTATE .................. 0.59 0.83 0.18 0.30
RATIO OF NONPERFORMING ASSETS TO TOTAL ASSETS ......... 0.44 0.60 0.10 0.14
</TABLE>
Other real estate as of September 30, 1998 consists of three properties.
Approximately $600,000 represents two properties under contract for sale, one
of which closed after September 30, 1998, and the other is expected to close
before the end of 1998. Management believes that the company is adequately
collateralized on these assets. Management is not aware of any adverse trend
relating to the company's loan portfolio.
As of September 30, 1998, there was no significant amount of loans
excluded from nonperforming loans set forth above, where known information
about possible credit problems of borrowers caused management to have serious
doubts as to the ability of such borrowers to comply with the present loan
repayment terms and which may result in such loans becoming nonperforming.
Analysis of Allowance for Loan Losses. The allowance for loan losses
represents management's recognition of the risks of extending credit and its
evaluation of the quality of the loan portfolio. The allowance is maintained
at a level considered adequate to provide for anticipated loan losses based on
management's assessment of various factors affecting the loan portfolio,
including a review of problem loans, business conditions, historical loss
experience, evaluation of the quality of the underlying collateral and holding
and disposal costs. The allowance is increased by additional charges to
operating income and reduced by loans charged off, net of recoveries.
27
<PAGE> 29
The following table sets forth information regarding changes in the
allowance for loan losses of the company for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
---------- --------------------------
1998 1997 1996
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
AVERAGE TOTAL LOANS ......................... $ 199,450 $ 126,914 $ 54,515
========== ========== ==========
TOTAL LOANS AT END OF PERIOD ................ $ 248,347 $ 165,627 $ 68,751
========== ========== ==========
ALLOWANCE AT BEGINNING OF PERIOD ............ $ 1,321 $ 851 $ 767
CHARGE-OFFS:
REAL ESTATE CONSTRUCTION .................. -- -- --
COMMERCIAL, FINANCIAL AND
AGRICULTURAL ........................... 14 -- 9
INSTALLMENT LOANS TO INDIVIDUALS .......... 54 58 3
REAL ESTATE MORTGAGE ...................... -- -- 10
OTHER ..................................... -- -- --
---------- ---------- ----------
TOTAL CHARGE-OFFS ..................... 68 58 22
RECOVERIES:
REAL ESTATE CONSTRUCTION .................. -- -- --
COMMERCIAL, FINANCIAL AND
AGRICULTURAL ............................ 139 94 86
INSTALLMENT LOANS TO INDIVIDUALS .......... 20 7 5
REAL ESTATE MORTGAGE ...................... -- 10 --
OTHER ..................................... -- -- --
---------- ---------- ----------
TOTAL RECOVERIES ...................... 159 111 91
---------- ---------- ----------
NET RECOVERIES .............................. 91 53 69
PROVISIONS FOR LOAN LOSSES .................. 180 140 15
OTHER INCREASE RESULTING FROM ACQUISITION ... -- 277 --
---------- ---------- ----------
ALLOWANCE AT END OF PERIOD .................. $ 1,592 $ 1,321 $ 851
========== ========== ==========
RATIO OF NET RECOVERIES (CHARGE-OFFS)
TO AVERAGE TOTAL LOANS .................... 0.05% 0.04% 0.13%
ALLOWANCE TO TOTAL LOANS AT END OF
PERIOD .................................... 0.64% 0.80% 1.24%
ALLOWANCE TO NONPERFORMING LOANS ............ 229.73% 107.61% 739.65%
</TABLE>
Net recoveries during the nine months ended September 30, 1998 totaled
approximately $91,000 or .05% of average loans compared to approximately
$53,000 or .04% of average loans for the year ended December 31, 1997 and
approximately $69,000 or .13% of average loans in 1996. These recoveries
resulted from loans charged off several years ago.
The company's lending personnel are responsible for continuous monitoring
of the quality of loan portfolios. The loan portfolios are also monitored and
examined by the company loan review personnel. In 1998 the company implemented
an annual outside loan review program. These reviews assist in the
identification of potential and probable losses, and also in the determination
of the level of the allowance for loan losses. The allowance for loan losses
is based primarily on management's estimates of possible loan losses from the
foregoing processes and historical experience. These estimates involve ongoing
judgments and may be adjusted over time depending on economic conditions and
changing historical experience.
28
<PAGE> 30
State and federal regulatory agencies, as an integral part of their
examination process, review the company's loans and its allowance for loan
losses. Although management believes that the company's allowance for loan
losses is adequate to cover anticipated losses, the loan loss allowance at
September 30, 1998 is lower as a percentage of total loans than historical
levels. Management has determined to increase the monthly provision for loan
losses in anticipation of future loan growth. There can be no assurance,
however, that management will not determine a need to further increase the
allowance for loan losses or that regulators, when reviewing the company's loan
portfolios in the future, will not require the company to increase such
allowance, either of which could adversely affect the company's earnings.
Further, there can be no assurance that the company's actual loan losses will
not exceed its allowance for loan losses.
The following tables set forth an allocation of the allowance for loan
losses by loan category as of the dates indicated. Portions of the allowance
have been allocated to categories based on an analysis of the status of
particular loans; however, the majority of the allowance is utilized as a
single unallocated allowance available for all loans. The allocation table
should not be interpreted as an indication of the specific amounts, by loan
classification, to be charged to the allowance. Management believes that the
table may be a useful device for assessing the adequacy of the allowance as a
whole. The table has been derived in part by applying historical loan loss
ratios to both internally classified loans and the portfolio as a whole in
determining the allocation of the loan losses attributable to each category of
loans.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
----------------------- ----------------------------------------------------
1998 1997 1996
----------------------- ----------------------- -----------------------
LOANS IN LOANS IN LOANS IN
CATEGORY CATEGORY CATEGORY
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
OF GROSS OF GROSS OF GROSS
ALLOWANCE LOANS ALLOWANCE LOANS ALLOWANCE LOANS
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL, FINANCIAL AND
AGRICULTURAL ............... $ 122 20.1% $ 16 25.0% $ 2 39.9%
REAL ESTATE CONSTRUCTION ..... 12 27.6 68 22.4 -- 14.7
REAL ESTATE MORTGAGE ......... 60 48.5 47 47.9 19 37.8
INSTALLMENT LOANS TO
INDIVIDUALS ................ 6 3.8 33 4.7 8 7.6
UNALLOCATED .................. 1,392 -- 1,157 -- 822 --
--------- --------- --------- --------- --------- ---------
TOTAL ALLOWANCE ......... $ 1,592 100.0% $ 1,321 100.0% $ 851 100.0%
========= ========= ========= ========= ========= =========
</TABLE>
The total allowance for loan loss balance at September 30, 1998 was $1.6
million or 229.73% of nonperforming loans and the portion of the loan loss
allowance directly allocated to specific loan categories was 28.86% of
nonperforming loans. Management continuously monitors credit quality and
adjusts the provision for loan losses as appropriate.
The provision for loan losses takes into account many factors such as the
company's prior experience with loan losses and an evaluation of the risks in
the loan portfolio at any given time, including changes in economic, operating
and other conditions of borrowers, the Denver-northern Colorado and western and
central Nebraska economies and to a lesser extent, the national economy. As
indicated in the preceding table, a majority of the loan loss allowance was not
allocated to a single category. The company's loan portfolio contains a
significant amount of loans that are real estate mortgage and real estate
construction loans, and management assesses general risks to the portfolio that
are common to both categories. These risks include the financial conditions of
borrowers, economic conditions in the building industry that could effect a
slowdown in the market resulting in fewer building permits and lower absorption
of newly developed sites, fluctuating land values, building moratoriums by
municipalities, and the overall general economy of the company's primary area
of operations.
29
<PAGE> 31
Management believes that the approximate amount of charge-offs by
category during 1998 will be in the range of .25% to .35% for consumer loans,
with recoveries in the range of .15% to .20% for commercial loans, for an
overall total recovery of approximately .04% of total loans. There are no
expected charge-offs or recoveries relating to the other categories. The
foregoing is a good faith best estimate only and is subject to several factors
beyond the control of the company, including the risks discussed above.
Investments. The company's investment policy is designed to ensure
liquidity for cash-flow requirements; to help manage interest rate risk; to
ensure collateral is available for public deposits, FHLB advances and
repurchase agreements; and to manage asset quality diversification. The
asset/liability committees of each of the company's banks are responsible for
implementing investment strategy, including ongoing review of the performance
of the investment portfolio, market values, market conditions, current economic
conditions, profitability, capital ratios, liquidity needs and collateral
position with the FHLB.
The company's investment portfolio at September 30, 1998 is comprised of
U.S. Treasury and U.S. Agency bonds and bills and general obligation and
revenue municipal bonds. The portfolio contains no derivatives, structured
notes or similar instruments that are classified as "High-Risk Securities" as
defined by the Federal Financial Institutions Examinations Council.
The following table sets forth the estimated fair value of the
available-for-sale securities and the amortized cost basis of held-to-maturity
securities in the company's investment portfolio by type as of the dates
indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- -------------------------
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
HELD-TO-MATURITY:
U.S. TREASURY & AGENCY SECURITIES .... $ 2,000 $ 5,807 $ 8,495
STATE AND POLITICAL SECURITIES ....... 7,241 7,235 7,136
OTHER BONDS .......................... -- -- 504
---------- ---------- ----------
TOTAL HELD-TO-MATURITY ........... $ 9,241 $ 13,042 $ 16,135
---------- ---------- ----------
AVAILABLE-FOR-SALE:
U.S. TREASURY & AGENCY SECURITIES .... $ 32,221 $ 11,986 $ 13,191
STATE AND POLITICAL SECURITIES ....... 1,681 1,611 1,445
OTHER BONDS .......................... -- 201 556
EQUITY SECURITIES .................... 1,208 1,672 461
---------- ---------- ----------
TOTAL AVAILABLE-FOR-SALE ......... $ 35,110 $ 15,470 $ 15,653
---------- ---------- ----------
TOTAL INVESTMENTS .......... $ 44,351 $ 28,512 $ 31,788
========== ========== ==========
</TABLE>
30
<PAGE> 32
Investment Maturities and Yield, The following table sets forth the
estimated fair value of the available for sale securities and the amortized
cost basis of held-to-maturity securities with the approximate yield of the
securities in the investment portfolio by type and maturity at September 30,
1998.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
---------------------
TYPE AND MATURITY AMOUNT YIELD
----------------- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
U.S. TREASURY & AGENCY SECURITIES:
ONE YEAR OR LESS ................. $ 24,769 5.42%
OVER ONE THROUGH FIVE YEARS ...... 4,387 5.78
OVER FIVE THROUGH 10 YEARS ....... 3,888 5.70
OVER 10 YEARS .................... 1,177 6.83
--------
TOTAL ........................ $ 34,221 5.55
========
MUNICIPAL SECURITIES:
ONE YEAR OR LESS ................. $ 319 5.00
OVER ONE THROUGH FIVE YEARS ...... 3,242 5.21
OVER FIVE THROUGH 10 YEARS ....... 1,630 5.48
OVER 10 YEARS .................... 3,731 6.18
--------
TOTAL ........................ $ 8,922 5.66
========
TOTAL INVESTMENT IN DEBT SECURITIES:
ONE YEAR OR LESS ................. $ 25,088 5.41
OVER ONE THROUGH FIVE YEARS ...... 7,629 5.54
OVER FIVE THROUGH 10 YEARS ....... 5,518 5.64
OVER 10 YEARS .................... 4,908 6.34
--------
TOTAL ........................ $ 43,143 5.57%
========
</TABLE>
Deposits. The company's primary source of funds has historically been
customer deposits. Deposits have grown significantly in recent years, with
average deposits increasing to $231.7 million for the nine months ended
September 30, 1998 from $158.4 million for the year ended December 31, 1997 and
$83.9 million for the year ended December 31, 1996. These increases are
primarily a result of the opening of one branch in 1996, two branches in 1997
and four branches in 1998. At September 30, 1998, average total certificates
of deposit comprised $148.4 million or 64.0% of average total deposits.
Management believes this ratio may increase as it uses this product in its
asset/liability management to minimize interest rate risk.
The following table presents the average balances for each major category
of deposits and the weighted average interest rates paid for interest-bearing
deposits for the period indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------ --------------------------------------------
1998 1997 1996
------------------ ------------------ -----------------
AVERAGE AVERAGE AVERAGE
AVERAGE INTEREST AVERAGE INTEREST AVERAGE INTEREST
BALANCE COST BALANCE COST BALANCE COST
-------- -------- -------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
DEMAND, INTEREST-BEARING......................... $ 13,008 2.08% $ 12,184 2.09% $10,743 2.10%
MONEY MARKET ACCOUNTS........................... 15,892 3.83 10,913 3.43 7,400 3.25
SAVINGS......................................... 12,635 3.12 11,413 3.15 9,285 3.12
IRA DEPOSITS.................................... 10,042 5.99 7,484 5.82 5,609 5.43
CERTIFICATES OF DEPOSIT UNDER $100,000.......... 116,821 6.15 72,229 6.11 26,367 5.63
CERTIFICATES OF DEPOSIT $100,000 AND OVER....... 31,567 5.95 19,500 5.89 7,416 5.58
-------- -------- ------
TOTAL INTEREST-BEARING DEPOSITS......... 199,965 5.47 133,723 5.22 66,820 4.43
NONINTEREST-BEARING DEMAND DEPOSITS............. 31,765 24,654 17,124
-------- -------- -------
TOTAL DEPOSITS.......................... $231,730 $158,377 $83,944
======== ======== =======
</TABLE>
31
<PAGE> 33
The following table sets forth the amount and maturity of IRA
certificates of deposit and time certificates of deposit that had balances of
more than $100,000 at September 30, 1998.
<TABLE>
<CAPTION>
REMAINING MATURITY (IN THOUSANDS)
------------------
<S> <C>
LESS THAN THREE MONTHS...................................... $ 7,644
THREE MONTHS UP TO SIX MONTHS............................... 7,919
SIX MONTHS UP TO ONE YEAR................................... 15,839
ONE YEAR AND OVER........................................... 11,742
-------
TOTAL............................................. $43,144
=======
</TABLE>
Federal Home Loan Bank Borrowings. The company's banks are members of
the Federal Home Loan Bank of Topeka, which is one of 12 regional Federal Home
Loan Banks. The FHLB system functions as a central bank providing credit for
members. As members of the FHLB, the company's banks are entitled to borrow
funds from the FHLB and are required to own FHLB stock in an amount determined
by a formula based upon total assets and FHLB borrowings. The company's banks
may use FHLB borrowings to supplement deposits as a source of funds. See
"Liquidity -- Asset/Liability Management." Average FHLB borrowings for the nine
months ended September 30, 1998 were $7.6 million compared to $4.2 million and
$0 for the years ended December 31, 1997 and 1996, respectively. At September
30, 1998, based on its FHLB stockholdings, the aggregate available and unused
borrowing capacity of the company's banks was approximately $9.7 million,
which was available through a line of credit and term advances. FHLB
borrowings are collateralized by FHLB stock, other investment securities and
certain loans.
A variety of borrowing terms and maturities can be chosen from the FHLB.
Maturities available range generally from one day to 10 years. Interest rates
can be either fixed or variable and prepayment options are available if
desired. The FHLB offers both amortizing and non-amortizing advances. To date
FHLB stock has been redeemable at the preset price of $100 per share, but there
can be no assurance that this policy will continue.
CAPITAL RESOURCES
The company monitors compliance with bank and bank holding company
regulatory capital requirements, focusing primarily on risk-based capital
guidelines. By mid-1998 the company determined that it would be below the
total capital minimum for a bank holding company in the near term as a result
of its significant growth. As indicated in the table immediately below, at
September 30, 1998, the company was .20% below the total capital minimum
requirements. Upon completion of this offering, the company will be in
compliance with such requirements. See "Capitalization." Under the risk-based
capital method of capital measurement, the ratio computed is dependent upon the
amount and composition of assets recorded on the balance sheet, and the amount
and composition of off-balance sheet items, in addition to the level of
capital. Included in the risk-based capital method are two measures of capital
adequacy, Tier 1 or core capital, and total capital, which consists of Tier 1
plus Tier 2 capital. See "Supervision and Regulation -- First Western Corp. --
Capital Adequacy" for definitions of Tier 1 and Tier 2 capital.
32
<PAGE> 34
The following tables set forth the company's capital ratios as of the
indicated dates.
<TABLE>
<CAPTION>
RISK-BASED CAPITAL RATIOS
SEPTEMBER 30, DECEMBER 31,
1998 1997
---------------------------- ---------------------------
AMOUNT RATIO AMOUNT RATIO
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tier 1 capital .............................. $ 19,680 7.22% $ 16,676 9.02%
Tier 1 capital minimum
requirement (1) ........................... 10,909 4.00 7,394 4.00
----------- ----------- ----------- -----------
Excess ...................................... $ 8,771 3.22% $ 9,282 5.02%
=========== =========== =========== ===========
Total capital ............................... $ 21,272 7.80% $ 17,997 9.74%
Total capital minimum
requirement (1) ........................... 21,819 8.00 14,788 8.00
----------- ----------- ----------- -----------
Excess (deficit) ............................ $ (547) (.20)% $ 3,209 1.74%
=========== =========== =========== ===========
Total risk adjusted assets .................. $ 272,740 $ 184,847
=========== ===========
</TABLE>
- ----------
(1) Based on risk-based capital guidelines of the Federal Reserve, a bank
holding company is required to maintain a Tier 1 capital to risk-adjusted
assets ratio of 4% and a total capital to risk-adjusted assets ratio of
8%. See "Supervision and Regulation -- First Western Corp. -- Capital
Adequacy" for definitions of Tier 1 and Tier 2 capital.
<TABLE>
<CAPTION>
LEVERAGE RATIOS
SEPTEMBER 30, DECEMBER 31,
1998 1997
---------------------------- ---------------------------
AMOUNT RATIO AMOUNT RATIO
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tier 1 capital .............................. $ 19,680 6.20% $ 16,676 7.53%
Minimum requirement (1) ..................... 12,692 4.00 8,861 4.00
----------- ----------- ----------- -----------
Excess ...................................... $ 6,988 2.20% $ 7,815 3.53%
=========== =========== =========== ===========
Average total assets ........................ $ 317,303 $ 221,523
=========== ===========
</TABLE>
- ----------
(1) The leverage ratio is defined as the ratio of Tier 1 capital to average
total assets. Based on Federal Reserve guidelines, a bank holding
company generally is required to maintain a leverage ratio of 4%. See
"Supervision and Regulation -- First Western Corp. -- Capital Adequacy"
for definitions of Tier 1 and Tier 2 capital.
LIQUIDITY
Sources of Liquidity. The company continuously forecasts and manages its
liquidity in order to satisfy cash flow requirements of depositors and
borrowers and allow the company to meet its own cash flow needs. The company
has developed internal and external sources of liquidity to meet its continued
growth needs. These include, but are not limited to: the ability to raise
deposits through branch
33
<PAGE> 35
promotional campaigns, maturity of overnight funds ($12 million available as of
September 30, 1998), maturity of short term investment securities ($15 million
available as of September 30, 1998), sale of available for sale securities ($19
million available as of September 30, 1998), draws on available borrowing lines
($25 million available as of September 30, 1998), draws on increased borrowing
lines available at the FHLB with the purchase of additional FHLB stock ($9.7
million available as of September 30, 1998), participation or sale of portions
of the loan portfolio, and possible sale of fixed assets of the company. The
company intends to pay its $5.8 million note payable with proceeds from this
offering, thus providing it with additional liquidity if needed.
Asset/Liability Management. A principal function of asset/liability
management is to coordinate the levels of interest-sensitive assets and
liabilities to minimize net interest income fluctuations in times of
fluctuating market interest rates. Interest-sensitive assets and liabilities
are those that are subject to repricing in the near term, including both
variable rate instruments and those fixed-rate instruments which are
approaching maturity. Changes in net yield on interest-sensitive assets arise
when interest rates on those assets (e.g. loans and investment securities)
change in a different time period from that of interest rates on liabilities
(e.g. time deposits). Changes in net yield on interest-sensitive assets also
arise from changes in the mix and volumes of earning assets and
interest-bearing liabilities.
The following table sets forth the interest rate sensitivity of the
company's assets and liabilities as of September 30, 1998, and sets forth the
repricing dates of the company's earning assets and interest-bearing
liabilities as of that date, as well as the company's interest rate sensitivity
gap percentages for the periods presented. The table is based upon assumptions
as to when assets and liabilities will reprice in a changing interest rate
environment, and since such assumptions can be no more than estimates, certain
assets and liabilities indicated as maturing or otherwise repricing within a
stated period may, in fact, mature or reprice at different times and at
different volumes than those estimated. Also, the renewal or repricing of
certain assets and liabilities can be discretionary and subject to competitive
and other pressures. Therefore, the following table does not and cannot
necessarily indicate the actual future impact of general interest rate
movements on the company's net interest income.
34
<PAGE> 36
<TABLE>
<CAPTION>
ESTIMATED MATURITY OR REPRICING AT SEPTEMBER 30, 1998
-----------------------------------------------------------------------------
THREE MONTHS
LESS THAN TO LESS THAN ONE TO OVER
THREE MONTHS ONE YEAR FIVE YEARS FIVE YEARS TOTAL
------------ ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earning assets:
Funds sold and interest-bearing deposits ......... $ 12,486 $ -- $ -- $ -- $ 12,486
Investment in securities available-for-sale ...... 17,887 6,901 4,345 5,977 35,110
Investment in securities held-to-maturity ........ 1,009 500 3,284 4,448 9,241
Loans ............................................ 70,275 137,152 36,868 4,052 248,347
---------- ---------- ---------- ---------- ----------
Total earning assets ............................. 101,657 144,553 44,497 14,477 305,184
Interest-bearing liabilities:
Deposits:
Demand, interest-bearing ....................... 32,222 -- -- -- 32,222
Savings ........................................ 17,315 -- -- -- 17,315
Certificates of deposit
under $100,000 ............................... 20,905 82,107 58,218 -- 161,230
$100,000 and over ............................ 7,644 23,758 11,742 -- 43,144
Other liabilities:
Securities sold under agreements
to repurchase ............................... 2,588 -- -- -- 2,588
Federal Home Loan Bank borrowings ................ -- -- 8,500 -- 8,500
Note payable ..................................... -- -- 5,800 -- 5,800
---------- ---------- ---------- ---------- ----------
Total interest-bearing liabilities ............... $ 80,674 $ 105,865 $ 84,260 $ -- $ 270,799
---------- ---------- ---------- ---------- ----------
Interest rate gap .................................. $ 20,983 $ 38,688 $ (39,763) $ 14,477 $ 34,385
========== ========== ========== ========== ==========
Cumulative interest rate gap at
September 30, 1998 ............................... $ 20,983 $ 59,671 $ 19,908 $ 34,385
========== ========== ========== ==========
Cumulative interest rate gap
to total assets .................................. 6.26% 17.79% 5.94% 10.25%
========== ========== ========== ==========
</TABLE>
Due to the volume of loans that reprice with changes in the prime lending
rate and the volume of noninterest- bearing deposits, the company has
experienced a positive gap in assets and deposits that reprice or mature in
less than three months. Of the total earning assets at September 30, 1998,
33.31% reprice or mature in less than three months while 29.79% of all
interest-bearing liabilities reprice or mature in that same time frame. The
positive interest rate gaps indicate that net income would increase in the
event of rising interest rates and would decrease in the event of decreasing
interest rates. In the unlikely event of an immediate, parallel and sustained
shift of market interest rates of 200 basis points, management estimates that
net income during the 12 months ending September 30, 1999 would likely increase
approximately 6% compared to the prior like 12-month period if interest rates
rose by 200 basis points and likely fall by approximately 6% compared to the
prior like 12-month period if rates fell by the same amount. These are good
faith estimates assuming all other factors do not change materially, and, in
management's belief, are not necessarily indicative of what actually could
occur in the event of immediate interest rate increases or deceases of this
magnitude. Management believes that it is highly unlikely that such changes
would occur in a short time period. As interest-bearing assets and liabilities
reprice at different time frames and proportions to market interest rate
movements, various assumptions must be made based on historical relationships
of these variables in reaching any conclusion. Since these correlations are
based on competitive and market conditions, future results would, in
management's belief, be materially different from the foregoing estimates.
EFFECTS OF INFLATION AND CHANGING PRICES
Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on a financial
institution's performance than inflation. Although interest rates do not
necessarily move in the same direction or to the same extent as the prices of
goods and services, increases in inflation generally have
35
<PAGE> 37
resulted in increased interest rates. Over short periods of time interest
rates may not move in the same direction or magnitude as inflation.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 130,
"Reporting Comprehensive Income," which is effective for the fiscal years
beginning after December 15, 1997. This statement establishes standards for
reporting and display of comprehensive income and its components (revenue,
expenses, gains and losses) in a full set of general purpose financial
statements. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The company adopted SFAS No. 130 on January 1,
1998, and all annual required disclosures will be included beginning with the
year end 1998 consolidated financial statements.
The Financial Accounting Standards Board recently adopted Statement No.
131 (Statement No. 131) "Disclosures about Segments of an Enterprise and
Related Information." Statement No. 131, which became effective for periods
beginning after December 15, 1997, requires that business enterprises report
information about operating segments in annual financial statements. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Management believes that Statement No.
131 will have no significant impact on the company's consolidated financial
statements.
YEAR 2000 CONSIDERATIONS
As the year 2000 approaches, a significant business issue has emerged
regarding how existing software programs and operating systems can accommodate
the date value for the year 2000. Many existing software products, including
products used by the company and its suppliers and customers, were designed to
accommodate only a two-digit date value, which represents the year. For
example, information relating to the year 1996 is stored in the system as "96."
As a result, the year 1999 (i.e., "99") could be the maximum date value that
these systems will be able to process accurately. In response to concerns about
this issue, regulatory agencies have begun to monitor holding companies' and
banks' readiness for the year 2000 as part of the regular examination process.
The company presently believes that with modifications to existing software and
conversion to new software, the year 2000 issue will not pose significant
operational problems for the company's business operations. To date, management
believes the company's Nebraska bank is substantially year 2000 compliant. In
addition, the company outsources its computer systems to a third party supplier,
who has informed the company that it expects to be year 2000 compliant in
mid-1999. Implementation of the company's plan to test in-house and out-sourced
software has been underway since the first quarter of 1998. Testing of
applications considered to be "mission critical" are scheduled for completion by
the first quarter of 1999. Total compliance for all systems, including the
company's outsourced computer systems, is expected by management to be completed
by the third quarter of 1999; management currently estimates that such
compliance will cost $150,000. The plan implementation team is responsible for
progress and will continue to provide a status report to the board of directors
on a monthly basis through December 31, 2000. However, if such modifications
and conversions are not made, or are not completed timely, the year 2000 issue
could have a material adverse impact on the operations of the company. The
company has in place a contingency plan in the event its outsourced computer
systems are not year 2000 compliant on a timely basis. In addition, there can
be no assurance that unforeseen problems in the company's outsourced computer
systems will not have an adverse effect on the company's systems or operations.
Additionally, failure of the company's customers to prepare for year 2000
compatibility could have a significant adverse effect on such customers'
operations and profitability, thus inhibiting their ability to repay loans and
adversely affecting the company's operations. The company does not have
sufficient information accumulated from customers to enable the company to
assess the degree to which customers' operations are susceptible to potential
problems relating to the year 2000 issue.
36
<PAGE> 38
BUSINESS
GENERAL
First Western Corp., a multibank holding company, offers full service
community banking through 10 banking locations in metropolitan Denver-northern
Colorado and two banking locations in western and central Nebraska. The
company was organized in 1963 by its founder and Chairman, Joel H. Wiens, to
purchase the company's first community bank, Firstate Bank, in Kimball,
Nebraska (the "Nebraska Bank"). In 1993 the company began its banking
operations in Colorado through the purchase of a bank in Northglenn, Colorado,
which was renamed Firstate Bank of Colorado (the "Colorado Bank"). In 1995 the
company began its Colorado expansion through establishing startup branches in
areas of metropolitan Denver-northern Colorado that management believed were
well situated for deposit and loan growth. To date, the company has added
seven branches and purchased a two-branch savings bank that has been
assimilated into the Colorado Bank. The company plans to open another startup
banking branch in Colorado in early 1999.
The company's growth strategy since 1995 has been to provide community
banking services by establishing startup branches at reasonable costs and
staffing them with experienced bankers to serve as branch presidents and loan
officers. Consolidation within the Colorado banking community has resulted in
the availability of experienced, highly capable bankers with existing customer
relationships who prefer to work in a community banking environment.
Consequently, the company has been able to open branches with highly qualified
personnel who have strong contacts with customers and who initiate immediate
banking business. In addition, the company believes that its management style
and internal culture, along with employee focused participation in decision
making, leads experienced bankers to explore employment with the company.
Also, the company has implemented its Colorado expansion through a central
operating system, and believes that its existing management, systems and
facilities are capable of supporting additional growth without proportionate
increases in operating costs. The company's operating strategy is to continue
to provide high quality community banking services to its customers and
increase market share through active solicitation of new business, repeat
business and referrals from customers, and continuation of selected promotional
strategies.
SUBSIDIARIES
The company has three subsidiaries, the Nebraska Bank, the Colorado Bank,
and First Mortgage Bancorp. The Nebraska Bank is a Nebraska state chartered
bank with assets of $72 million, net loans of $49 million and net deposits of
$60 million as of September 30, 1998. The Colorado Bank is a Colorado state
chartered bank with assets of $266 million, net loans of $207 million and
deposits of $234 million as of September 30, 1998. See "Supervision and
Regulation." First Mortgage Bancorp is a Nebraska licensed sales finance
company, with assets of $500,000. It does not conduct significant operations,
although from time to time it purchases loan participations from the company's
banks. The Nebraska Bank is 91.4% owned by the company; the other two
subsidiaries are wholly owned by the company.
STRATEGIES
Growth. The company's goal in continuing its expansion is to maintain a
profitable, customer-focused financial institution. Management believes that
the company's existing structure, management, data and operational systems are
sufficient to achieve further growth in asset size, revenues and capital
without proportionate increases in operating costs. This growth should also
allow the company to increase the lending limits of its banks, thereby enabling
the company to continue to serve the needs of existing and new customers.
The company's growth strategy is primarily focused on branch expansions
and existing branch growth. Although the company may consider acquisitions of
smaller financial institutions from time to time,
37
<PAGE> 39
\such external growth is a secondary priority due to the significant premiums
currently being paid to acquire financial institutions in the company's market
area.
Branch Expansion. The company has been able to grow through establishing
startup branches at reasonable costs, while attracting experienced, highly
capable bankers who prefer the autonomy and decision making opportunities in a
community banking environment. Since January 1, 1996, the company has hired
over 15 experienced bankers to staff six new branches in Colorado as well as
experienced corporate financial officers in the Colorado Bank. Banking
experience of these individuals ranges from 10 to 30 years.
Because of the significant economic growth in Colorado over the past
several years, management has determined to focus the company's branch
expansion in the Front Range area (Colorado Springs to Fort Collins). The
Colorado Bank has one additional branch that is expected to begin operations in
early 1999. The company reviews branch opportunities on an ongoing basis.
Management believes that the company's branching strategy will capitalize on
the significant economic growth experienced in the company's primary market
area, as well as take advantage of the needs of businesses and consumers for a
full service community bank.
The company's market areas are the metropolitan Denver-northern Colorado
area and western and central Nebraska. The Denver-northern Colorado area is
the most densely populated area in the Rocky Mountain region. Total population
is approximately 2.5 million, and the area has received a net migration of over
260,000 persons since 1990. Employment in the area is diversified across the
manufacturing, construction, financial services, tourism, transportation,
technology, cable television, retail trade, services and government sectors.
In 1997, Colorado achieved the eleventh straight year of employment growth,
with nonagricultural employment increasing 4% during 1997 to approximately 2.0
million. The company's Nebraska market area includes the Nebraska Panhandle as
well as the fringes of southeastern Wyoming and the northeastern corner of
Colorado, with service providers and agriculture being the primary businesses.
Existing Branch Growth. Management believes that the company's largest
source of internal growth is through the company's intensive solicitation
program conducted by branch presidents and lending officers, followed by
referrals from customers. The primary reason for referrals is positive
customer feedback regarding the company's customer service and response time.
The company's Colorado banking market is dominated by large national and
regional financial institutions. This dominance was achieved through the
purchase of Colorado-based financial institutions over the past several years,
which resulted in a significant consolidation of the company's Colorado banking
industry. Management believes that small and medium sized businesses often are
not adequately served by large banks nor are such businesses of sufficient size
to be of interest to these large banks, and that individuals frequently have
difficulty in finding personalized banking services. Many of these customers
seek a banking relationship with a smaller and significantly more
service-oriented community banking organization such as the company. The
company's operational systems have been designed to complement superior
customer service. Management believes the company's banking locations are
small enough to facilitate personalized services and decision-making, yet of
sufficient size to meet most customers' needs. Management also believes that
the economic expansion in Colorado contributes significantly to internal
growth. Through the company's primary emphasis on customer service and
management's experience, the company will continue to focus on attracting these
customers in achieving internal growth primarily by focusing on the following:
o Operational Efficiencies - the company seeks to maximize
operational and support efficiencies consistent with maintaining
high quality customer service. The company utilizes recently
developed technology to provide customer support. Various
management and administrative functions are consolidated, including
credit administration and servicing,
38
<PAGE> 40
investment management and accounting, enabling branch personnel to
better focus on customer service and business development.
o Marketing Activities - the company focuses on its active
solicitation program for new business, as well as identifying and
developing products and services that satisfy customer needs,
particularly customer service. The company's marketing programs
also utilize local print (promotional materials in each location)
as well as sponsorship of community events within branch areas.
o Products Offered - the company offers a wide range of deposit
products including regular checking, checking with interest, money
market accounts, regular savings, certificates of deposit, and
IRAs. The company also offers additional access to its customers
with a ATM/Visa debit card program as well as telephone banking, PC
banking, and on-line Internet banking. The company also offers
installment loans, including auto, recreational vehicle, and other
secured and unsecured loans sourced directly by its branches. See
"Loans" below for a discussion of products that the company
provides to commercial accounts.
LOANS
The company has the ability to provide a broad range of commercial and
retail lending services. The company follows a uniform credit policy which
sets forth underwriting and loan administration criteria, including levels of
loan commitment, loan types, credit criteria, concentration limits, loan
administration, loan review and grading and related matters. In addition, the
company provides ongoing loan officer training and review, obtains outside
independent loan reviews, operates a centralized processing, underwriting and
servicing center for loans and manages problem assets centrally. At September
30, 1998, substantially all loans outstanding were to customers within the
company's market area.
Real Estate Mortgage Loans. These loans include various types of loans
for which the company holds real property as collateral. Most of the loans as
of September 30, 1998 were to businesses. Of the $120.9 million of real estate
mortgage loans at September 30, 1998, approximately $57.8 million were loans
made to commercial customers where the collateral for the loan is, among other
things, the real estate occupied by the business of the customer. It is the
company's practice whenever practicable in making commercial loans to receive
real estate as collateral in addition to other appropriate collateral.
Therefore, many loans categorized as real estate mortgage loans can be
characterized as commercial loans which are secured by real estate. Commercial
loans secured by real estate often mature annually and typically have
adjustable interest rates. The primary risks of real estate mortgage loans
include the borrower's inability to pay and deterioration in value of real
estate that is held as collateral.
Real Estate Construction Loans. Construction loans include commercial
and residential real estate construction loans. Real estate construction
loans are principally made to builders to construct business buildings or
single and multi-family residences. These loans typically have maturities of
six to 12 months and adjustable interest rates, and are subject to origination
fees. Terms may vary depending upon many factors, including, but are not
limited to, location, type of project and financial condition of the builder.
Commercial, Financial and Agricultural Loans. These loans consist
primarily of loans to businesses for various purposes, including revolving
lines of credit and equipment financing. The loans secured by collateral other
than real estate generally mature within one year, have adjustable interest
rates and are secured by inventory, accounts receivable, livestock, crops,
machinery or other commercial assets. Revolving lines of credit generally are
for business purposes, generally mature annually and have adjustable interest
rates.
39
<PAGE> 41
Installment Loans to Individuals. Installment loans to individuals,
which are not secured by real estate, generally have terms of two to five years
and bear interest at fixed rates. These loans usually are secured by motor
vehicles, investment securities or other personal assets, and in some instances
are unsecured.
The company maintains a loan committee approach to commercial lending,
which it believes yields positive results in both responsiveness to customer
needs and asset quality. The company has three regional loan committees, each
of whom meet once per week to review and discuss loans.
Interest rates charged on loans vary with the degree of risk, maturity,
underwriting and servicing costs, loan amount, and extent of other banking
relationships maintained with customers, and are further subject to competitive
pressures, money market rates, availability of funds and government
regulations. Most of the loans in the company's portfolio at September 30,
1998, had interest rates that float at a margin above the prime rate.
In the ordinary course of business, the company issues letters of credit.
See Note 10 of Notes to Consolidated Financial Statements. The company applies
the same credit standards to these commitments as it uses in all its lending
activities and has included these commitments in its lending risk evaluations.
The company's exposure to credit loss under letters of credit is represented by
the amount of these commitments. Under applicable federal and state law,
permissible loans to one borrower at September 30, 1998 were limited to an
aggregate of $2.7 million for the Colorado Bank and $1.0 million for the
Nebraska Bank. With the infusion of approximately $4.2 million in capital to
the Colorado Bank (see "Use of Proceeds"), the company expects that the lending
limit of the Colorado Bank will increase by approximately $700,000 to a total
of $3.4 million.
COMPETITION
The company faces a high degree of competition. In its market areas,
there are numerous small banks and several larger national and regional
financial banking groups. The company also competes with insurance companies,
savings and loan associations, credit unions, leasing companies, mortgage
companies, and other financial service providers. Many of the banks and other
financial institutions with which the company competes have capital resources
and legal lending limits substantially in excess of the capital resources and
legal lending limits of the company.
The company competes for loans and deposits principally based on the
availability and quality of services provided, responsiveness to customers,
interest rates, loan fees and office locations. The company actively solicits
deposit customers and competes by offering them superior customer service and a
complete product line. The company believes its customer service, broad
product line and banking franchise enable it to compete in its market area.
The company faces competition for its personnel. The company competes
through its management style and internal culture, along with employee focused
participation in decision making. Management believes that the company is able
to compete for personnel effectively in the company's market areas.
The company will also face significant competition from other financial
institutions in any potential acquisitions. Many of these competitors have
substantially greater resources than the company as well as the ability to
issue marketable equity securities that can be used as part of the purchase
price.
PROPERTIES
The principal offices of both the company and the Colorado Bank are
located in a two story building at 11210 Huron Street, Northglenn, Colorado
80234.
40
<PAGE> 42
The table below sets forth property information concerning the branches
of the Colorado Bank and the branches of the Nebraska Bank.
<TABLE>
<CAPTION>
Square
Name and Address of Branch Year Opened Type of Interest footage of facility
- -------------------------- ----------- ---------------- -------------------
<S> <C> <C> <C>
Main Office - Colorado Bank 1993 Land and building owned by 14,000
11210 Huron the Colorado Bank
Northglenn, Colorado 80234
Thornton Branch 1995 Land and building owned by 1,500
2616 East 120th Avenue the Colorado Bank
Thornton, Colorado 80233
Cherry Creek Branch 1995 Land and building owned by 5,500
101 Garfield Street the Colorado Bank
Denver, Colorado 80206
Westminster Branch 1996 Leased 4,560
9191 Sheridan Boulevard
Westminster, Colorado 80030
Boulder/Gunbarrel Branch 1997 Leased 4,000
6685 Gunpark Drive
Boulder, Colorado 80301
Greeley Branch 1997 Leased 3,316
3501 West 12th Street
Greeley, Colorado 80634
Lafayette Branch 1998 Leased 2,300
1200 West South Boulder Road
Lafayette, Colorado 80026
Loveland Branch 1998 Land and building owned by 4,000
205 East Eisenhower the Colorado Bank
Loveland, Colorado 80537
Fort Collins Branch 1998 Land and building owned by 5,000
3131 South College the Colorado Bank
Fort Collins, Colorado 80525
Denver Technological Center 1998 Leased 8,500
Branch
5299 DTC Boulevard
Englewood, Colorado 80111
Main Office - Nebraska Bank 1963 Land and building owned by 7,200
115 South Walnut the Nebraska Bank
Kimball, Nebraska 69145
Elm Creek Branch 1992 Land and building owned by 3,080
222 North Tyler the Nebraska Bank
Elm Creek, Nebraska 68836
</TABLE>
41
<PAGE> 43
All of the leased properties are leased from unaffiliated third parties and are
subject to long term leases.
LEGAL PROCEEDINGS
The company and its subsidiaries are from time to time parties to various
legal actions arising in the normal course of business. Management believes
that there is no proceeding threatened or pending against the company or any of
its subsidiaries which, if determined adversely, would have a material adverse
effect on the financial condition or results of operations of the company.
EMPLOYEES
As of September 30, 1998, the company had approximately 150 full-time
equivalent employees. Management considers its relationship with its employees
to be very good.
FW CAPITAL I
FW Capital I is a statutory business trust created under Delaware law on
November 6, 1998. FW Capital I's business and affairs will be conducted by the
Property Trustee, the Delaware Trustee and three individual Administrative
Trustees who are officers or directors of the company. FW Capital I was created
for the exclusive purpose of offering the Preferred Securities and engaging in
the other transactions discussed in this prospectus. All of the common
securities of FW Capital I are owned by the company. See "Description of the
Preferred Securities -- Subordination of Common Securities of FW Capital I Held
by the Company." FW Capital I will have a term of 30 years, but may dissolve
earlier as provided in the trust agreement.
No separate financial statements of FW Capital I have been included
herein. The company and FW Capital I do not consider that such financial
statements would be material to holders of the Preferred Securities because FW
Capital I is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as assets the Junior Subordinated Debentures of
the company and issuing the Preferred Securities. See "Prospectus Summary --
FW Capital I," "Description of the Preferred Securities," "Description of the
Junior Subordinated Debentures" and "Description of Guarantee."
42
<PAGE> 44
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the company, their respective
ages and positions as of November 1, 1998, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Joel H. Wiens 69 Chairman of the Board and President of the company and Chairman of the Board of the
Colorado and Nebraska Banks
Timothy D. Wiens 43 Vice Chairman and Director of the company; President, Chief Executive Officer and
Director of the Colorado Bank; and Director of the Nebraska Bank
Ronald B. James 44 Chief Financial Officer, Treasurer and Assistant Secretary of the company and the
Colorado Bank
Michael J. Nelson 56 Secretary and Director of the company; President and Director of the Nebraska Bank;
and Director of the Colorado Bank
Max W. Revell 46 Director of the company; Executive Vice President and Director of the Nebraska Bank
Lynn M. Anthony 34 Director of the company
Alan D. Linton 51 Senior Vice President/Senior Credit Officer of the Colorado Bank
</TABLE>
Joel H. Wiens is the father of Timothy D. Wiens. There are no other
family relationships among any of the directors and executive officers of the
company or its banks. All directors of the company hold office until the next
meeting of shareholders or until their successors are elected and qualified.
Joel H. Wiens has been Chairman of the Board of the company and the
Nebraska Bank since 1963 and the Colorado Bank since 1993. For more than the
past five years, he has been the President and owner of Western Management
Company, a management company that provides management consulting services to
the company and its subsidiaries. See "Related Party Transactions."
Timothy D. Wiens has been an officer and Director of the company and a
Director of the Nebraska Bank for over the past five years. He has been an
officer and Director of the Colorado Bank since 1993. From August 1993 to
January 1995, Mr. Wiens was President of Firstate Mortgage Corporation. From
April 1989 to August 1993, Mr. Wiens served as an Executive Vice President for
Recycling Industries, a scrap metal industry consolidator. From 1986 to 1989,
Mr. Wiens was a co-founder and Chairman of First City Financial Corporation, a
Denver based residential and commercial mortgage company.
Ronald B. James has been Chief Financial Officer and Treasurer of the
company and the Colorado Bank since June 1998. From March 1997 to June 1998,
Mr. James was a Senior Vice President with First National Bank of Greeley, and
from March 1982 to February 1997, he was employed with First Interstate Bancorp
in various positions, including as a finance officer. Prior to 1982, Mr. James
held a controller and an accounting position with First Interstate Bank of
Englewood and Jefferson Bank and Trust, respectively.
Michael J. Nelson has been an officer and Director of the company since
1987, and he also has been an officer and Director of the Nebraska Bank since
1978 and a Director of the Colorado Bank since
43
<PAGE> 45
1993. Mr. Nelson is also a director of George Risk Industries, Inc., an
electronics manufacturing company in Kimball, Nebraska which is publicly traded
on the Nasdaq Bulletin Board System.
Max W. Revell has been a Director of the company since 1994 and an
officer and Director of the Nebraska Bank since 1982. Prior to 1982, Mr.
Revell worked for Centennial State Bank and Centennial Insurance Agency in
Lyons, Colorado and for Tri-State Insurance Agency in Kimball, Nebraska.
Lynn M. Anthony has been a Director of the company since January 1997.
Since May 1993, Mr. Anthony has been employed by Western Management Company,
the management company owned by Joel H. Wiens which provides management
services to the company and its banks. See "Related Party Transactions." From
January 1987 to May 1993, Mr. Anthony was employed as an accountant by Fred A.
Lockwood & Co., a regional public accounting firm located in Nebraska. Mr.
Anthony is a certified public accountant in Nebraska.
Alan D. Linton has been Senior Vice President/Senior Credit officer of
the Colorado Bank since January 1997. From 1987 through 1996 he was employed
as Director of Operations and Chief Financial Officer of Pratt Management
Company, a real estate property management, development and construction
company. From 1974 through 1986 he worked for United Banks of Colorado, ending
his tenure as President of United Bank of Longmont.
Directors of the company are paid an annual fee of $1,000. Directors
of the Colorado Bank receive a fee of $100 per meeting, plus directors living
outside of the Denver metropolitan area receive a $100 per meeting travel
allowance. Directors of the Nebraska Bank are paid $200 per meeting attended,
with up to an additional $100 per meeting of travel expense reimbursement. The
board of directors of the company meets quarterly and the board of directors of
the company's banks meet monthly.
44
<PAGE> 46
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the company
to its Chief Executive Officer and to its Vice Chairman, the named executive
officers, for the years 1995 through 1997. No other executive officer of the
company received compensation from the company exceeding $100,000 for such
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Awards Payouts
------------------------------
Securities
Other Under-
Annual Restricted lying All Other
Compen- Stock Options/ LTIP Compen-
Name Salary Bonus sation Award(s) SARs Payouts sation
and Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel H. Wiens, ........ 1997 -- -- -- -- -- -- (1)
Chairman of the Board.. 1996 -- -- -- -- -- -- (1)
1995 -- -- -- -- -- -- (1)
Timothy D. Wiens, ..... 1997 73,178 30,000 8,400(2) -- -- -- --
Vice Chairman ......... 1996 60,062 15,700 5,520(2) -- -- -- --
1995 55,000 17,000 -- -- -- -- --
</TABLE>
(1) Joel H. Wiens does not receive a salary from the company or its banks;
however, Western Management Company, 100% owned by him, received
$167,000, $145,500 and $119,000 in 1997, 1996 and 1995, respectively,
from the company and its subsidiaries for management services. See
"Related Party Transactions."
(2) Represents an automobile allowance and club dues paid on behalf of
Timothy D. Wiens.
The company does not currently have any compensatory option or incentive
plans, although it does intend to adopt a stock option plan in the near future.
None of the directors or officers of the company have any options, warrants or
other similar rights to purchase securities of the company. However, the
company has the right to adopt or issue, as the case may be, such options,
warrants or rights in the future.
INDEMNIFICATION
The company's articles of incorporation provide that the board of
directors is authorized, without the need for shareholder approval, to
indemnify directors and officers to the fullest extent allowed by Nebraska law;
provided, however, that the exercise of such indemnification powers by the
board of directors is consistent with Nebraska law. Generally under Nebraska
law, any director or officer who is made or threatened to be made a party to
any suit or proceeding may be indemnified if such director or officer acted in
good faith and had no reasonable basis to believe that (i) in the case of
conduct in an official capacity with the company, his or her conduct was in the
company's best interests; and (ii) in all other cases, his or her conduct was
at least not opposed to the best interests of the company; and, with respect to
any criminal proceeding, he or she had no reasonable cause to believe his or
her conduct was unlawful. Nebraska law further provides that a company may
maintain insurance on behalf of an officer or director against liability
asserted or incurred by him or her in such capacity, and that a company may
indemnify, advance expenses to, or provide or maintain insurance on behalf of
an employee or agent without limitation from Nebraska law. Nebraska law also
extends such indemnification to officers and directors of the company who serve
at the request of the company as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign entity.
45
<PAGE> 47
Nebraska law provides that a director is not liable for any action taken
as long as such director discharged his or her duties (i) in good faith, (ii)
with the care of an ordinarily prudent person in a like position under the same
circumstances, and (iii) in a manner he or she reasonably believes to be in the
best interest of the company.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the company as to which indemnification is
being sought. The company is not aware of any other threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
46
<PAGE> 48
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of common stock of the company, as of November 1, 1998, by (i) each
shareholder known by the company to be the beneficial owner of more than 5% of
its outstanding common stock and (ii) each director of the company and each
named executive officer and (iii) all directors and executive officers as a
group. Unless otherwise indicated, based on information furnished by such
owners, management believes that the shareholders listed below have sole
investment and voting power with respect to their shares.
<TABLE>
<CAPTION>
NAME AND SHARES
ADDRESS OF BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER OWNED OF CLASS
---------------- ------------ ----------
<S> <C> <C>
Joel H. Wiens . . . . . . . . . . . . . 126,437(1) 90.3%
11210 Huron Street
Northglenn, Colorado 80234
Timothy D. Wiens . . . . . . . . . . . . 17,159(2) 12.3%
11210 Huron Street
Northglenn, Colorado 80234
Michael J. Nelson . . . . . . . . . . . 878 (3)
115 South Walnut
Kimball, Nebraska 69145
Max W. Revell . . . . . . . . . . . . . 438 (3)
115 South Walnut
Kimball, Nebraska 69145
Lynn M. Anthony . . . . . . . . . . . . -- --
115 South Walnut
Kimball, Nebraska 69145
All executive officers and
directors as a group (seven persons) . 140,000 100.0%
</TABLE>
- ------------
(1) Of this amount, 116,613 shares are owned directly, and 9,824 shares
are owned indirectly as trustee of a family trust of which Timothy D.
Wiens is a 50% beneficiary. One-half of these shares is included in
the stock ownership of Timothy D. Wiens.
(2) Of this amount, 9,545 shares are owned directly, 2,702 shares are
owned indirectly through his minor children and 4,912 shares are owned
indirectly as a 50% beneficiary of a family trust.
(3) Less than 1%.
47
<PAGE> 49
RELATED PARTY TRANSACTIONS
The company and each of its three subsidiaries have entered into
management agreements with Western Management Corporation, a corporation owned
by Joel H. Wiens, the company's Chairman of the Board. Each management
agreement is effective for one year, subject to renewal at the annual meeting
of the board of directors of each entity. Management services performed under
each agreement include strategic planning, tax planning and budgeting, business
development, marketing, community and industry relations, and assistance with
the preparation and filing of Federal Reserve reports. The management
agreements currently require monthly fees to Western Management Corporation as
follows: the company - $750; the Colorado Bank - $750 plus $250 per branch
(currently $2,750 in total); the Nebraska Bank - $3,000; First Mortgage Bancorp
- -- $2,000. In addition to the foregoing monthly fees, Western Management
Corporation bills in December of each year for any additional amount of time
spent over 100 hours annually at $85 per hour for Joel H. Wiens and $65 per
hour for Lynn M. Anthony. The company believes that these arrangements are on
terms similar to those that would be obtained with an unaffiliated party. The
following table summarizes payments made by the company and its subsidiaries to
Western Management Corporation for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
NINE MONTHS ENDED ----------------------------------
SEPTEMBER 30, 1998 1997 1996 1995
------------------ -------- -------- --------
<S> <C> <C> <C> <C>
Company .................................... $ 6,750 $ 19,000 $ 19,000 $ 10,000
Colorado Bank .............................. 22,750 28,000 9,000 9,000
Nebraska Bank .............................. 27,000 86,000 86,000 86,000
First Mortgage Bancorp ..................... 18,000 34,000 31,500 14,000
-------- -------- -------- --------
Total ............................. $ 74,500 $167,000 $145,500 $119,000
======== ======== ======== ========
</TABLE>
In 1995 Timothy D. Wiens sold assets of a mortgage company he owned to
the company for $100,000 to be paid out of profits generated by mortgage
operations relating to those assets. Through September 30, 1998, payments to
Timothy D. Wiens under this agreement totaled $82,000. The company believes
that this transaction was made on terms similar to those that would have been
obtained with an unaffiliated party.
In May 1997, the company issued 15,000 shares of its common stock to
Joel H. Wiens, Michael J. Nelson, Max W. Revell, Timothy D. Wiens and as
custodian for two of his minor children in exchange for 8,550 shares they
owned in the Colorado Bank (representing an 18.2% minority interest in the
Colorado Bank). The parties used comparable valuations of similar entities in
determining the exchange ratio for the transaction. The book value of the
minority interest was approximately $632,000. After the exchange, the Colorado
Bank became wholly-owned by the company.
From time to time, Joel H. Wiens, the company's Chairman, purchases
loan participations from the company's subsidiaries. The participations are
made on terms identical to those of unaffiliated parties. Approximate loan
principal balances outstanding under these participations are summarized as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------ -------------------------
1998 1997 1996
------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Loan participations purchased by Joel H. Wiens .................. $ 1,041 $ 1,420 $ 1,071
</TABLE>
48
<PAGE> 50
Timothy D. Wiens, Michael J. Nelson, and Max W. Revell, along with one
officer from the Nebraska Bank and two unaffiliated persons, equally own
Insurance Professionals, Inc., a Nebraska insurance agency. Insurance
Professionals, Inc. rents office space at both the Kimball and Elm Creek
branches of the Nebraska Bank for $100 per month per location.
SUPERVISION AND REGULATION
GOVERNMENT REGULATION
The company and its banks are extensively regulated under federal,
Colorado and Nebraska law. These laws and regulations are primarily intended to
protect depositors and the deposit insurance fund of the Federal Deposit
Insurance Corporation ("FDIC"), not shareholders of the company. The following
information is qualified in its entirety by reference to the particular
statutory and regulatory provisions. Any change in applicable laws, regulations
or regulatory policies may have a material effect on the business, operations
and prospects of the company and its banks. The company is unable to predict
the nature or extent of the effects that fiscal or monetary policies, economic
controls or new federal or state legislation may have on its business and
earnings in the future.
FIRST WESTERN CORP.
General. The company is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, and is subject to regulation,
supervision and examination by the Federal Reserve. The company is required to
file an annual report and such other reports as the Federal Reserve now
requires or may require.
Acquisitions. As a bank holding company, the company is required to
obtain the prior approval of the Federal Reserve before acquiring direct or
indirect ownership or control of more than 5% of the voting shares of a bank or
bank holding company. The Federal Reserve will not approve any acquisition,
merger or consolidation that would have a substantial anti-competitive result,
unless the anti-competitive effects of the proposed transaction are outweighed
by a greater public interest in meeting the needs and convenience of the
public. The Federal Reserve also considers managerial, capital and other
financial factors in acting on acquisition or merger applications.
Permissible Activities. Subject to limited exceptions, a bank holding
company may not engage in, or acquire direct or indirect control of more than
5% of the voting shares of any company engaged in a non-banking activity,
unless such activity has been determined by the Federal Reserve to be closely
related to banking or managing banks. The Federal Reserve has identified
specific non-banking activities in which a bank holding company may engage with
notice to, or prior approval by, the Federal Reserve.
Capital Adequacy. The Federal Reserve monitors the capital adequacy
of bank holding companies. As discussed below, the company's banks are also
subject to the capital adequacy requirements of the FDIC and, Colorado and
Nebraska regulations, as applicable. The Federal Reserve uses a combination of
risk-based guidelines and leverage ratios to evaluate capital adequacy of the
company.
The Federal Reserve has adopted a system using risk-based capital
adequacy guidelines to evaluate the capital adequacy of bank holding companies
on a consolidated basis. Under the risk-based capital guidelines, different
categories of assets are assigned different risk weights, based generally on
the perceived credit risk of the asset. These risk weights are multiplied by
corresponding asset balances to determine a "risk-weighted" asset base.
Certain off balance sheet items, such as loan commitments in excess of one
year, mortgage loans sold with recourse and letters of credit, are added to the
risk-weighted asset base by converting them to a balance sheet equivalent and
assigning to them the appropriate risk weight. For purposes of the risk-based
capital guidelines, total capital is defined as the
49
<PAGE> 51
sum of "Tier 1" and "Tier 2" capital elements, with Tier 2 being limited to
100% of Tier 1. For bank holding companies, Tier 1 capital includes, with
certain restrictions, common shareholders' equity, perpetual preferred stock
(no more than 25% of Tier 1 capital being comprised of cumulative preferred
stock) and minority interests in consolidated subsidiaries less the unamortized
balance of intangible assets. Tier 2 capital includes, with certain
limitations, certain forms of perpetual preferred stock, as well as maturing
capital instruments and the allowance for loan losses (limited to 1.25% of
risk-weighted assets). The regulatory guidelines require a minimum ratio of
total capital to risk-weighted assets of 8% (of which at least 4% should be in
the form of Tier 1 capital).
At September 30, 1998, the company's Tier 1 capital was $19.7 million.
In addition to the risk-based capital guidelines, the Federal Reserve
and the FDIC use a leverage ratio as an additional tool to evaluate the capital
adequacy of banks and bank holding companies. The leverage ratio is defined to
be a company's Tier 1 capital divided by its average tangible assets. Based
upon the current capital status of the company, the applicable minimum required
leverage ratio is 4%.
The table below sets forth ratios of (i) total capital to
risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets and (iii)
Tier 1 capital to tangible assets, at September 30, 1998.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
-------------------------
RATIO ACTUAL MINIMUM REQUIRED
----- ------ ----------------
<S> <C> <C>
TOTAL CAPITAL TO RISK-WEIGHTED ASSETS................... 7.80% 8.00%
TIER 1 CAPITAL TO RISK-WEIGHTED ASSETS.................. 7.22% 4.00%
TIER 1 CAPITAL TO AVERAGE ASSETS........................ 6.20% 4.00%
</TABLE>
Failure to meet the capital guidelines may result in the initiation by
the Federal Reserve of appropriate supervisory or enforcement actions. The
company's total capital to risk-weighted assets was below the minimum required
as of September 30, 1998. The company has anticipated that capital would be
needed in its expansion efforts, and has informed its banking regulators that
the offering of Preferred Securities will improve the ratio substantially. See
"Capitalization."
THE BANKS
General. The company owns two banks, Firstate Bank of Colorado, a
Colorado banking corporation with 10 banking locations, and Firstate Bank, a
Nebraska banking corporation with two banking locations. The deposits of the
company's banks are insured by the FDIC, and both banks are subject to
supervision and regulation by the FDIC. In addition, the Colorado Bank and the
Nebraska Bank are regulated by the Colorado Division of Banking and the
Nebraska Department of Banking and Finance, respectively.
Permissible Activities. No Colorado or Nebraska bank may engage in
any activity not permitted for national banks, unless the institution complies
with applicable capital requirements and the FDIC determines that the activity
poses no significant risk to the insurance fund. Neither the Colorado Bank nor
the Nebraska Bank are presently involved in the types of transactions covered
by this limitation.
Community Reinvestment Act. Enacted in 1977, the federal Community
Reinvestment Act ("CRA") has become important to financial institutions,
including their holding companies. The CRA currently allows regulators to turn
down an applicant seeking to make an acquisition or establish a branch unless
it has performed satisfactorily under the CRA. Satisfactory performance means
meeting adequately the credit needs of the communities the applicant serves.
The applicable federal regulators regularly conduct CRA examinations to assess
the performance of financial institutions. During the last examination,
ratings of satisfactory were received by both the Colorado Bank and Nebraska
bank. As a result, management
50
<PAGE> 52
believes that the banks' performance under CRA will not impede regulatory
approvals of proposed acquisitions or branching opportunities.
Dividend Restrictions. Dividends paid by the company's banks provide
substantially all of the operating and investing cash flow of the company.
Under Colorado and Nebraska law, the approval of the principal regulator is
required prior to the declaration of any dividend by a bank if the total of all
dividends declared in any calendar year exceeds the total of its net profits of
that year combined with its retained net profits for the preceding two years.
In addition, a bank cannot pay a dividend if it will cause its bank to be
"undercapitalized." See "Risk Factors -- Dependence on Dividends From
Subsidiary Banks."
Examinations. The company's banks are examined from time to time by the
FDIC. Based upon such an evaluation, the examining regulator may revalue the
assets of an insured institution and require that it establish specific reserves
to compensate for the difference between the value determined by the regulator
and the book value of such assets. The Colorado Division of Banking and the
Nebraska Department of Banking and Finance also conduct examinations of
state-chartered banks. Both of these regulators may accept the results of a
federal examination in lieu of conducting an independent examination. Both the
Colorado and Nebraska have the authority to revalue the assets of a
state-chartered institution and require it to establish reserves.
Capital Adequacy. The FDIC has adopted regulations establishing minimum
requirements for the capital adequacy of insured institutions. The requirements
address both risk-based capital and leverage capital, with risk-based assets and
Tier 1 and Tier 2 capital being determined in basically the same manner as
described above for bank holding companies. The FDIC may establish higher
minimum requirements if, for example, a bank has previously received special
attention or has a high susceptibility to interest rate risk.
The FDIC risk-based capital guidelines require state non-member banks
to have a ratio of Tier 1 or core capital to total risk-weighted assets of 4%
and a ratio of total capital to total risk-weighted assets of 8%.
The FDIC leverage guidelines require that state banks maintain Tier 1
capital of no less than 3% and up to 5% of total tangible assets. The applicable
guideline for the company's banks are estimated to be 4%. Banks with capital
ratios below the required minimum are subject to certain administrative actions,
including the termination of deposit insurance upon notice and hearing, or a
temporary suspension of insurance without a hearing in the event the institution
has no tangible capital.
The table below sets forth the capital ratios of the Colorado Bank and
the Nebraska Bank at September 30, 1998.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
----------------------------------------------------------
COLORADO BANK NEBRASKA BANK
RATIO ACTUAL MINIMUM REQUIRED ACTUAL MINIMUM REQUIRED
----- ------ ---------------- ------ ----------------
<S> <C> <C> <C> <C>
TOTAL CAPITAL TO RISK-WEIGHTED ASSETS................. 8.37% 8.00% 16.24% 8.00%
TIER 1 CAPITAL TO RISK-WEIGHTED ASSETS................. 8.03 4.00 14.99 4.00
TIER 1 CAPITAL TO AVERAGE ASSETS....................... 7.16 4.00 11.26 4.00
</TABLE>
Banking regulators have adopted regulations that define five capital
levels: well capitalized, adequately capitalized, undercapitalized, severely
undercapitalized and critically undercapitalized. An institution is critically
undercapitalized if it has a tangible equity to total assets ratio that is
equal to or less than 2%. An institution is well capitalized if it has a total
risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio
of 6% or greater, and a Tier 1 leverage ratio of 5% or greater, and the
institution is not subject to an order, written agreement, capital directive,
or prompt corrective action directive to meet and maintain a specific capital
level for any capital measure. An institution is adequately capitalized if it
51
<PAGE> 53
has a total risk-based capital ratio of not less than 8%, a Tier 1 risk-based
capital ratio not less than 4% and a leverage ratio of not less than 4%. Under
these regulations, as of September 30, 1998, the Colorado Bank was adequately
capitalized and the Nebraska Bank was well capitalized.
The Federal Deposit Insurance Corporation Improvement Act ("FDICIA")
requires the federal banking regulators to take "prompt corrective action" with
respect to resolving the problems of depository institutions, including
capital-deficient institutions. In addition to requiring the submission of a
capital restoration plan, FDICIA contains broad restrictions on certain
activities of undercapitalized institutions involving asset growth,
acquisitions, branch establishment, and expansion into new lines of business.
With certain exceptions, an insured depository institution is prohibited from
making capital distributions, including dividends, and is prohibited from paying
management fees to control persons if the institution would be undercapitalized
after any such distribution or payment.
As an institution's capital decreases, the powers of the federal
regulators become greater. A significantly undercapitalized institution is
subject to mandated capital raising activities, restrictions on interest rates
paid and transactions with affiliates, removal of management, and other
restrictions. The regulators have limited discretion in dealing with a
critically undercapitalized institution and are virtually required to appoint a
receiver or conservator if the capital deficiency is not corrected promptly.
Real Estate Lending Evaluations. The federal regulators have adopted
uniform standards for evaluations of loans secured by real estate or made to
finance improvements to real estate. Banks are required to establish and
maintain written internal real estate lending policies consistent with safe and
sound banking practices and appropriate to the size of the institution and the
nature and scope of its operations. The regulations establish loan to value
ratio limitations on real estate loans, which generally are equal to or less
than the loan to value limitations established by the company's banks.
Deposit Insurance Premiums. The assessment schedule for banks ranges
from 0 to 27 cents per $100 of deposits subject to Bank Insurance Fund ("BIF")
assessments, based on each institution's risk classification. The banks' insured
deposits are subject to assessment payable to BIF. An institution's risk
classification is based on an assignment of the institution by the FDIC to one
of three capital groups and to one of three supervisory subgroups. The capital
groups are "well capitalized," "adequately capitalized" and "undercapitalized."
The three supervisory subgroups are Group "A" (for financially solid
institutions with only a few minor weaknesses), Group "B" (for those
institutions with weaknesses which, if uncorrected could cause substantial
deterioration of the institution and increase the risk to the deposit insurance
fund) and Group "C" (for those institutions with a substantial probability of
loss to the fund absent effective corrective action). Currently, the ratings for
the Colorado Bank are two and a Group A supervisory subgroup, and the ratings
for the Nebraska Bank are one and a Group A supervisory subgroup.
Interstate Banking Legislation. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Interstate Act"), which became effective
September 1995, has eliminated many of the historical barriers to the
acquisition of banks by out-of-state bank holding companies. The Interstate Act
facilitates the interstate expansion and consolidation of banking organizations
by permitting: (i) bank holding companies that are adequately capitalized and
managed to acquire banks located in states outside their home states regardless
of whether such acquisitions are authorized under the laws of the host state;
(ii) the interstate merger of banks after June 1, 1997, subject to the right of
individual states either to pass legislation providing for earlier effectiveness
of such mergers or to "opt out" of this authority prior to such date; (iii)
banks to establish new branches on an interstate basis provided that such action
is specifically authorized by the law of the host state; (iv) foreign banks to
establish, with approval of the appropriate regulators in the United States,
branches outside their home states to the same extent that national or state
banks located in such state would be authorized to do so; and (v) banks to
receive deposits, renew time deposits, close loans, service loans and receive
payments on loans and other obligations as agent for any bank or thrift
affiliate, whether the affiliate is located in the same or different state. The
company's banks do not currently have any plans to take any actions permitted by
the Interstate Act.
52
<PAGE> 54
CHANGING REGULATORY STRUCTURE
The laws and regulations affecting banks and bank holding companies are
in a state of flux. The rules and the regulatory agencies in this area have
changed significantly over recent years, and there is reason to expect that
similar changes will continue in the future. It is not possible to predict the
outcome of these changes.
One of the major additional burdens imposed on the banking industry is
the increased authority of federal agencies to regulate the activities of
federal and state banks and their holding companies. The Federal Reserve, the
Comptroller of the Currency and the FDIC have extensive authority to police
unsafe or unsound practices and violations of applicable laws and regulations by
depository institutions and their holding companies. These agencies can assess
civil money penalties and other laws have expanded the agencies' authority in
recent years, and the agencies have not yet fully tested the limits of their
powers. In addition, the Colorado Division of Banking and the Nebraska
Department of Banking and Finance possess certain enforcement powers to address
violations of their banking laws by banks chartered in each respective state.
EFFECT ON ECONOMIC ENVIRONMENT
The policies of regulatory authorities, including the monetary policy
of the Federal Reserve, have a significant effect on the operating results of
bank holding companies and their subsidiaries. Among the means available to the
Federal Reserve to affect the money supply are open market operations in U.S.
Government securities, changes in the discount rate on member bank borrowings,
and changes in reserve requirements against member bank deposits. These means
are used in varying combinations to influence overall growth and distribution of
bank loans, investments and deposits, and their use may affect interest rates
charged on loans or paid on deposits.
The Federal Reserve's monetary policies have materially affected the
operating results of commercial banks in the past and are expected to continue
to do so in the future. The nature of future monetary policies and the effect of
such policies on the business and earnings of the company and its subsidiaries
cannot be predicted.
53
<PAGE> 55
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities and the Common 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. Initially, Wilmington
Trust Company will be the Delaware Trustee and the Property Trustee and will act
as trustee for the purpose of complying with 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. This summary
of certain 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, all the provisions of the Trust Agreement,
including the definitions therein of certain terms, and the Trust Indenture Act.
Wherever particular defined terms of the Trust Agreement (as amended or
supplemented from time to time) are referred to herein, such defined terms are
incorporated herein. 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 Administrative
Trustees on behalf of FW Capital I will issue the Preferred Securities and the
Common Securities (collectively, the "Trust Securities"). The Preferred
Securities will represent preferred undivided beneficial interests in the assets
of FW Capital I 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 of FW Capital I (which will
be held by the company), as well as other benefits as described in the Trust
Agreement.
The Preferred Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities of FW Capital I except as
described under "Subordination of Common Securities of FW Capital I Held by the
Company" below.
Legal title to the Junior 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 (the "Guarantee") will be a guarantee on a
subordinated basis and will not guarantee payment of distributions or amounts
payable on redemption of the Preferred Securities or on liquidation of the
Preferred Securities if FW Capital I does not have funds on hand available to
make such payments. See "Description of Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on the Preferred Securities
("Distributions") will be payable at the annual rate of % of the stated
Liquidation Amount of $10, payable quarterly in arrears on the 15th day of
January, April, July and October in each year, commencing April 15, 1999 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 amount of each Distribution due with respect to the
Preferred Securities will include amounts accrued through the date the
Distribution is due. Distributions on the Preferred Securities will be payable
to the holders thereof as they appear on the register of FW Capital I on the
relevant record date which, for so long as the Preferred Securities remain in
book-entry form, will be one Business Day (as defined below) prior to the
relevant Distribution Date and, in the event the Preferred Securities are not in
book-entry form, will be the first day of the month 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 April 15, 1999.
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, payment of the Distribution payable on such date will be made on
the
54
<PAGE> 56
next Business Day (and without any interest or other payment in respect to any
such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such Distribution shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable. As used in this prospectus, a
"Business Day" means any day other than a Saturday or a Sunday, or a day on
which banking institutions in Colorado are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Indenture Trustee is closed for business.
The funds of FW Capital I available for distribution to holders of its
Preferred Securities will be limited to payments by the company under the
Junior Subordinated Debentures in which FW Capital I will invest the proceeds
from the issuance and sale of its Preferred Securities. "Description of Junior
Subordinated Debentures." If the company does not make interest payments on
the Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Preferred Securities. The payment of
Distributions (if and to the extent FW Capital I 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 Guarantee."
Extension Period. So long as no Debenture Event of Default has occurred
and is continuing, the company has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect to
each such period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the stated maturity of the Junior Subordinated
Debentures. As a consequence of any such election, quarterly Distributions on
the Preferred Securities will be deferred by FW Capital I during any such
Extension Period. Distributions to which holders of Preferred Securities are
entitled will accumulate additional amounts thereon at the rate per year of %
thereof, compounded quarterly from the relevant Distribution Date, to the extent
permitted under applicable law. The term "Distributions" as used herein includes
any such additional accumulated amounts. During any such Extension Period, the
company may not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
company's capital stock (which includes common and preferred stock) or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the company that rank pari passu with or junior
in interest to the Junior Subordinated Debentures or make any guarantee payments
with respect to any guarantee by the company of the debt securities of any
subsidiary of the company if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the company, (b) any declaration of a dividend
in connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
and (d) purchases of common stock for issuance under any future benefit plans
for its directors, officers or employees). Prior to the termination of any such
Extension Period, the company may further extend such Extension Period, provided
that such extension does not cause such Extension Period to exceed 20
consecutive quarters or extend beyond the stated maturity. Upon the termination
of any such Extension Period and the payment of all amounts then due, and
subject to the foregoing limitations, the company may elect to begin a new
Extension Period. Subject to the foregoing, there is no limitation on the number
of times that the company may elect to begin an Extension Period.
The company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
REDEMPTION
Mandatory Redemption of Preferred Securities. Upon the repayment or
redemption at any time, in whole or in part, of any Junior Subordinated
Debentures, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the
55
<PAGE> 57
Trust Securities, upon not less than 30 nor more than 60 days' notice of a date
of redemption (the "Redemption Date"), at the Redemption Price (as defined
below). See "Description of Junior Subordinated Debentures -- Redemption." If
less than all of the Junior Subordinated Debentures are to be repaid or
redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption of the Trust Securities pro
rata.
Optional Redemption of Junior Subordinated Debentures. The company will
have the right to redeem the Junior Subordinated Debentures (i) on or after
____________, 2003, in whole at any time or in part from time to time at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof, or (ii) at any time, in whole (but not in
part), upon the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof, 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. See
"Description of Junior Subordinated Debentures -- Redemption."
Tax Event Redemption, Investment Company Event Redemption, Capital
Treatment Event Redemption or Distribution of Junior Subordinated Debentures. If
a Tax Event, an Investment Company Event or a Capital Treatment Event shall
occur and be continuing, the company has the right to redeem the Junior
Subordinated Debentures in whole (but not in part) and thereby cause a mandatory
redemption of the Trust Securities in whole (but not in part) at the Redemption
Price (as defined below) within 90 days following the occurrence of such Tax
Event, Investment Company Event or Capital Treatment 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. If a Tax
Event, an Investment Company Event or a Capital Treatment Event has occurred and
is continuing and the company does not elect to redeem the Junior Subordinated
Debentures and thereby cause a mandatory redemption of the Trust Securities or
to liquidate FW Capital I and cause the Junior Subordinated Debentures to be
distributed to holders of the Trust Securities in liquidation of FW Capital I as
described below, such Trust Securities will remain outstanding and Additional
Sums (as defined below) may be payable on the Junior Subordinated Debentures.
A "Tax Event" means the receipt by the company and FW Capital I 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 original issuance of
the Preferred Securities, there is more than an insubstantial risk that (i) FW
Capital I is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, (ii) interest payable by the company on the
Junior 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) FW Capital I 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.
An "Investment Company Event" means the receipt by the company and FW
Capital I of an opinion of counsel experienced in such matters to the effect
that, as a result of any 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, FW Capital I is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act, which change becomes effective on or after the original
issuance of the Preferred Securities.
56
<PAGE> 58
A "Capital Treatment Event" means the reasonable determination by the
company that, as a result of any amendment to, or change (including any
proposed 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 or administrative pronouncement or action 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 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.
DEFINITIONS
"Additional Sums" means the additional amounts as may be necessary to
be paid by the company with respect to the Junior Subordinated Debentures in
order that the amount of Distributions then due and payable by FW Capital I on
the outstanding Trust Securities of FW Capital I shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
FW Capital I has become subject.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Junior Subordinated Debentures
to be contemporaneously redeemed in accordance with the Indenture, allocated to
the Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of FW Capital I, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
DISTRIBUTION OF JUNIOR 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 liquidate FW
Capital I and, after satisfaction of the liabilities of creditors of FW Capital
I as provided by applicable law, cause the Junior Subordinated Debentures to be
distributed to the holders of Trust Securities in liquidation of FW Capital I.
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no
longer be deemed to be outstanding, (ii) the Depositary or its nominee, as the
record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed
to represent the Junior 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 Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution
57
<PAGE> 59
and liquidation of FW Capital I were to occur. Accordingly, the Preferred
Securities that an investor may purchase, or the Junior Subordinated Debentures
that the investor may receive on dissolution and liquidation of FW Capital I,
may trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby.
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 Junior 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 FW Capital I has funds on hand available
for the payment of such Redemption Price. See "-- Subordination of Common
Securities of FW Capital I Held by the Company" and "-- Guarantee."
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 at
such holder's registered address. Unless FW Capital I defaults in payment of the
applicable Redemption Price, on and after the Redemption Date, Distributions
will cease to accrue on such Preferred Securities called for redemption.
If FW Capital I gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, Denver time, on the Redemption Date,
the Property Trustee will pay the Redemption Price to the Depositary, as the
record holder of the Preferred Securities, and the Depositary thereafter will
credit the Redemption Price to the Participants for whom it holds the Preferred
Securities. See "Book-Entry Issuance." If such Preferred Securities are no
longer in book-entry form, the Property Trustee, to the extent funds are
available, will deposit with the paying agent for such Preferred Securities
funds sufficient to pay the aggregate Redemption Price and will give such paying
agent irrevocable instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing such Preferred
Securities. Notwithstanding the foregoing, Distributions payable on or prior to
the Redemption Date will be payable to the holders of such Preferred Securities
on the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the Preferred Securities will
cease, except the right of the holders of the Preferred Securities to receive
the applicable 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 such Preferred Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In 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 FW Capital I 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 FW Capital I
for such Preferred Securities to the date such Redemption Price is actually
paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price. See "Description of
Guarantee."
Subject to applicable law (including, without limitation, federal
securities laws), the company 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 Junior Subordinated Debentures to holders of Preferred
Securities will be made to the applicable record holders thereof as they appear
on the register of such Preferred Securities on the relevant record date, which
date will be one Business Day prior to the relevant Redemption Date; provided,
however, that in the event that any Preferred Securities are not in book-entry
form, the relevant record date for such Preferred Securities
58
<PAGE> 60
will be a date at least 15 days prior to the Redemption Date. In the case of a
liquidation, the record date will be established by the Property Trustee and be
no more than 45 days before the Liquidation Date.
If less than all of the Trust Securities issued by FW Capital I are to
be redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed will be allocated pro rata to the Preferred
Securities and Common 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 shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $10 or an integral multiple thereof) of the Liquidation
Amount of Preferred Securities. The Property Trustee shall promptly notify the
Trust Securities registrar 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.
SUBORDINATION OF COMMON SECURITIES OF FW CAPITAL I HELD BY THE COMPANY
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amounts of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities, shall 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 applicable Redemption Price the full
amount of such Redemption Price on all of the outstanding Preferred Securities
then called for redemption, shall have been made or provided for. All funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Preferred
Securities then due and payable.
In the case of any Event of Default under the Trust Agreement 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 until the effects of all such Events of Default have been
cured, waived or otherwise eliminated. Until any such Events of Default have
been so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of the Preferred Securities and not on behalf of
the 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 terminate FW Capital I
and cause the Junior Subordinated Debentures to be distributed to the holders of
the Preferred Securities. 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. See "Distribution of Junior
Subordinated Debentures" above.
In addition, pursuant to the Trust Agreement, FW Capital I shall
automatically terminate upon expiration of its term and shall earlier terminate
on the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the company; (ii) delivery by the company of written direction to
the Property Trustee to terminate FW Capital I (which direction is optional and
wholly within the discretion of the company); (iii) redemption of all of the
Preferred Securities as described under "Description of the
59
<PAGE> 61
Preferred Securities--Redemption--Mandatory Redemption;" and (iv) the entry of
an order for the dissolution of FW Capital I by a court of competent
jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above or upon the expiration of the term of FW Capital I, FW Capital I shall be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of FW
Capital I as provided by applicable law, to the holders of such Trust Securities
a Like Amount of the Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of FW Capital I available
for distribution to holders, after satisfaction of liabilities to creditors of
FW Capital I as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate of the Liquidation Amount of $10
per Trust Security 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 FW Capital I has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by FW Capital I on the Preferred Securities will be
paid on a pro rata basis. The holder(s) 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.
Under current United States federal income tax law and interpretations
and assuming, as expected, FW Capital I is treated as a grantor trust, a
distribution of the Junior 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 other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences." If the company elects neither to
redeem the Junior Subordinated Debentures prior to maturity nor to liquidate FW
Capital I and distribute the Junior Subordinated Debentures to holders of the
Preferred Securities, the Preferred Securities will remain outstanding until the
repayment of the Junior Subordinated Debentures.
If the company elects to liquidate FW Capital I and thereby causes the
Junior Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of FW Capital I, the company will continue to have the
right to shorten the maturity of such Junior Subordinated Debentures, subject to
certain conditions. See "Description of Junior Subordinated Debentures --
General."
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Preferred Securities and Common Securities
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by FW Capital I 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 FW Capital I 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 Property Trustee in the Trust Agreement (other
than a default or breach in the performance of a
60
<PAGE> 62
covenant or warranty which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach, for a period of 60 days after there has
been given, by registered or certified mail, to the Property Trustee 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, unless such Event of Default shall have
been cured or waived. The company and the Administrative Trustees are required
to file annually with the Property Trustee a certificate as to whether 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 FW Capital I as described above. See "-- Liquidation Distribution
Upon Termination." Upon a Debenture Event of Default, unless the principal of
all the Junior Subordinated Debentures has already become due and payable,
either the Property Trustee or the holders of not less than 25% in aggregate
principal amount of the Junior Subordinated Debentures then outstanding may
declare all of the Junior Subordinated Debentures to be due and payable
immediately by giving notice in writing to the company (and to the Property
Trustee, if notice is given by holders of the Junior Subordinated Debentures).
If the Property Trustee or the holders of the Junior Subordinated Debentures
fail to declare the principal of all of the Junior Subordinated Debentures due
and payable upon a Debenture Event of Default, the holders of at least 25% in
Liquidation Amount of the Preferred Securities then outstanding will have the
right to declare the Junior Subordinated Debentures immediately due and payable.
In either event, payment of principal and interest on the Junior Subordinated
Debentures will remain subordinated to the extent provided in the Indenture. In
addition, holders of the Preferred Securities have the right in certain
circumstances to bring a Direct Action (as defined below). See "Description of
Junior Subordinated Debentures -- Enforcement of Certain Rights by Holders of
Preferred Securities."
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event 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 shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of Trust Property
may at the time be located, the company, as the holder of the Common Securities,
and the Administrative Trustees will have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment,
61
<PAGE> 63
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 (as defined in the Trust Agreement) 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 will be a party, or any Person succeeding to all or substantially
all the corporate trust business of such Trustee, shall be the successor of such
Trustee under the Trust Agreement, provided such Person shall be otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF FW CAPITAL I
FW Capital I may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. FW Capital I 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 FW Capital I 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 as the holder of the Junior
Subordinated Debentures, (iii) any such transaction does not adversely affect
the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, (iv)
such successor entity has a purpose identical to that of FW Capital I, (v) the
Successor Securities will be listed or traded on any national securities
exchange or other organization on which the Preferred Securities may then be
listed, (vi) prior to such a transaction, the company has received an opinion
from independent counsel to FW Capital I experienced in such matters to the
effect that (a) such transaction 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 any such
transaction, neither FW Capital I nor such successor entity will be required to
register as an investment company under the Investment Company Act and (vii) the
company or any permitted successor or designee owns all of the common securities
of such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, FW Capital I shall not, except with the consent
of holders of 100% in Liquidation Amount of the Preferred Securities, enter into
any such transaction, or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such transaction, would cause FW Capital I
or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee --
Amendments and Assignment" and as otherwise required by law and the Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the company and
the Trustees, without the consent of the holders of the Trust Securities, (i) to
cure any ambiguity, correct or supplement any
62
<PAGE> 64
provisions in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as will be necessary to
ensure that FW Capital I 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 FW Capital I will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of Trust Securities, and any
amendments of the Trust Agreement shall become effective when notice thereof is
given to the holders of the Trust Securities. The Trust Agreement may be
amended by the Trustees and the company (i) with the consent of holders
representing not less than a majority of the aggregate Liquidation Amount of
the outstanding Trust Securities, and (ii) upon 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
FW Capital I's status as a grantor trust for United States federal income tax
purposes or FW Capital I's exemption from status as an "investment company"
under the Investment Company Act, provided that without the consent of each
holder of Trust Securities, the Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made
in respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
executing any trust or power conferred on the Indenture Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent may be given by the Property Trustee without the prior
consent of each holder of the Preferred Securities. The Trustees shall 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 the
Preferred Securities of any notice of default with respect to the Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of
such holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that FW Capital I 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 the 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 the Preferred Securities are entitled to vote,
or of any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of the Preferred Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of the Preferred Securities will be
required for FW Capital I to redeem and cancel the Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the 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 Trustees, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
63
<PAGE> 65
GLOBAL PREFERRED SECURITIES
The Preferred Securities will be represented by one or more global
certificates registered in the name of the Depositary or its nominee ("Global
Preferred Security"). Beneficial interests in the Preferred Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by participants in the Depositary. Except as described below,
Preferred Securities in certificated form will not be issued in exchange for the
global certificates. See "Book-Entry Issuance."
A global security will be exchangeable for Preferred Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the company that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered to act as such depositary, (ii) the company in
its sole discretion determines that such global security shall be so
exchangeable, or (iii) there shall have occurred and be continuing an Event of
Default under the Indenture. Any global security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for definitive certificates
registered in such names as the Depositary directs. It is expected that such
instructions will be based upon directions received by the Depositary with
respect to ownership of beneficial interests in such global security. In the
event that Preferred Securities are issued in definitive form, they will be in
denominations of $10 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for the individual
Preferred Securities represented thereby, such Global Preferred Security may not
be transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
Payments on Preferred Securities represented by a global security will
be made to the Depositary, as the depositary for the Preferred Securities. In
the event the Preferred Securities are issued in definitive form, Distributions
will be payable, the transfer of the Preferred Securities will be registrable,
and Preferred Securities will be exchangeable for Preferred Securities of other
denominations of a like aggregate Liquidation Amount, at the corporate office of
the Property Trustee, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Preferred Securities are issued in certificated form, the
record dates for payment of Distributions will be the first day of the month in
which the relevant Distribution Date occurs. For a description of the terms of
the depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance."
Upon the issuance of a Global Preferred Security, and the deposit of
such Global Preferred Security with or on behalf of the Depositary, the
Depositary or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate Liquidation Amounts of the individual
Preferred Securities represented by such Global Preferred Security to persons
that have accounts with such Depositary ("Participants"). Such accounts shall be
designated by the dealers, Underwriters or agents with respect to such Preferred
Securities. Ownership of beneficial interests in a Global Preferred Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary or its nominee (with respect
to interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a Global Preferred Security.
64
<PAGE> 66
So long as the Depositary for a Global Preferred Security, or its
nominee, is the registered owner of such Global Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such Global
Preferred Security for all purposes under the Trust Agreement governing such
Preferred Securities. Except as provided below, owners of beneficial interests
in a Global Preferred Security will not be entitled to have any of the
individual Preferred Securities represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities in definitive form and will not be
considered the owners or holders thereof under the Trust Agreement.
None of the company, the Property Trustee, any Paying Agent, or the
Securities Registrar (defined below) for such Preferred Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Preferred Security representing such Preferred Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The company expects that the Depositary for Preferred Securities or its
nominee, upon receipt of any payment of the Liquidation Amount or Distributions
in respect of a permanent Global Preferred Security, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security as shown on the records of such Depositary or its
nominee. The company also expects that payments by Participants to owners of
beneficial interests in such Global Preferred Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
If the Depositary for the Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the company within 90 days, FW Capital I will
issue individual Preferred Securities in exchange for the Global Preferred
Security. In addition, FW Capital I may at any time and in its sole discretion,
subject to any limitations described herein relating to such Preferred
Securities, determine not to have any Preferred Securities represented by one or
more Global Preferred Securities and, in such event, will issue individual
Preferred Securities in exchange for the Global Preferred Security or Securities
representing the Preferred Securities. Further, if FW Capital I so specifies
with respect to the Preferred Securities, an owner of a beneficial interest in a
Global Preferred Security representing Preferred Securities may, on terms
acceptable to the company, the Property Trustee and the Depositary for such
Global Preferred Security, receive individual Preferred Securities in exchange
for such beneficial interests, subject to any limitations described herein. In
any such instance, an owner of a beneficial interest in a Global Preferred
Security will be entitled to physical delivery of individual Preferred
Securities represented by such Global Preferred Security equal in Liquidation
Amount to such beneficial interest and to have such Preferred Securities
registered in its name. Individual Preferred Securities so issued will be issued
in denominations, unless otherwise specified by FW Capital I, of $10 and
integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to the
Depositary, which will credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any of the Preferred Securities are not
held by the Depositary, such payments will be made by check mailed to the
address of the holder entitled thereto as such address will appear on the
Register. The paying agent (the "Paying Agent") will initially be the Property
Trustee and any co-paying agent chosen by the Property Trustee and acceptable to
the Administrative Trustees and the company. The Paying Agent will be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees will appoint a
65
<PAGE> 67
successor (which shall 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 registrar and transfer agent for the
Preferred Securities. Registration of transfers of the Preferred Securities
will be effected without charge by or on behalf of FW Capital I, but upon
payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. FW Capital I will not be required to
register or cause to be registered the transfer of the 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 the Preferred
Securities are entitled under the Trust Agreement to vote, then the Property
Trustee shall take such action as is directed by the company and if not so
directed, shall take such action as it deems advisable and in the best
interests of the holders of the 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 FW Capital I in such a way that FW Capital I 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 Junior
Subordinated Debentures will be treated as indebtedness of the company for
United States federal income tax purposes. In this regard, the company and the
Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of FW Capital I or the Trust
Agreement, that the company and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
related Preferred Securities. Holders of the Preferred Securities have no
preemptive or similar rights.
FW Capital I may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures will be issued under the
Subordinated Indenture, dated as of _________, 1998 (the "Indenture"), between
the company and Wilmington Trust Company, as trustee (the "Indenture Trustee").
The following summary of the terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture, which has been
filed as an exhibit to the Registration Statement of which this prospectus forms
a part, and to the Trust Indenture Act. The Indenture is qualified under the
Trust Indenture Act. Whenever particular defined terms of the Indenture are
referred to herein, such defined terms are incorporated herein or therein by
reference.
66
<PAGE> 68
Concurrently with the issuance of the Preferred Securities, FW Capital
I will invest the proceeds thereof, together with the consideration paid by the
company for the Common Securities, in Junior Subordinated Debentures issued by
the company. The Junior Subordinated Debentures will be issued as unsecured debt
under the Indenture.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual
rate of % of the principal amount thereof, payable quarterly in arrears on the
15th day of January, April, July and October of each year (each, an "Interest
Payment Date"), commencing April 15, 1999, to the person in whose name each
Junior Subordinated Debenture is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. Notwithstanding the above, in the event that either the (i) Junior
Subordinated Debentures are held by the Property Trustee and the Preferred
Securities are no longer in book-entry only form or (ii) the Junior Subordinated
Debentures are not represented by a Global Subordinated Debenture (as defined
herein), the record date for such payment shall be the first day of the month in
which such payment is made. The amount of each interest payment due with respect
to the Junior Subordinated Debentures will include amounts accrued through the
Interest Payment Date. It is anticipated that, until the liquidation, if any, of
FW Capital I, each Junior Subordinated Debenture 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 Junior Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of __% thereof,
compounded quarterly. The term "interest" as used herein shall include quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Junior Subordinated Debentures will mature on ___________, 2028
(such date, as it may be shortened as hereinafter described, the "Stated
Maturity"). Such date may be shortened once at any time by the company to any
date not earlier than ___________, 2003, subject to the company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. In the event that the company
elects to shorten the stated maturity of the Junior Subordinated Debentures, it
will give notice to the registered holders of the Junior Subordinated
Debentures, the Property Trustee and the Indenture Trustee of such shortening no
less than 90 days prior to the effectiveness thereof. The Property Trustee must
give notice to the holders of the Trust Securities of the shortening of the
stated maturity.
The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior and Subordinated
Debt of the company. Because the company is a holding company, the right of
the company to participate in any distribution of assets of any subsidiaries,
including its banks, upon any such subsidiaries' 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 that subsidiary, except to the extent that the company may itself
be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the company's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of the company for
payments on the Junior Subordinated Debentures. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of the company,
including Senior and Subordinated Debt, whether under the Indenture or any
existing or other indenture that the company may enter into in the future or
otherwise. See "Subordination" below.
67
<PAGE> 69
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is
continuing, the company has the right under the Indenture at any time during the
term of the Junior Subordinated Debentures to defer the payment of interest at
any time or from time to time for a period not exceeding 20 consecutive quarters
(each such period an "Extension Period"), provided that no Extension Period may
extend beyond the stated maturity. At the end of such Extension Period, the
company must pay all interest then accrued and unpaid (together with interest
thereon at the annual rate of __%, compounded quarterly, to the extent permitted
by applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures will be required to accrue
interest 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 Extension Period, the company may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the company (including other Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the company of the debt securities of any subsidiary of the
company if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, and (d) purchases of
common stock related to rights under any of the company's benefit plans for its
directors, officers or employees). Prior to the termination of any such
Extension Period, the company may further extend such Extension Period, provided
that such extension does not cause such Extension Period to exceed 20
consecutive quarters or extend beyond the stated maturity. Upon the termination
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date, the company may elect to begin a new Extension Period
subject to the above requirements. No interest shall be due and payable during
an Extension Period, except at the end thereof. If the Property Trustee is the
only Registered Holder of the Junior Subordinated Debentures, the company must
give the Property Trustee, the Administrative Trustees and the Indenture Trustee
notice of its election of any Extension Period at least one Business Day prior
to the earlier of (i) the date the Distributions on the Preferred Securities
would have been payable except for the election to begin or extend such
Extension Period or (ii) the date the Administrative Trustees are required to
give notice to the holders of the Preferred Securities of the record date or the
date such Distributions are payable, but in any event not less than one Business
Day prior to such record date. The Indenture Trustee shall give notice of the
company's election to begin or extend a new Extension Period to the
Administrative Trustees who, in turn, will give notice to the holders of the
Preferred Securities. There is no limitation on the number of times that the
company may elect to begin an Extension Period.
ADDITIONAL SUMS
If FW Capital I is required to pay any additional taxes, duties or
other governmental charges as a result of a Tax Event, the company will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by FW
Capital I shall not be reduced as a result of any such additional taxes, duties
or other governmental charges.
68
<PAGE> 70
REDEMPTION
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 Junior Subordinated Debentures are redeemable prior to
maturity at the option of the company (i) on or after ________, 2003, in whole
at any time or in part from time to time, or (ii) at any time in whole (but not
in part), upon the occurrence and during the continuance of a Tax Event, an
Investment Company Event or a Capital Treatment Event, in each case at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Unless the
company defaults in payment of the Redemption Price, on and after the Redemption
Date interest ceases to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
The Junior 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 FW Capital I, the Junior Subordinated Debentures
may be distributed to the holders of the Preferred Securities and Common
Securities in liquidation of FW Capital I after satisfaction of liabilities to
creditors of FW Capital I as provided by applicable law. If distributed to
holders of the Preferred Securities in liquidation, the Junior Subordinated
Debentures will initially be issued in the form of one or more global securities
and the Depositary, or any successor depositary for the Preferred Securities,
will act as depositary for the Junior Subordinated Debentures. It is anticipated
that the depositary arrangements for the Junior Subordinated Debentures would be
substantially identical to those in effect for the Preferred Securities. If the
Junior Subordinated Debentures are distributed to the holders of Preferred
Securities upon the liquidation of FW Capital I, there can be no assurance as to
the market price of any Junior Subordinated Debentures that may be distributed
to the holders of Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there shall have occurred any event of which the
company has actual knowledge that (a) with the giving of notice or the lapse of
time, or both, would constitute a Debenture Event of Default and (b) in respect
of which the company shall not have taken reasonable steps to cure, or (ii) the
company shall have given notice of its election of an Extension Period as
provided in the Indenture with respect to the Junior Subordinated Debentures and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing, or (iii) while the Junior Subordinated Debentures
are held by FW Capital I, the company shall be in default with respect to its
payment of any obligation under the Guarantee, then 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 or (2) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the company (including other
Junior Subordinated Debt) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the company of the debt securities of any subsidiary of the
company if such guarantee ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock, (b) any declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee and (d) purchases
69
<PAGE> 71
of common stock related to rights under any of the company's benefit plans for
its directors, officers or employees).
SUBORDINATION
In the Indenture, the company has agreed that any Junior Subordinated
Debentures will be subordinate and junior in right of payment to all Senior and
Subordinated Debt to the extent provided in the Indenture. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshaling of
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceeding of the company, the
holders of Senior and Subordinated Debt will first be entitled to receive
payment in full of principal of (and premium, if any) and interest, if any, on
such Senior and Subordinated Debt before the holders of Junior Subordinated
Debentures will be entitled to receive or retain any payment in respect of the
principal of or interest, if any, on the Junior Subordinated Debentures.
In the event of the acceleration of the maturity of any Junior
Subordinated Debentures, the holders of all Senior and Subordinated Debt
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 Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the principal of or
interest, if any, on the Junior Subordinated Debentures; provided, however,
that holders of subordinated debt shall not be entitled to receive payment of
any such amounts to the extent that such subordinated debt is by its terms
subordinated to trade creditors.
No payments on account of principal or interest, if any, in respect of
the Junior Subordinated Debentures may be made if there shall have occurred and
be continuing a default in any payment with respect to Senior and Subordinated
Debt or an event of default with respect to any Senior and Subordinated Debt
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be 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) 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.
"Senior and Subordinated Debt" means 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 Junior Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Junior Subordinated
Debentures; provided, however, that Senior and Subordinated Debt shall 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
70
<PAGE> 72
the extent that payments made to the holders of such Debt by the holders of the
Junior 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,
(v) the Guarantee, and (vi) any other debt securities issued pursuant to the
Indenture.
The Indenture places no limitation on the amount of additional Senior
and Subordinated Debt that may be incurred by the company. The company expects
from time to time to incur additional indebtedness constituting Senior and
Subordinated Debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debentures will be represented by global
certificates registered in the name of the Depositary or its nominee ("Global
Subordinated Debenture"). Beneficial interests in the Junior Subordinated
Debentures will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary. Except as described below, Junior
Subordinated Debentures in certificated form will not be issued in exchange for
the global certificates. See "Book-Entry Issuance."
Unless and until a Global Subordinated Debenture is exchanged in whole
or in part for the individual Junior Subordinated Debentures represented
thereby, it may not be transferred except as a whole by the Depositary for such
Global Subordinated Debenture to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary or
by the Depositary or any nominee to a successor Depositary or any nominee of
such successor.
A global security shall be exchangeable for Junior Subordinated
Debentures registered in the names of persons other than the Depositary or its
nominee only if (i) the Depositary notifies the company that it is unwilling or
unable to continue as a depositary for such global security and no successor
depositary shall have been appointed, or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act at a time when the
Depositary is required to be so registered to act as such depositary or (ii) the
company in its sole discretion determines that such global security shall be so
exchangeable. Any global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in such
names as the Depositary shall direct. It is expected that such instructions will
be based upon directions received by the Depositary from its Participants with
respect to ownership of beneficial interests in such global security. In the
event that Junior Subordinated Debentures are issued in definitive form, such
Junior Subordinated Debentures will be in denominations of $10 and integral
multiples thereof and may be transferred or exchanged at the offices described
below.
Payments on Junior Subordinated Debentures represented by a global
security will be made to the Depositary, as the depositary for the Junior
Subordinated Debentures. In the event Junior Subordinated Debentures are issued
in definitive form, principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate office of
the Indenture Trustee, or at the offices of any paying agent or transfer agent
appointed by the company, provided that payment of interest may be made at the
option of the company by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Junior Subordinated Debentures
are issued in certificated form, the record dates for payment of interest will
be the first day of the month in which such payment is to be made. For a
description of the Depositary and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance."
71
<PAGE> 73
The company will appoint the Indenture Trustee as securities registrar
under the Indenture (the "Securities Registrar"). Junior Subordinated Debentures
may be presented for exchange as provided above, and may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the Securities Registrar. The company may at any time rescind the designation of
any such registrar or approve a change in the location through which any such
registrar acts, provided that the company maintains a registrar in the place of
payment. The company may at any time designate additional registrars with
respect to the Junior Subordinated Debentures.
In the event of any redemption, neither the company nor the Indenture
Trustee shall be required to issue or register the transfer of Junior
Subordinated Debentures during a period beginning at the opening of business 15
days before the day of selection for redemption of Junior Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption.
GLOBAL SUBORDINATED DEBENTURE
Upon the issuance of the Global Subordinated Debenture, and the deposit
of such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for such Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by such
Global Subordinated Debenture to Participants. Ownership of beneficial interests
in a Global Subordinated Debenture will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial interests
in such Global Subordinated Debenture will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Subordinated Debenture.
So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of such Global Subordinated Debenture, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by such Global
Subordinated Debenture for all purposes under the Indenture governing such
Junior Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders thereof
under the Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing such Junior Subordinated Debentures. None of the company, the
Indenture Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The company expects that the Depositary or its nominee, upon receipt of
any payment of principal or interest in respect of the Global Subordinated
Debenture representing the Junior Subordinated Debentures, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on
72
<PAGE> 74
the records of such Depositary or its nominee. The company also expects that
payments by Participants to owners of beneficial interests in such Global
Subordinated Debenture held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
If the Depositary is at any time unwilling, unable or ineligible to
continue as depositary and a successor depositary is not appointed by the
company within 90 days, the company will issue individual Junior Subordinated
Debentures in exchange for the Global Subordinated Debenture. In addition, the
company may at any time and in its sole discretion, determine not to have the
Junior Subordinated Debentures represented by one or more Global Subordinated
Debentures and, in such event, will issue individual Junior Subordinated
Debentures in exchange for the Global Subordinated Debenture. Further, if the
company so specifies with respect to the Junior Subordinated Debentures, an
owner of a beneficial interest in a Global Subordinated Debenture representing
the Junior Subordinated Debentures may, on terms acceptable to the company, the
Indenture Trustee and the Depositary for such Global Subordinated Debenture,
receive individual Junior Subordinated Debentures in exchange for such
beneficial interests. In any such instance, an owner of a beneficial interest in
a Global Subordinated Debenture will be entitled to physical delivery of
individual Junior Subordinated Debentures equal in principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures so issued will be issued
in denominations, unless otherwise specified by the company, of $10 and integral
multiples thereof.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Junior Subordinated
Debentures will be made at the office of the Indenture Trustee, except that at
the option of the company payment of any interest may be made, except in the
case of a Global Subordinated Debenture, by check mailed to the address of the
person entitled thereto as such address shall appear in the securities register.
Payment of any interest on Junior Subordinated Debentures will be made to the
person in whose name such Junior Subordinated Debenture is registered at the
close of business on the regular record date for such interest. The company may
at any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however, the company will at all times be required to maintain a
Paying Agent in each place of payment for the Junior Subordinated Debentures.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the company in trust, for the payment of the principal of or
interest on the Junior Subordinated Debentures and remaining unclaimed for two
years after such principal or interest has become due and payable shall, at the
request of the company, be repaid to the company and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to the company for payment thereof.
MODIFICATION OF INDENTURE
From time to time the company and the Indenture Trustee may, without
the consent of the holders of the Junior Subordinated Debentures, amend, waive
or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interests of the holders of the
Junior Subordinated Debentures or the Preferred Securities so long as they
remain outstanding) and qualifying, or maintaining the qualification of, the
Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the outstanding
Junior Subordinated Debentures, to modify the Indenture in a manner affecting
the rights of the holders of the Junior Subordinated Debentures; provided, that,
no such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debenture, (i) change the stated maturity of the Junior
Subordinated Debentures or extend the time of payment of interest thereon
73
<PAGE> 75
(except as described under "Description of Junior Subordinated
Debentures--General" and "--Option to Extend Interest Payment Period"), or
reduce the principal amount thereof or the rate of interest thereon, or (ii)
reduce the percentage of principal amount of Junior Subordinated Debentures,
the holders of which are required to consent to any such modification of the
Indenture, provided that so long as any of the Preferred Securities remain
outstanding, no such modification may be made that adversely affects the
holders of such Preferred Securities in any material respect, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the
aggregate Liquidation Amount of the Preferred Securities unless and until the
principal of the Junior Subordinated Debentures and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures, when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption by declaration or otherwise; or
(iii) failure by the company to observe or perform in any material
respect certain other covenants contained in the Indenture for 90 days after
written notice to the company from the Indenture Trustee or to the company and
the Indenture Trustee by the holders of at least 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
company, including the voluntary commencement of bankruptcy proceedings, entry
of an order for relief against the company in a bankruptcy proceeding,
appointment of a custodian over substantially all of the company's property, a
general assignment for the benefit of creditors, or a court order for
liquidation of the company.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee.
Should the holders of the Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Preferred Securities shall have such right. In case a
Debenture Event of Default shall occur and be continuing, the Property Trustee
will have the right to declare the principal of and the interest on such Junior
Subordinated Debentures, and any other amounts payable under the Indenture, to
be forthwith due and payable and to enforce its other rights as a creditor with
respect to such Junior Subordinated Debentures.
The company is required to file annually with the Indenture Trustee a
certificate as to whether the company is in compliance with all the conditions
and covenants applicable to it under the Indenture.
74
<PAGE> 76
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, 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 Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder ("Direct Action"). If the right to bring a
Direct Action is removed, FW Capital I may become subject to the reporting
obligations under the Exchange Act. The company shall have 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 would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the company shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the company or convey, transfer or lease its
properties and assets substantially as an entirety to the company, unless (i) in
case the company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the company's obligations on the Junior 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, shall have occurred and be continuing; and (iii)
certain other conditions as prescribed in the Indenture are met.
The provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the company that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their stated maturity within one year, and the company deposits or causes to
be deposited with the Indenture Trustee, in trust, funds for the purpose and in
an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Indenture
Trustee for cancellation, for the principal and interest to the date of the
deposit or to the stated maturity, as the case may be, then the Indenture will
cease to be of further effect (except as to the company's obligations to pay all
other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the company will be
deemed to have satisfied and discharged the Indenture.
75
<PAGE> 77
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of Colorado.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
COVENANTS OF THE COMPANY
The company will covenant in the Indenture, as to the Junior
Subordinated Debentures, that if and so long as (i) FW Capital I is the holder
of all such Junior Subordinated Debentures, (ii) a Tax Event in respect of FW
Capital I has occurred and is continuing and (iii) the company has elected, and
has not revoked such election, to pay Additional Sums (as defined under
"Description of the Preferred Securities - Redemption") in respect of the
Preferred Securities, the company will pay to FW Capital I such Additional Sums.
The company will also covenant, as to the Junior Subordinated Debentures, (i) to
maintain directly or indirectly 100% ownership of the Common Securities of FW
Capital I to which Junior Subordinated Debentures have been issued, provided
that certain successors which are permitted pursuant to the Indenture may
succeed to the company's ownership of the Common Securities, (ii) to use its
reasonable efforts to cause FW Capital I (a) to remain a business trust, except
in connection with a distribution of Junior Subordinated Debentures to the
holders of the Preferred Securities in liquidation of FW Capital I, (b) the
redemption of all of the Trust Securities or (c) in connection with certain
mergers, consolidations, or amalgamations permitted by the Trust Agreement, and
(iii) to use its reasonable efforts to cause each Holder of Trust Securities to
be treated as owning an individual beneficial interest in the Junior
Subordinated Debentures.
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the
Preferred Securities and the Junior Subordinated Debentures. The Preferred
Securities and the Junior Subordinated Debentures will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will be
issued for the Preferred Securities and the Junior Subordinated Debentures and
will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary holds securities that its Participants deposit with
the Depositary. The Depositary also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants" include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its Direct Participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers,
76
<PAGE> 78
Inc. Access to the Depositary system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with Direct Participants, either directly or
indirectly ("Indirect Participants"). The rules applicable to the Depositary
and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Preferred Securities or Junior Subordinated
Debentures on the Depositary's records. The ownership interest of each actual
purchaser of each preferred security and each Junior Subordinated Debenture
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the or Junior Subordinated
Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the
Preferred Securities or Junior Subordinated Debentures; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Preferred Securities or Junior Subordinated Debentures are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners and the
voting rights of Direct Participants, Indirect Participants and Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder
of the Preferred Securities or Junior Subordinated Debentures. If less than all
of the Preferred Securities or the Junior Subordinated Debentures are being
redeemed, the Depositary will determine by lot or pro rata the amount of the
Preferred Securities of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or the Junior Subordinated Debentures, in those instances in which a
vote is required, neither the Depositary nor Cede & Co. will itself consent or
vote with respect to Preferred Securities or Junior Subordinated Debentures.
Under its usual procedures, the Depositary would mail an omnibus proxy (the
"Omnibus Proxy") to the relevant Trustee as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts such Preferred Securities or Junior
Subordinated Debentures are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to the Depositary.
The Depositary's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of the
Depositary, the relevant Trustee, FW Capital I or the company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the
77
<PAGE> 79
relevant Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Trustee and the company. In the event that a successor securities depositary is
not obtained, definitive Preferred Securities or Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The company, at its option,
may decide to discontinue use of the system of book-entry transfers through the
Depositary (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through the Depositary. In any
such event, definitive certificates for such Preferred Securities or Junior
Subordinated Debentures will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that FW Capital I
and the company believe to be accurate, but FW Capital I and the company assume
no responsibility for the accuracy thereof. Neither FW Capital I nor the company
has any responsibility for the performance by the Depositary or its Participants
of their respective obligations as described herein or under the rules and
procedures governing their respective operations.
DESCRIPTION OF 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.
Wilmington Trust Company will act as trustee under the Guarantee (the "Guarantee
Trustee") for the purposes of compliance with the Trust Indenture Act, and the
Guarantee will be qualified under the Trust Indenture Act. The following summary
of certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the Guarantee, including the definitions therein of certain terms, and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this prospectus forms a part. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Preferred
Securities.
GENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis
of all of FW Capital I's obligations under the Preferred Securities, but will
apply only to the extent that FW Capital I has funds sufficient to make such
payments, and is not a guarantee of collection.
The company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that FW Capital I 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 FW Capital I
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that FW Capital I has funds on hand available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption to the extent that FW Capital I has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of FW Capital I (unless the Junior
Subordinated Debentures are distributed to holders of the Preferred Securities),
the lesser of (a) the Liquidation Distribution and (b) the amount of assets of
FW Capital I remaining available for distribution to holders of Preferred
Securities. The company's obligation
78
<PAGE> 80
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
FW Capital I to pay such amounts to such holders.
If the company does not make interest payments on the Junior
Subordinated Debentures held by FW Capital I, FW Capital I will not be able to
pay Distributions on the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior and Subordinated Debt of the company. See "Status of the
Guarantee" below. Because the company is a holding company, the right of the
company to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the company may
itself be recognized as a creditor of that subsidiary. Accordingly, the
company's obligations under the Guarantee 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. Except as
otherwise described herein, the Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of the company, including Senior and
Subordinated Debt whether under the Indenture, any other indenture that the
company may enter into in the future, or otherwise.
The company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed on a subordinated
basis all of FW Capital I's obligations under 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 on a subordinated basis of all of FW
Capital I's obligations under the Preferred Securities. See "Relationship Among
the Preferred Securities, the Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the company
and will rank subordinate and junior in right of payment to all Senior and
Subordinated Debt in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection. 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 or entity. The Guarantee
will be held for the benefit of the holders of the Preferred Securities. The
Guarantee does not place a limitation on the amount of additional Senior and
Subordinated Debt that may be incurred by the company. The company expects from
time to time to incur additional indebtedness constituting Senior and
Subordinated Debt.
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 such outstanding Preferred Securities. See "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the company and shall inure to the
benefit of the holders of the Preferred Securities then outstanding.
79
<PAGE> 81
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 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 FW Capital I,
the Guarantee Trustee or any other person or entity.
The company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether the company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the company in performance of the Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Guarantee and, after default with respect to the Guarantee, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by
the Guarantee at the request of any holder of the Preferred Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the Preferred Securities, upon
full payment of the amounts payable upon liquidation of FW Capital I or upon
distribution of Junior 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 the Preferred Securities or the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
laws of the State of Colorado.
THE EXPENSE AGREEMENT
Pursuant to the Agreement as to Expenses and Liabilities entered into
by the company under the Trust Agreement (the "Expense Agreement"), the company
will irrevocably and unconditionally guarantee to each person or entity to whom
FW Capital I becomes indebted or liable, the full payment of any costs,
expenses or liabilities of FW Capital I, other than obligations of FW Capital I
to pay to the holders of the Preferred Securities or other similar interests in
FW Capital I of the amounts due such holders pursuant to the terms of the
Preferred Securities or such other similar interests, as the case may be.
80
<PAGE> 82
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent FW Capital I has funds available for the payment of
such Distributions) are irrevocably guaranteed by the company as and to the
extent set forth under "Description of Guarantee." Taken together, the
company's obligations under the Junior 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 payments 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 those documents that has the effect of providing a
full, irrevocable and unconditional guarantee on a subordinated basis of FW
Capital I's obligations under the Preferred Securities. If and to the extent
that the company does not make payments on the Junior Subordinated Debentures,
FW Capital I will not pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of Distributions when FW
Capital I does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of the Preferred Securities is to institute a
legal proceeding directly against the company for enforcement of payment of
such Distributions to such holder. The obligations of the company under the
Guarantee are subordinate and junior in right of payment to all Senior and
Subordinated Debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due
on the Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Preferred Securities,
primarily because: (i) the aggregate principal amount of the Junior
Subordinated Debentures will be equal to the sum of the aggregate Liquidation
Amount of the Preferred Securities and Common Securities; (ii) the interest
rate and interest and other payment dates on the Junior Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the Preferred Securities; (iii) the company shall pay for all and any costs,
expenses and liabilities of FW Capital I except FW Capital I's obligations to
holders of Preferred Securities; and (iv) the Trust Agreement further provides
that FW Capital I will not engage in any activity that is not consistent with
the limited purposes of FW Capital I.
Notwithstanding anything to the contrary in the Indenture, the company
has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent the company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES UNDER THE GUARANTEE
A holder of any the Preferred Securities may institute a legal
proceeding directly against the company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, FW Capital I or any other person or entity,
A default or event of default under any Senior and Subordinated Debt
would not constitute an Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior and Subordinated Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Junior Subordinated Debentures until such Senior and
Subordinated Debt has been paid in full or any payment default thereunder has
been cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default.
81
<PAGE> 83
LIMITED PURPOSE OF FW CAPITAL I
The Preferred Securities evidence a beneficial interest in FW Capital
I, and FW Capital I exists for the sole purpose of issuing the Trust Securities
and investing the proceeds thereof in the Junior Subordinated Debentures. A
principal difference between the rights of a holder of the Preferred Securities
and a holder of a Junior Subordinated Debenture is that a holder of a Junior
Subordinated Debenture is entitled to receive from the company the principal
amount of and interest accrued on Junior Subordinated Debentures held, while a
holder of the Preferred Securities is entitled to receive Distributions from FW
Capital I (or from the company under the Guarantee) if and to the extent FW
Capital I has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of FW Capital I involving the liquidation of the Junior
Subordinated Debentures, the holders of Preferred Securities will be entitled
to receive, out of assets held by FW Capital I, 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 Junior Subordinated
Debentures, would be a subordinated creditor of the company, subordinated in
right of payment to all Senior and Subordinated Debt as set forth in the
Indenture, but entitled to receive payment in full of principal and interest,
before any stockholders of the company receive payments or distributions.
Since the company is the guarantor under the Guarantee and has agreed to pay
for all costs, expenses and liabilities of FW Capital I (other than FW Capital
I's obligations to the holders of its Preferred Securities), the positions of a
holder of the Preferred Securities and a holder of Junior Subordinated
Debentures relative to other creditors and to stockholders of the company in
the event of liquidation or bankruptcy of the company are expected to be
substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Jones & Keller, P.C., counsel to the company
("Counsel"), the following summary accurately describes the material United
States federal income tax consequences that may be relevant to the purchase,
ownership and disposition of Preferred Securities. Unless otherwise stated,
this summary deals only with Preferred Securities held as capital assets by
United States Persons (defined below) who purchase the Preferred Securities
upon original issuance at the first price at which a substantial amount of
Preferred Securities were sold. As used herein, a "United States Person" means
a person that is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of its source, or (iv) any trust if a court within the United States
is able to exercise primary supervision over the administration of such trust
and one or more United States persons have the authority to control all
substantial decisions of such trust. The tax treatment of holders may vary
depending on their particular situation. This summary does not address all the
tax consequences that may be relevant to a particular holder or to holders who
may be subject to special tax treatment, such as banks, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, foreign investors, persons that
will hold the Preferred Securities as part of a position in a "straddle" or as
part of a "hedging" or other integrated transaction, or persons whose
functional currency is not the United States dollar. In addition, this summary
does not include any description of any alternative minimum tax consequences or
other collateral tax consequences under United States federal income tax laws,
or the tax laws of any state, local or foreign government that may be
applicable to a holder of Preferred Securities. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. Any such change could cause the tax
consequences
82
<PAGE> 84
to vary substantially from the consequences described below, possibly adversely
affecting an owner of Preferred Securities.
The following discussion does not discuss the tax consequences that
might be relevant to persons that are not United States Persons ("non-United
States Persons"). Non-United States Persons should consult their own tax
advisors as to the specific United States federal income tax consequences of
the purchase, ownership and disposition of Preferred Securities.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Counsel are not binding on the Internal
Revenue Service ("Service") or the courts, either of which could take a
contrary position. Moreover, no rulings have been or will be sought from the
Service with respect to the transactions described herein. Accordingly, there
can be no assurance that the Service will not challenge the opinions expressed
herein or that a court would not sustain such a challenge. It is therefore
possible that the federal income tax treatment of the purchase, ownership and
disposition of Preferred Securities may differ from the treatment described
below.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION
OF THE PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE
"DESCRIPTION OF PREFERRED SECURITIES -- REDEMPTION."
CLASSIFICATION OF FW CAPITAL I
In connection with the issuance of the Preferred Securities, Counsel
is of the opinion that, under current law and assuming compliance with the
terms of the Trust Agreement, and based on certain facts and assumptions
contained in such opinion, FW Capital I will be classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes. As a result, each beneficial owner of the Preferred
Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Junior Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the interest income or original issue discount that is paid or accrued
on the Junior Subordinated Debentures. See "-- Interest Income and Original
Issue Discount." No amount included in income with respect to the Preferred
Securities will be eligible for the dividends received deduction.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The company intends to take the position, based on the advice of Jones
& Keller, P.C., that the Junior 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 Junior Subordinated Debentures as indebtedness and the Preferred
Securities as evidence of an indirect beneficial ownership interest in the
Junior Subordinated Debentures. No assurance can be given, however, that such
position of the company will not be challenged by the Service or, if
challenged, that such a challenge will not be successful. The remainder of
this discussion assumes that the Junior Subordinated Debentures will be
classified for United States federal income tax purposes as indebtedness of the
company. See "Risk Factors -- Possible Tax Law Changes Affecting Preferred
Securities."
83
<PAGE> 85
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be included in income by a Securityholder at the time
such interest income is paid or accrued in accordance with such
Securityholder's regular method of tax accounting.
The company believes that, under the applicable Treasury regulations,
the Junior Subordinated Debentures will not be considered to have been issued
with original issue discount ("OID") within the meaning of Section 1273(a) of
the Code. This is because under the Treasury regulations a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The company
believes, and will take the position, that the likelihood of exercising its
option to defer payments of interest is "remote." If the company's option to
defer payments of interest on the Junior Subordinated Debentures were not
treated as remote, the Junior Subordinated Debentures would be considered
issued with OID at original issuance which would, in general, accrue over the
term of the Junior Subordinated Debentures as described below.
If the company exercises its right to defer payments of interest on
the Junior Subordinated Debentures, the Junior Subordinated Debentures will
become OID instruments, and the amount of OID would be equal to the aggregate
of all future payments of interest on the Junior Subordinated Debentures. In
such event, all Securityholders would be required to accrue the OID on the
Junior Subordinated Debentures on a daily basis during the Extension Period,
even though the company would not pay such interest until the end of the
Extension Period, and even though some Securityholders may use the cash method
of tax accounting. Moreover, thereafter the Junior Subordinated Debentures
would be taxed as OID instruments for as long as they remained outstanding.
Thus, even after the end of the Extension Period, all Securityholders would be
required to continue to include the OID on the Junior Subordinated Debentures
in income on a daily economic accrual basis, regardless of their method of tax
accounting and in advance of receipt of the cash attributable to such interest
income. In such event, actual cash payments of interest on the Junior
Subordinated Debentures would not be reported separately as taxable income.
The Treasury regulations described above have not yet been addressed
in any rulings or other definitive interpretations by the Service, and it is
possible that the Service could take a contrary position. If the Service were
to assert successfully that the stated interest on the Junior Subordinated
Debentures was OID regardless of whether the company exercises its right to
defer payments of interest on such debentures, all Securityholders would be
required to include such stated interest in income on a daily economic accrual
basis as described above.
The company does not anticipate that Additional Sums (as defined in
the Indenture) will be paid. However, if Additional Sums are paid, they will
be taxable to the Securityholder as ordinary income (generally as interest
income).
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by FW Capital I of the Junior
Subordinated Debentures as described under the caption "Description of
Preferred Securities -- Liquidation and Distribution Upon Termination" will be
non-taxable and will result in the Securityholder receiving directly its pro
rata share of the Junior Subordinated Debentures previously held indirectly
through FW Capital I, with a holding period and aggregate tax basis equal to
the holding period and aggregate tax basis such Securityholder had in its
Preferred Securities before such distribution. If, however, the liquidation of
FW Capital I were to occur because FW Capital I is subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Debentures as a result of a Tax Event or otherwise, the
distribution of Junior Subordinated Debentures to Securityholders by FW Capital
I would be a taxable event to FW Capital I and each Securityholder, and a
Securityholder would recognize gain or loss as if the Securityholder had sold
or exchanged its Preferred Securities for the Junior Subordinated Debentures it
84
<PAGE> 86
received upon the liquidation of FW Capital I. See "-- Sales or Redemption of
Preferred Securities." A Securityholder would recognize interest income in
respect of Junior Subordinated Debentures received from FW Capital I in the
manner described above under "-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of
Preferred Securities (including a redemption for cash) in an amount equal to
the difference between the amount realized (which for this purpose, will
exclude amounts attributable to accrued interest or OID not previously included
in income) and the Securityholder's adjusted tax basis in the Preferred
Securities sold or so redeemed. A Securityholder's adjusted tax basis will be
its initial purchase price increased by any accrued OID previously included in
such Securityholder's gross income to the date of disposition and decreased by
payments (other than stated interest on the Junior Subordinated Debentures that
does not constitute OID) received on the Preferred Securities. Any gain or
loss on the sale, exchange or retirement of the Preferred Securities generally
will be treated as capital gain or loss. In general, amounts attributable to
accrued interest with respect to a Securityholder's pro rata share of the
Junior Subordinated Debentures not previously included in income, will be
taxable as ordinary income. However, there is conflicting authority regarding
the need for inclusion of interest income for a cash basis taxpayer if the
Preferred Securities are sold for less than their principal amount. The
Internal Revenue Service Restructuring and Reform Act of 1998 provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Capital gain or loss is long-term if the holding period
for the asset is more than one year, and is short-term if the holding period
for the asset is one year or less. Capital gains realized from assets held for
one year or less are taxed at the same rates as ordinary income. Subject to
certain limitations, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
Should the company exercise its option to defer any payment of
interest on the Junior Subordinated Debentures, the Preferred Securities may
trade at a price that does not fully reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debentures. In the
event of such a deferral, a Securityholder that disposes of its Preferred
Securities between record dates for payments of Distributions (and consequently
does not receive a Distribution from FW Capital I for the period prior to such
disposition) will nevertheless be required to include in income accrued OID on
the Junior Subordinated Debentures through the date of disposition and will add
such amount to its adjusted tax basis in its Preferred Securities. Such a
Securityholder will recognize a capital loss on the disposition of its
Preferred Securities to the extent the selling price (which may not fully
reflect the value of accrued but unpaid OID) is less than the Securityholder's
adjusted tax basis in the Preferred Securities (which will include accrued but
unpaid OID that has been included in income). As stated previously, subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid or OID accrued, if any, on the Junior
Subordinated Debentures, beneficial ownership of which is reflected in the
Preferred Securities held of record by United States Persons (other than
corporations and other exempt Securityholders), will be reported to the
Service. Generally, income on the Preferred Securities will be reported to
Securityholders on Form 1099, which form should be mailed to Securityholders by
January 31 following each calendar year. Proposed regulations, if adopted,
could alter the information reporting requirements which must be made to both
the Internal Revenue Service and the Securityholders. "Backup" withholding at
a rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury regulations, certifies that
such
85
<PAGE> 87
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions. Any amounts withheld from a Securityholder
under the backup withholding rules will be allowed as a refund or a credit
against such Securityholder's United States federal income tax liability,
provided the required information is furnished to the Service. Payment of the
proceeds from the disposition of Preferred Securities to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the Securityholder or beneficial owner establishes an
exemption from information reporting and backup withholding.
POSSIBLE TAX LAW CHANGES AFFECTING PREFERRED SECURITIES
Certain legislative proposals were made in 1996 and 1997, which if
enacted, could have adversely affected the ability of the company to deduct
interest paid on the Junior Subordinated Debentures. Although these proposals
were not enacted, there can be no assurance that future legislative proposals
or final legislation will not affect the ability of the company to deduct
interest on the Junior Subordinated Debentures or otherwise adversely affect
the tax treatment of the transaction described herein. Such a change could
give rise to a Tax Event, which may permit the company to cause a redemption of
the Trust Preferred Securities. See "Risk Factors -- Possible Tax Law Changes
Affecting Preferred Securities," "Description of the Preferred
Securities--Redemption" and "Description of Junior Subordinated Debentures --
Redemption."
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.
However, the company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of Section 3(14) of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans (generally, those Plans maintained or sponsored by, or
contributed to by, the company or an affiliate, or with respect to which the
company or an affiliate is a fiduciary, or Plans for which the company or an
affiliate provide services). The acquisition and ownership of Preferred
Securities by an individual retirement arrangement or other Plan 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, which could give rise to the imposition of substantial taxes 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 and/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 Plans or 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.
86
<PAGE> 88
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement
among the company and the Underwriters listed on the table below for whom Howe
Barnes Investments, Inc. is acting as representative, the Underwriters have
severally agreed to purchase from FW Capital I an aggregate of 2,000,000
Preferred Securities in the amounts set forth below opposite their respective
names.
<TABLE>
<CAPTION>
Underwriters Number of Preferred Securities
------------ ------------------------------
<S> <C>
Howe Barnes Investments, Inc. . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . 2,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to accept and pay for all of the Preferred
Securities, if any are taken.
FW Capital I has granted to the Underwriters an option, exercisable
within 30 days after the date of this prospectus to purchase up to an
additional 300,000 Preferred Securities at the same price per Preferred
Security to be paid by the Underwriters for the other Preferred Securities
offered hereby. If the Underwriters purchase any of such additional Preferred
Securities pursuant to this option, each Underwriter will be committed to
purchase such additional shares in approximately the same proportion as set
forth in the table above. The Underwriters may exercise the option only for
the purpose of covering over-allotments, if any, made in connection with the
distribution of the Preferred Securities offered hereby.
The table below shows the price and proceeds on a per security and
aggregate basis. The proceeds to be received by FW Capital I as shown in the
table below do not reflect estimated expenses of $350,000 payable by the
company.
<TABLE>
<CAPTION>
Per Preferred Security Total
---------------------- -----------------
<S> <C> <C>
Price to Investors $10 $20,000,000
Proceeds to company $10 $20,000,000
</TABLE>
All of the proceeds to FW Capital I will be used to purchase the
Junior Subordinated Debentures from the company. The company has agreed to pay
the Underwriters $_____ per Preferred Security, or a total of $_______, as
compensation for arranging the investment in the Junior Subordinated
Debentures. Should the Underwriters exercise the over-allotment option, an
aggregate of $_____ will be paid to the Underwriters for arranging the
investment in the Junior Subordinated Debentures.
The Underwriters propose to offer the Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this prospectus, and in part to certain securities dealers at
such price less a concession not in excess of $____ per Preferred Security.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $___ per Preferred Security to certain brokers and dealers. After
the Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The company and FW Capital I have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
In connection with the offering, the Underwriters may purchase and
sell the Preferred Securities in the open market. These transactions may
include over-allotment and stabilizing transactions and
87
<PAGE> 89
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for
the purpose of preventing or retarding a decline in the market price of the
Preferred Securities; and syndicate short positions involve the sale by the
Underwriters of a greater number of securities than they are required to
purchase from the company in the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if such Preferred Securities are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Securities, which may be higher than the price that might otherwise prevail in
the open market. These activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the- counter market or
otherwise.
The Underwriters have advised FW Capital I that they do not intend to
confirm any sales of Preferred Securities to any discretionary accounts. In
connection with the offer and sale of the Preferred Securities, the
Underwriters will comply with Rule 2810 under the NASD Conduct Rules.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and the
formation of FW Capital I will be passed upon by Richards, Layton & Finger,
P.A., Wilmington, Delaware, special Delaware counsel to the company and FW
Capital I. The validity of the guarantee and the Junior Subordinated
Debentures will be passed upon for the company by Jones & Keller, P.C., Denver,
Colorado, counsel to the company. Certain legal matters in connection with
this offering will be passed upon for the Underwriters by Chapman and Cutler,
Chicago, Illinois. Jones & Keller, P.C. and Chapman and Cutler will rely on
the opinions of Richards, Layton & Finger, P.A., as to matters of Delaware law.
Certain matters relating to United States federal income tax considerations
will be passed upon for the company by Jones & Keller, P.C.
EXPERTS
The consolidated financial statements of the company in this
prospectus as of December 31, 1997 and for each of the years in the two-year
period ended December 31, 1997 have been included herein in reliance upon the
report of Clifton Gunderson L.L.C., independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
88
<PAGE> 90
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditor's Report . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Income . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity . . . . . . . . . F-5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . F-7
</TABLE>
F-1
<PAGE> 91
INDEPENDENT AUDITOR'S REPORT
Board of Directors
First Western Corp.
Northglenn, Colorado
We have audited the consolidated balance sheet of First Western Corp. and
Subsidiaries as of December 31, 1997, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the two years in the
period ended December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Western Corp.
and Subsidiaries as of December 31, 1997, and the results of their operations
and their cash flows for each of the two years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
CLIFTON GUNDERSON L.L.C.
Denver, Colorado
October 23,1998
F-2
<PAGE> 92
FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1998 (Unaudited) and December 31, 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 14,449 $ 10,427
Interest bearing deposits in other banks 6 149
Federal funds sold 12,480 11,310
Investment securities:
Available-for-sale, at fair value 35,110 15,470
Held-to-maturity, at amortized cost, fair value of $9,344, in 1998
and $13,125, in 1997 9,241 13,042
--------- ---------
Total investment securities 44,351 28,512
Loans held for sale 5,312 4,182
Gross loans receivable: 249,104 166,059
Less: unearned loan fees (757) (432)
allowance for loan losses (1,592) (1,321)
--------- ---------
Net loans receivable 246,755 164,306
Premises and equipment, net 7,408 5,117
Other assets 4,732 3,597
--------- ---------
TOTAL ASSETS $ 335,493 $ 227,600
========= =========
LIABILITIES
Deposits:
Demand non-interest bearing $ 40,132 $ 32,238
Demand interest bearing 12,887 12,558
Time 241,025 155,498
--------- ---------
Total deposits 294,044 200,294
Securities sold under agreements to repurchase 2,588 2,072
Note payable 5,800 3,380
Federal Home Loan Bank borrowings 8,500 1,000
Other liabilities 4,031 3,283
--------- ---------
Total liabilities 314,963 210,029
Minority interest in consolidated subsidiaries 662 660
STOCKHOLDERS' EQUITY
Common stock $1.00 par value; 500,000 shares authorized; 140 140
140,000 shares issued and outstanding
Surplus 697 697
Retained earnings 19,038 16,085
Unrealized loss on securities available-for-sale, net of taxes (7) (11)
--------- ---------
Total stockholders' equity 19,868 16,911
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 335,493 $ 227,600
========= =========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
F-3
<PAGE> 93
FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Nine months ended September 30, 1998 and 1997 (Unaudited)
and years ended December 31, 1997 and 1996
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Nine months ended September 30, Years ended December 31,
1998 1997 1997 1996
------------------------------- ------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 16,808 $ 9,593 $ 13,860 $ 5,686
Taxable investment securities 775 908 1,173 1,273
Nontaxable investment securities 369 328 447 506
Dividends on investment securities 56 33 47 19
Federal funds sold 693 412 690 417
Other interest 14 34 46 7
--------- --------- --------- ---------
Total interest income 18,715 11,308 16,263 7,908
--------- --------- --------- ---------
Interest expense:
Deposits 8,185 4,749 6,986 2,959
Federal funds purchased 8 42 45 11
Securities sold under agreements to repurchase 75 87 113 150
Note payable 182 49 113 --
Federal Home Loan Bank borrowings 305 182 224 --
--------- --------- --------- ---------
Total interest expense 8,755 5,109 7,481 3,120
--------- --------- --------- ---------
Net interest income 9,960 6,199 8,782 4,788
Provision for loan losses 180 110 140 15
--------- --------- --------- ---------
Net interest income after provision for loan losses 9,780 6,089 8,642 4,773
--------- --------- --------- ---------
Other income:
Fees for other customer services 726 555 761 627
Net gains from sale of loans 716 475 625 232
Commissions and fees from brokerage activities 133 13 29 15
Investment securities transactions, net (3) -- -- 196
Other operating income 409 162 293 181
--------- --------- --------- ---------
Total other income 1,981 1,205 1,708 1,251
--------- --------- --------- ---------
Other expenses:
Salaries and employee benefits 3,545 2,172 3,296 1,950
Net occupancy expense of premises 1,107 652 989 464
Purchased services 906 627 842 327
Office supplies 233 126 182 137
Minority interest in income of consolidated subsidiaries 93 86 101 184
Other operating expenses 1,159 751 1,134 687
--------- --------- --------- ---------
Total other expenses 7,043 4,414 6,544 3,749
--------- --------- --------- ---------
Income before income taxes 4,718 2,880 3,806 2,275
Income tax expense 1,765 919 1,309 705
--------- --------- --------- ---------
NET INCOME $ 2,953 $ 1,961 $ 2,497 $ 1,570
========= ========= ========= =========
Income per share:
Basic and diluted earnings per share $ 21.09 $ 14.89 $ 18.67 $ 12.56
========= ========= ========= =========
Weighted average shares outstanding 140,000 131,667 133,750 125,000
========= ========= ========= =========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
F-4
<PAGE> 94
FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine months ended September 30, 1998 (Unaudited)
and years ended December 31, 1997 and 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Unrealized
gain (loss) on
securities
available-for-
Retained sale, net of
Common Stock Surplus Earnings taxes Total
------------ -------- -------- --------------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ 125 $ 80 $ 12,018 $ 59 $ 12,282
Net income for the year -- -- 1,570 -- 1,570
Net change in unrealized gain (loss) -- -- -- (103) (103)
-------- -------- -------- -------- --------
Balance at December 31, 1996 125 80 13,588 (44) 13,749
Net income for the year -- -- 2,497 -- 2,497
Issuance of 15,000 shares in exchange for minority
shares of Firstate Bank of Colorado 15 617 -- -- 632
Net change in unrealized gain (loss) -- -- -- 33 33
-------- -------- -------- -------- --------
Balance at December 31, 1997 140 697 16,085 (11) 16,911
Net income for the period (unaudited) -- -- 2,953 -- 2,953
Net change in unrealized gain (loss) (unaudited) -- -- -- 4 4
-------- -------- -------- -------- --------
Balance at September 30, 1998 (unaudited) $ 140 $ 697 $ 19,038 $ (7) $ 19,868
======== ======== ======== ======== ========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
F-5
<PAGE> 95
FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1998 and 1997 (Unaudited)
and years ended December 31, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30, Years ended December 31,
1998 1997 1997 1996
------------------------ -------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,953 $ 1,961 $ 2,497 $ 1,570
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses 180 110 140 15
Provision for losses on other real estate owned -- 76 76 --
Depreciation and amortization 493 256 426 189
Net gains from sale of loans (716) (475) (625) (232)
Proceeds from sale of loans held for sale 40,660 18,649 27,225 7,471
Origination of loans held for sale (41,074) (19,442) (29,800) (8,221)
Investment securities transactions, net 3 -- -- (196)
Increase in minority interest in
consolidated subsidiaries 2 8 23 89
Changes in deferrals and accruals:
Other assets (545) (435) (449) 107
Other liabilities 740 3,631 3,375 247
--------- --------- --------- ---------
Net cash provided by operating activities 2,696 4,339 2,888 1,039
--------- --------- --------- ---------
Cash flows from investing activities:
Net (increase) decrease in federal funds sold (1,170) (9,395) 1,710 (6,805)
Net (increase) decrease in interest bearing deposits
in other banks 143 -- (50) 5
Purchase of investment securities available-for-sale (90,942) (315) (1,643) (2,224)
Purchase of investment securities held-to-maturity -- (1,543) (765) (2,892)
Proceeds from sale of investment securities
available-for-sale 30,154 250 250 3,065
Proceeds from maturities/paydowns of investment securities 44,956 5,136 6,681 5,065
Net increase in loans (83,267) (48,932) (67,275) (23,112)
Expenditures for bank premises and equipment (2,734) (2,388) (2,466) (252)
Proceeds from sale of real estate owned -- 256 256 --
Purchase of savings bank, net of $3,897 of cash
and due from banks acquired -- 154 154 --
--------- --------- --------- ---------
Net cash used in investing activities (102,860) (56,777) (63,148) (27,150)
--------- --------- --------- ---------
Cash flows from financing activities:
Net increase in deposits 93,750 59,621 71,936 23,347
Net increase (decrease) in securities sold under
agreements to repurchase 516 (5,144) (5,941) 3,963
Advances from Federal Home Loan Bank 7,500 -- 1,000 --
Payments on Federal Home Loan Bank advances -- (1,800) (6,800) --
Proceeds from note payable 3,850 2,400 3,380 --
Payments on note payable (1,430) -- -- --
--------- --------- --------- ---------
Net cash provided by financing activities 104,186 55,077 63,575 27,310
--------- --------- --------- ---------
Net increase in cash and due from banks 4,022 2,639 3,315 1,199
Cash and due from banks at beginning of period 10,427 7,112 7,112 5,913
--------- --------- --------- ---------
Cash and due from banks at end of period $ 14,449 $ 9,751 $ 10,427 $ 7,112
========= ========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 8,631 $ 3,593 $ 5,028 $ 2,978
Income taxes 1,444 752 1,137 671
Noncash transactions:
Conversion of loans to other real estate owned 761 197 197 10
Issuance of shares for minority interest of
Firstate Bank of Colorado -- 632 632 --
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
F-6
<PAGE> 96
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
First Western Corp. (the Company) was incorporated for the purposes of
owning shares of and acting as the parent holding company for Firstate Bank
(the Nebraska Bank) and Firstate Bank of Colorado (the Colorado Bank)
(collectively referred to as the "Banks"). The Banks provide a full range of
banking services to individual and corporate customers principally in the
west and central Nebraska and the Denver-northern Colorado areas. A majority
of the Company's loans are related to real estate and commercial activities.
The Company is subject to competition from other financial institutions for
loans and deposit accounts. The Company and the Banks are also subject to
regulation by certain governmental agencies and undergo periodic
examinations by those regulatory agencies.
BASIS OF FINANCIAL STATEMENT PRESENTATION AND USE OF ESTIMATES
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual results could
differ significantly from those estimates.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance for
loan losses. In connection with the determination of the allowance for loan
losses, management obtains independent appraisals for significant properties
and assesses estimated future cash flows from borrowers' operations and the
liquidation of loan collateral.
Management believes that the allowance for loan losses is adequate.
While management uses available information to recognize loan losses,
changes in economic conditions may necessitate revisions in future years. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Banks' allowance for loan
losses. Such agencies may require the Banks to recognize additional losses
based on their judgments about information available to them at the time of
their examination.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its respective subsidiaries. The Company currently owns 100% of
Firstate Bank of Colorado (having acquired the minority interest in a May,
1997 exchange of stock,) and First Mortgage Bancorp. The Company also owns
91.4% of Firstate Bank (Kimball, Nebraska). All material intercompany
transactions and balances have been eliminated in consolidation.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The unaudited interim financial statements have been prepared in
conformity with generally accepted accounting principles and include all
adjustments which are, in the opinion of management, normal and recurring in
nature and necessary to a fair presentation of the interim periods
presented. Results of operations for the nine months ended September 30,
1998 are not necessarily indicative of the results to be expected for the
full year.
CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company has defined
cash equivalents as those amounts included in the balance sheet caption
"Cash and Due from Banks".
F-7
<PAGE> 97
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
INVESTMENT SECURITIES
Management determines the classification of debt securities at the time
of purchase. Debt securities are classified as held-to-maturity when the
Banks have the positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at amortized cost.
Debt securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are stated at fair value,
with the unrealized gains and losses, net of tax, reported as a component of
stockholders' equity.
The amortized cost of debt securities classified as held-to-maturity or
available-for-sale is adjusted for amortization of premiums and accretion of
discounts to maturity or, in the case of mortgage-backed securities, over
the estimated life of the security. Such amortization and accretion is
included as an adjustment to interest income from investments. Realized
gains and losses and declines in value judged to be other-than-temporary are
included in investment securities transactions, net in the Statements of
Income . The cost of securities sold is based on the specific identification
method.
LOANS HELD FOR SALE
Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or estimated market value in the aggregate.
Net unrealized losses are recognized through a valuation allowance by
charges to income.
LOANS RECEIVABLE
Loans receivable that management has the intent and ability to hold for
the foreseeable future or until maturity or pay-off are reported at their
outstanding principal adjusted for any charge-offs, the allowance for loan
losses, and any deferred fees or costs on originated loans.
Loan fees which represent adjustments to interest yield are deferred
and amortized over the estimated life of the loan. Most of the loans
originated by the Company are short-term.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.
Renegotiated loans are those loans on which concessions in terms have
been granted because of a borrower's financial difficulty. Interest is
generally accrued on such loans in accordance with the new terms.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the
principal is unlikely or, with respect to consumer installment loans,
according to an established delinquency schedule. The allowance is an amount
that management believes will be adequate to absorb losses inherent in
existing loans and commitments to extend credit, based on evaluations of the
collectibility and prior loss experience of loans and commitments to extend
credit. The evaluations take into consideration such factors as changes in
the nature and volume of the portfolio, overall portfolio quality, loan
concentrations, specific problem loans and commitments, and current and
anticipated economic conditions that may affect the borrowers' ability to
pay.
F-8
<PAGE> 98
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Impaired loans are measured based on the present value of expected
future cash flows discounted at the loan's original effective interest rate.
As a practical expedient, impairment may be measured based on the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. When the measure of the impaired loan is less than the
recorded investment in the loan, the impairment is recorded through a
valuation allowance.
PREMISES AND EQUIPMENT
Premises, including leasehold improvements, and equipment are stated at
cost. Depreciation is provided for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service lives,
principally on the straight-line method.
FORECLOSED REAL ESTATE
Real estate properties acquired through, or in lieu of, foreclosure are
to be sold and are initially recorded at fair value at the date of
foreclosure establishing a new cost basis. After foreclosure, management
periodically performs valuations and the real estate is carried at the lower
of carrying amount or fair value less cost to sell. Revenue and expense from
operations and changes in the valuation allowance are included in other
operating expenses.
INCOME TAXES
Provisions for income taxes are based on taxes payable or refundable
for the current year (after exclusion of non-taxable income such as interest
on state and municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and pretax financial income
and between the tax bases of assets and liabilities and their reported
amounts in the consolidated financial statements. Deferred tax assets and
liabilities are included in the consolidated financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled.
As changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
PER SHARE COMPUTATIONS
Basic earnings per share is based on the weighted average number of
common shares outstanding during each period presented. The Company had no
dilutive-potential common shares and therefore basic earnings per share
equals diluted earnings per share.
OPERATING SEGMENTS
The Company adopted Financial Accounting Standards Board Statement No.
131, Disclosures About Segments of an Enterprise and Related Information,
(SFAS No. 131) effective January 1, 1998. This statement establishes
standards for reporting information about segments in annual and interim
financial statements. SFAS No. 131 introduces a new model for segment
reporting called "management approach". The management approach is based on
the way the chief operating decision-maker organizes segments within a
company for making operating decisions and assessing performance. Reportable
segments are based on products and services, geography, legal structure,
management structure and any other in which management disaggregates a
company. Based on the "management approach" model, the Company has
determined that its business is comprised of a single operating segment and
that SFAS No. 131 therefore has no impact on its consolidated financial
statements.
F-9
<PAGE> 99
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 2 - ACQUISITIONS
In February 1997, the Company acquired 100% of First Northern Holdings,
L.T.D. and the remaining 18.5% minority interest not owned by it in First
Northern Savings Bank, Greeley, Colorado. The purchase price, approximately
$3.8 million, was paid in cash. The excess purchase price over the fair
value of the net assets acquired (goodwill) of $966,000 is being amortized
over a fifteen-year period from the date of purchase. Both locations of
First Northern Savings Bank immediately became branches of Firstate Bank of
Colorado and added approximately $33 million in assets to the Company.
In May 1997, the Company exchanged 15,000 shares of its common stock
for the 18.2% of Firstate Bank of Colorado that it did not own. Such
minority shares were owned by individuals already affiliated with the
Company. No goodwill was recognized in connection with this transaction.
Following their respective acquisition dates, the Company included the
results of operations of both of the above indicated acquisitions in its
Consolidated Statements of Income.
NOTE 3 - INVESTMENT SECURITIES
At December 31, 1997, the Company had securities with the following
amortized cost and estimated fair values (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Securities held-to-maturity Cost Gains Losses Fair Value
- --------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury & agency securities $ 5,807 $ -- $ 21 $ 5,786
State and political securities 7,235 104 -- 7,339
------- ------- ------- -------
$13,042 $ 104 $ 21 $13,125
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Securities held-to-maturity Cost Gains Losses Fair Value
- --------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury & agency securities $12,028 $ -- $ 42 $11,986
State and political securities 1,587 24 -- 1,611
Other bonds 200 1 -- 201
Equity securities 1,672 -- -- 1,672
------- ------- ------- -------
$15,487 $ 25 $ 42 $15,470
======= ======= ======= =======
</TABLE>
The amortized cost and estimated fair value of debt securities at
December 31, 1997, by contractual maturity, are shown below (in thousands).
Actual maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations without call or prepayment
penalties.
F-10
<PAGE> 100
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
Held-to-maturity Available-for-sale
---------------------- -----------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 4,316 $ 4,303 $ 8,800 $ 8,779
Due after one year through five years 3,668 3,679 3,570 3,562
Due after five years through ten years 2,520 2,543 645 640
Due after ten years 2,538 2,600 800 817
------- ------- ------- -------
$13,042 $13,125 $13,815 $13,798
======= ======= ======= =======
</TABLE>
Securities included in the accompanying Consolidated Balance Sheet at
December 31, 1997 with an amortized cost of $14,071,044 are pledged as
collateral for public deposits and for other purposes as required or
permitted by law.
Gross realized losses of $37 on sales of securities available-for-sale
were recognized in 1997. Gross realized gains and gross realized losses on
sales of securities available-for-sale respectively were $212,107 and
$15,747 in 1996.
NOTE 4 - LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
The components of the loan portfolio are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Commercial, financial and agricultural $ 50,070 $ 41,500
Real estate construction 68,624 37,235
Real estate mortgage 120,850 79,499
Installment loans to individuals 9,393 7,693
Other 167 132
--------- ---------
249,104 166,059
Less unearned loan fees (757) (432)
Less allowance for loan losses (1,592) (1,321)
--------- ---------
$ 246,755 $ 164,306
========= =========
</TABLE>
The Company had no foreign loans outstanding at December 31, 1997 or
September 30, 1998 (unaudited.)
F-11
<PAGE> 101
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Transactions in the allowance for loan losses are as follows (in
thousands):
<TABLE>
<CAPTION>
Nine months
ended
September 30, Years Ended December 31,
1998 1997 1996
------------- ------- -------
(Unaudited)
<S> <C> <C> <C>
Balance at beginning of period $ 1,321 $ 851 $ 767
Provision for loan losses 180 140 15
Acquisition of savings bank allowance -- 277 --
Recoveries 159 111 91
Loans charged off (68) (58) (22)
------- ------- -------
Balance at end of period $ 1,592 $ 1,321 $ 851
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997 1996
------------- ------- -------
(Unaudited)
(In thousands)
<S> <C> <C> <C>
Outstanding principal balance of accruing
loans having payments delinquent more
than ninety days $279 $744 $ 22
Loans on which the accrual of interest has
been discontinued or reduced $414 $484 $ 93
</TABLE>
The average investments in impaired loans were $ 329,000 and $ 89,000
during the years ended December 31, 1997 and 1996, respectively. Interest
income on impaired loans recognized for cash payments received during these
years was not significant.
The Company is not committed to lend funds to debtors whose loans have
been modified.
NOTE 5 - PREMISES AND EQUIPMENT
At December 31, 1997, premises and equipment consisted of the following
(in thousands):
<TABLE>
<CAPTION>
Accumulated
depreciation
and Net
Cost amortization amount
------ ------------ -------
<S> <C> <C> <C>
Buildings & improvements $3,593 $ 422 $3,171
Leasehold Improvements 446 89 357
Equipment 2,378 1,633 745
Land 844 -- 844
====== ====== ======
$7,261 $2,144 $5,117
====== ====== ======
</TABLE>
F-12
<PAGE> 102
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 6 - DEPOSITS
At September 30, 1998 (unaudited), the scheduled remaining maturities
of time deposits with stated maturities are as follows (in thousands):
<TABLE>
<CAPTION>
Deposit Category
Under $100,000 $100,000 or more Total
---------------- ---------------- --------
<S> <C> <C> <C>
Three months or less $ 22,526 $ 8,885 $ 31,411
Over three months through 12 months 81,081 22,125 103,206
Over one year through three years 57,973 11,539 69,512
Over three years 119 -- 119
No stated maturity 36,777
-------- -------- --------
$161,699 $ 42,549 $241,025
======== ======== ========
</TABLE>
At December 31, 1997, the scheduled remaining maturities of time
deposits with stated maturities were as follows (in thousands):
<TABLE>
<CAPTION>
Deposit Category
Under $100,000 $100,000 or more Total
---------------- ---------------- --------
<S> <C> <C> <C>
Three months or less $ 23,311 $ 9,356 $ 32,667
Over three months through 12 months 48,190 12,388 60,578
Over one year through three years 30,225 3,615 33,840
Over three years 239 -- 239
No stated maturity 28,174
-------- -------- --------
$101,965 $ 25,359 $155,498
======== ======== ========
</TABLE>
NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The securities underlying the repurchase agreements are held by an
agent of the Banks and are under the control of the Banks.
Information concerning the repurchase agreements is summarized as
follows:
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, 1998 December 31, 1997
------------------ -----------------
(Unaudited)
(in thousands)
<S> <C> <C>
Average daily balance $ 2,274 $ 2,387
Period end balance 2,588 2,072
Average interest rate 4.44% 4.72%
</TABLE>
F-13
<PAGE> 103
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - NOTE PAYABLE
The Company maintained a revolving line of credit with the National
Bank of Commerce in the amount of $5,000,000 at December 31, 1997. The
outstanding balance at December 31, 1997 was $3,380,000. The repayment
schedule requires semi-annual interest payments with the principal due at
maturity, (June 30, 2002.) Interest is calculated at 250 basis points over
the like "CMT" treasury (7.91 percent at December 31, 1997.) The note is
secured by 91 percent of the outstanding common stock of Firstate Bank
(Kimball, Nebraska) and is guaranteed by a principal stockholder of the
Company. The loan agreement also calls for the Company to maintain the
following minimum financial ratios:
Maintain or cause each of its bank subsidiaries to maintain:
(i) for Company, not less than a 6.5% tangible equity
capital-to-asset ratio and
(ii) for each of its subsidiary banks, not less than a 6.0% tangible
equity capital-to-asset ratio
On February 25, 1998 the revolving line of credit was modified to
increase the maximum principal balance from $5,000,000 to $10,000,000 and to
add as collateral 100% of the outstanding common stock of Firstate Bank of
Colorado. At September 30, 1998, the Company has $5,800,000 (unaudited)
borrowed against this line of credit.
NOTE 9 - FEDERAL HOME LOAN BANK BORROWINGS
As of December 31, 1997, the Banks had available lines of credit
totaling $9,731,000 with the Federal Home Loan Bank (FHLB) secured by FHLB
capital stock and qualifying first mortgage residential loans. The advances
outstanding at December 31, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
Amount Maturity date Interest Rate
- ------ ----------------- -------------
<S> <C> <C>
$1,000 November 23, 1998 5.90%
</TABLE>
The advances outstanding at September 30, 1998 (unaudited) are as
follows (in thousands):
<TABLE>
<CAPTION>
Amount Maturity date Interest Rate
- ------ ----------------- -------------
<S> <C> <C>
$1,000 November 23, 1998 5.52%
2,500 February 2, 2001 5.74%
5,000 January 31, 2003 5.81%
- ------
$8,500
======
</TABLE>
NOTE 10 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONTINGENT
LIABILITIES
The Banks are parties to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of their
customers. These financial instruments include commitments to extend credit
and stand-by letters of credit.
F-14
<PAGE> 104
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Those instruments involve, to a varying degree, elements of credit risk
in excess of the amount recognized in the consolidated balance sheet. The
contract amounts of those instruments reflect the extent of involvement the
Banks have in particular classes of financial instruments.
The Banks' exposure to credit loss in the event of non-performance by
the other party to the financial instrument for commitments to extend credit
and stand-by letters of credit is represented by the contractual notional
amount of those instruments. The Banks use the same credit policies in
making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Financial instruments whose contract amounts represent credit risk are
as follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Commitments to extend credit $ 86,346 $ 56,010
Stand-by letters of credit $ 3,161 $ 2,139
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments may
expire without being drawn upon or be participated to other financial
institutions, the total commitment amounts do not necessarily represent
future cash requirements. The Banks evaluate each customer's
credit-worthiness on a case-by-case basis.
The amount of collateral obtained if deemed necessary by the Banks upon
extension of credit is based on management's credit evaluation. Collateral
held varies, but may include accounts receivable, inventory, property, plant
and equipment and income-producing commercial properties.
Stand-by letters of credit are conditional commitments issued by the
Banks to guarantee the performance of a customer to a third party. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers.
In the normal course of business there are outstanding various
contingent liabilities, such as claims and legal actions, which are not
reflected in the accompanying consolidated financial statements. Management
believes, based on consultation with counsel, that liabilities arising from
these proceedings, if any, will not be material to the Company's
consolidated financial position.
F-15
<PAGE> 105
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 11 - LEASE COMMITMENTS
Firstate Bank of Colorado leases various office and ATM space under
noncancelable operating leases. Future minimum lease payments under these
leases, expiring at various dates through 2008, are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ending December 31,
<S> <C>
1998 $ 384
1999 495
2000 435
2001 419
2002 432
Thereafter 2,017
-------
$ 4,182
=======
</TABLE>
Total lease expense for all operating leases was $241,866 and $169,359
for the years ended December 31, 1997 and 1996, respectively.
NOTE 12 - INCOME TAXES
Deferred tax assets and liabilities are recorded based on the
differences between financial statement and tax basis of assets and
liabilities and the tax rates in effect when these differences are expected
to reverse.
Temporary differences in the recognition of revenue and expense for tax
and financial reporting purposes resulted in net deferred tax assets as of
December 31, 1997 as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax assets
Provision for loan losses $ 13
Depreciation 133
Unrealized loss on securities available-for-sale 6
-----
Total deferred tax assets $ 152
Deferred tax liabilities --
-----
Net deferred tax assets $ 152
=====
</TABLE>
F-16
<PAGE> 106
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The effective income tax rate varies from the statutory federal rate
because of several factors, the most significant being nontaxable interest
income earned on obligations of state and political subdivisions. The
following table reconciles the Company's effective tax rate to the statutory
federal rate (dollars in thousands).
<TABLE>
<CAPTION>
1997 1996
Amount Percent Amount Percent
------- ------- ------ -------
<S> <C> <C> <C> <C>
Tax expense at statutory rate $ 1,294 34.0% $ 773 34.0%
Increase (decrease) in taxes due to:
Tax exempt municipal interest (142) -3.7% (167) -7.3%
State tax 81 2.1% 17 0.7%
Other 76 2.0% 82 3.6%
------- ---- ------ ----
Total income tax expense $ 1,309 34.4% $ 705 31.0%
======= ==== ====== ====
</TABLE>
The consolidated provision for income taxes consisted of the following
for the years ended December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Current tax provision:
Federal $1,191 $ 679
State 123 26
------ ------
1,314 705
Deferred federal (5) --
------ ------
$1,309 $ 705
====== ======
</TABLE>
NOTE 13 - RELATED PARTIES
The Company has sold loan participations to related parties
(stockholders, directors, family members, businesses related through common
ownership). At December 31, 1997 and 1996, the participations sold to
related parties were approximately $1.4 million and $1.1 million,
respectively. As of September 30, 1998, participations sold to related
parties were approximately $1.0 million (unaudited).
In accordance with the terms of management agreements, the Company and
each of its three subsidiaries purchase services from Western Management
Corporation, a corporation owned by a principal stockholder. Such agreements
are annually renewable and are on terms that the Company believes would be
similar to those obtained from an unaffiliated party. The purchased services
include strategic planning, tax planning and budgeting, business
development, marketing, etc.
F-17
<PAGE> 107
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Amounts expensed by the Company and its subsidiaries are as follows (in
thousands):
<TABLE>
<CAPTION>
Nine months ended Years ended December 31,
September 30, 1998 1997 1996
- ------------------ ---------- ---------
(Unaudited)
<S> <C> <C>
$ 74.5 $ 167.0 $ 145.5
</TABLE>
In 1995, the Vice Chairman of the Company sold assets of a mortgage
company to the Company for a purchase price of $100,000 to be paid out of
future profits generated by mortgage operations relating to those assets.
Through September 30, 1998, payments under the terms of this agreement
totaled $82,000 (unaudited). The Company believes that this transaction was
made on terms similar to those that would have been obtained with an
unaffiliated party.
The Company had no loans outstanding to related parties at December
31, 1997 or September 30, 1998 (unaudited).
NOTE 14 - EMPLOYEE BENEFITS
The Company participates in a multiple-employer 401(k) profit sharing
plan involving other companies of its primary shareholder. The plan is
available for all Company personnel who have been employed for one year.
Employees may contribute up to 10% of their compensation with the Company's
discretionary matching within the limits defined for a 401(k) Plan.
Contributions in 1997 and 1996 were $19,341 and $15,817, respectively.
NOTE 15 - COMPREHENSIVE INCOME
The Financial Accounting Standards Board (FASB) has issued SFAS
No. 130, "Reporting Comprehensive Income", which is effective for the fiscal
years beginning after December 15, 1997. This statement establishes
standards for reporting and display of comprehensive income and its
components (revenue, expenses, gains and losses) in a full set of general
purpose financial statements. This statement requires that all items that
are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. The Company adopted
SFAS No. 130 on January 1, 1998, and all annual required disclosures will be
included beginning with the year end 1998 consolidated financial statements.
F-18
<PAGE> 108
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Company's comprehensive income is as follows (in thousands):
<TABLE>
<CAPTION>
Nine months ended Years Ended December 31,
September 30, 1998 1997 1996
(Unaudited)
------------------ ---------- ---------
<S> <C> <C> <C>
Net income $ 2,953 $ 2,497 $ 1,570
Other comprehensive income, net of tax-unrealized
gain (loss) on available-for-sale securities
Unrealized gain (loss) arising during the period 4 33 (103)
Less: reclassification adjustment for net gain (loss)
realized in net income -- -- --
------- ------- -------
Subtotal 4 33 (103)
------- ------- -------
Comprehensive income $ 2,957 $ 2,530 $ 1,467
======= ======= =======
</TABLE>
NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summary presents the methodologies and assumptions used
to estimate the fair value of the Company's financial instruments. The
Company operates as a going concern and, except for its investment
portfolio, no active market exists for its financial instruments. Much of
the information used to determine fair value is highly subjective and
judgmental in nature and, therefore, the results may not be precise. The
subjective factors include, among other things, estimates of cash flows,
risk characteristics, credit quality and interest rates, all of which are
subject to change. Since the fair value is estimated as of the balance sheet
date, the amounts which will actually be realized or paid upon settlement or
maturity of the various financial instruments could be significantly
different.
CASH AND DUE FROM BANKS, INTEREST BEARING DEPOSITS IN BANKS AND FEDERAL FUNDS
SOLD
For these short-term instruments, the carrying amount approximates
fair value.
INVESTMENTS
For investment securities, fair value equals quoted market price, if
available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities. The carrying
amount of accrued interest receivable approximates its fair value.
LOANS
The fair value of fixed rate loans is estimated by discounting the
future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining
maturities. For variable rate loans, the carrying amount is a reasonable
estimate of fair value. For loans where collection of principal is in doubt,
an allowance for losses has been estimated. Loans with similar
characteristics were aggregated for purposes of the calculations. The
carrying amount of accrued interest receivable approximates its fair value.
DEPOSITS
The fair value of demand deposits, savings accounts, NOW accounts, and
certain money market deposits is the amount payable on demand at the
reporting date (i.e. their carrying amount). The fair value of fixed
maturity time deposits is estimated using a discounted cash flow calculation
that applies the rates currently offered for deposits of similar remaining
maturities. The carrying amount of accrued interest payable approximates its
fair value.
F-19
<PAGE> 109
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
For securities sold under agreements to repurchase, the carrying amount
is a reasonable estimate of fair value.
LONG-TERM BORROWINGS
The fair value of long-term borrowings is estimated by discounting the
future cash flows using the current rate at which a similar loan could be
financed.
COMMITMENTS TO EXTEND CREDIT AND STAND-BY LETTERS OF CREDIT
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present credit worthiness of the
counterparts. For fixed-rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed rates.
The fair value of letters of credit is based on fees currently charged for
similar agreements or on the estimated cost to terminate them or otherwise
settle the obligations with the counterparts at the reporting date.
The following table presents estimated fair values of the Company's
financial instruments as of December 31, 1997:
<TABLE>
<CAPTION>
Carrying Estimated
Amount Fair Value
-------- ----------
(In thousands)
<S> <C> <C>
FINANCIAL ASSETS
Cash and due from banks $ 10,427 $ 10,427
Interest bearing deposits in other banks 149 149
Federal funds sold 11,310 11,310
Investment securities:
Securities held-to-maturity 13,042 13,125
Securities available-for-sale 15,470 15,470
Loans held for sale 4,182 4,182
Net loans 164,306 164,051
Accrued interest receivable 2,272 2,272
FINANCIAL LIABILITIES
Deposits:
Non-interest bearing 32,238 32,238
Interest bearing 168,056 168,186
Securities sold under agreements to repurchase 2,072 2,072
Note payable 3,380 3,380
Federal Home Loan Bank borrowing 1,000 1,000
Accrued interest payable 2,770 2,770
UNRECOGNIZED FINANCIAL INSTRUMENTS
Commitments to extend credit 56,010 56,010
Stand-by letters of credit 2,139 2,139
</TABLE>
F-20
<PAGE> 110
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 17 - STOCKHOLDERS' EQUITY AND REGULATORY RESTRICTIONS
The payment of dividends to the Company by the subsidiaries is subject
to various state and federal regulatory limitations.
The Company and the Banks are subject to various regulatory capital
requirements administered by the federal and state banking agencies. Failure
to meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary, actions by regulators that, if
undertaken, could have a direct material effect on the Company's
consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Banks must meet
specific capital guidelines that involve quantitative measures of the bank's
assets, liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Company and the Banks' capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Banks to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December
31, 1997 and as of September 30, 1998 (unaudited), that the Banks meet all
minimum capital adequacy requirements to which they are subject.
As of December 31, 1997, the most recent notification, the Federal
Deposit Insurance Corporation categorized the Nebraska Bank as well
capitalized, and the Colorado Bank as adequately capitalized, under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, a bank must maintain minimum total risk-based, Tier 1
risk-based, and Tier 1 leverage ratios as set forth in the table. There are
no conditions or events since that notification that management believes
have changed either Bank's category.
As of December 31, 1997
(In thousands of dollars)
<TABLE>
<CAPTION>
To be well
For capital capitalized under
adequacy prompt corrective
Actual purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
>or = >or =
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
Total capital to risk weighted assets $ 17,997 9.74% $14,788 8% $ 18,485 10%
Tier 1 capital to risk weighted assets 16,676 9.02% 7,394 4% 11,091 6%
Tier 1 capital to average assets 16,676 7.53% 8,861 4% 11,076 5%
COLORADO BANK
Total capital to risk weighted assets $ 12,472 9.10% $10,959 8% $ 13,698 10%
Tier 1 capital to risk weighted assets 11,855 8.65% 5,479 4% 8,219 6%
Tier 1 capital to average assets 11,855 7.66% 6,191 4% 7,739 5%
NEBRASKA BANK
Total capital to risk weighted assets $ 8,278 17.55% $ 3,773 8% $ 4,716 10%
Tier 1 capital to risk weighted assets 7,687 16.30% 1,887 4% 2,830 6%
Tier 1 capital to average assets 7,687 11.65% 2,640 4% 3,300 5%
</TABLE>
F-21
<PAGE> 111
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Unaudited actual consolidated capital ratios for the Company as of
September 30, 1998 are as follows:
<TABLE>
<S> <C>
Total capital to risk weighted assets 7.80%
Tier 1 capital to risk weighted assets 7.22%
Tier 1 capital to average assets 6.20%
</TABLE>
The Federal Reserve Board requires banks to maintain reserve balances
composed of cash on hand and balances maintained at the Federal Reserve
Bank. These reserve balances are based primarily on deposit levels and
totaled approximately $708,000 at December 31, 1997.
NOTE 18 - CONDENSED FINANCIAL STATEMENTS - PARENT COMPANY ONLY
The following presents condensed parent company only financial
statements for First Western Corp. (in thousands).
Condensed Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 10 $ 16
Investment in subsidiaries 26,309 20,523
Other assets 1,385 1,173
-------- --------
TOTAL ASSETS $ 27,704 $ 21,712
======== ========
Liabilities
- -----------
Note payable $ 5,800 $ 3,380
Income taxes payable 1,583 1,309
Accounts payable and accrued liabilities 453 112
-------- --------
Total liabilities 7,836 4,801
-------- --------
Stockholders' equity
- --------------------
Common stock 140 140
Surplus 697 697
Retained earnings 19,038 16,085
Unrealized loss on securities available-for-sale, net of taxes (7) (11)
-------- --------
Total stockholders' equity 19,868 16,911
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,704 $ 21,712
======== ========
</TABLE>
F-22
<PAGE> 112
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Condensed Statements of Income
<TABLE>
<CAPTION>
Nine months ended Years ended
September 30, December 31,
1998 1997 1997 1996
-------------------- -------------------
(Unaudited)
<S> <C> <C> <C> <C>
Income
Dividends received from subsidiaries $ 996 $ 891 $ 937 $ 890
Interest -- 5 5 26
------- ------- ------- -------
Total income 996 896 942 916
------- ------- ------- -------
Expense
Purchased services 219 219 294 2
Interest 182 48 113 --
Other 9 9 27 26
------- ------- ------- -------
Total expenses 410 276 434 28
------- ------- ------- -------
Income before income tax (benefit) and equity
in undistributed income of subsidiaries 586 620 508 888
Income tax (benefit) (170) 2 2 (10)
------- ------- ------- -------
Income before equity in undistributed income of subsidiaries 756 618 506 898
Equity in undistributed income of subsidiaries 2,197 1,343 1,991 672
------- ------- ------- -------
Net income $ 2,953 $ 1,961 $ 2,497 $ 1,570
======= ======= ======= =======
</TABLE>
F-23
<PAGE> 113
FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Condensed Statement of Cash Flows
<TABLE>
<CAPTION>
Nine months ended Years ended
September 30, December 31,
1998 1997 1997 1996
-------------------- -------------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,953 $ 1,961 $ 2,497 $ 1,570
Adjustments to reconcile net income to net cash
provided by operating activities
Equity in undistributed income of subsidiaries (2,197) (1,343) (1,991) (672)
Changes in deferrals and accruals:
Other assets (212) (117) (501) (208)
Income taxes payable 274 209 639 205
Accounts payable and accrued liabilities 341 1,247 112 --
------- ------- ------- -------
Net cash provided by operating activities 1,159 1,957 756 895
------- ------- ------- -------
Cash flows from investing activities:
Capital injection into subsidiary bank (3,750) (3,738) (3,737) --
Purchase of savings bank -- (3,743) (3,743) --
Net cash transfers with First Mortgage Bancorp 165 2,660 2,799 (1,146)
------- ------- ------- -------
Net cash used in investing activities (3,585) (4,821) (4,681) (1,146)
------- ------- ------- -------
Cash flows from financing activities:
Proceeds from note payable 3,850 2,400 3,380 --
Payments on note payable (1,430) -- -- --
------- ------- ------- -------
Net cash provided by financing activities 2,420 2,400 3,380 --
------- ------- ------- -------
Net (decrease) increase in cash (6) (464) (545) (251)
Cash at beginning of period 16 561 561 812
------- ------- ------- -------
Cash at end of period $ 10 $ 97 $ 16 $ 561
======= ======= ======= =======
</TABLE>
F-24
<PAGE> 114
We have not authorized any dealer, salesperson or any other person to
give any information or to make any representations other than those contained
in this prospectus authorized by us and referred to in this prospectus, and, if
given or made, you must not rely upon such information and representations.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities in any state to any person to whom it is unlawful
to make an offer. We do not intend the delivery of this prospectus or any sale
made to create the implication that there has been no change in our affairs
since the date of the information provided in this prospectus. However, if
there is any material change in our affairs during the time when a copy of this
prospectus is required to be delivered, we will amend or supplement this
prospectus to reflect the change.
<PAGE> 115
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
CAUTIONARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ACCOUNTING TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . 19
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
DESCRIPTION OF THE PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
BOOK-ENTRY ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
DESCRIPTION OF GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE . . . . . . . . . . 81
CERTAIN FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
DEALER PROSPECTUS DELIVERY OBLIGATIONS. UNTIL _________, 1999, ALL
DEALERS THAT EFFECT TRANSACTIONS IN THE PREFERRED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
<PAGE> 116
2,000,000 PREFERRED SECURITIES
FW CAPITAL I
% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED, AS DESCRIBED HEREIN, BY
FIRST WESTERN CORP.
LOGO
------------------------------
P R O S P E C T U S
------------------------------
HOWE BARNES INVESTMENTS, INC.
, 1998
<PAGE> 117
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Directors, officers, employees, trustees and agents of the company and
FW Capital I may be entitled to benefit from the indemnification provisions
contained in the Nebraska Business Corporation Act (the "Nebraska Act") and the
company's Articles of Incorporation. In addition, certain provisions in the
Articles of Incorporation limit the liability of directors of the company. The
general effect of these provisions is summarized below:
The Nebraska Act permits a corporation organized in its state to
indemnify any person who was or is a party or is threatened to be made a party
to any suit, action or other proceeding by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, trust or other enterprise. Such
indemnification may be against expenses, including attorneys' fees, judgments,
fines and other amounts in connection with such proceeding. Indemnification is
available if such person acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, or,
with respect to any criminal action or proceeding, such person had no
reasonable cause to believe that the conduct was unlawful. Unless a court of
competent jurisdiction otherwise orders, indemnification is not available in
connection with a proceeding by or in the right of the corporation if the
person is adjudged liable to the corporation or derived an improper personal or
financial benefit. A corporation is required to indemnify a director or
officer who is wholly successful in the defense of any such proceeding.
Expenses (including attorneys' fees) incurred by a director, officer, employee
or agent of the corporation in defending any such proceeding may be advanced by
the corporation before the final disposition if such person furnishes an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to be indemnified. Before a corporation may indemnify
or advance expenses to a person under these provisions, the board of directors
(excluding any directors who are parties to such a proceeding), independent
legal counsel appointed by the board of directors, or the shareholders must
provide authorization. A corporation may purchase insurance against any
liability of individuals for whom the corporation may provide such
indemnification. Any provisions in a corporation's articles of incorporation,
bylaws, resolutions or in a contract (except an insurance policy) for such
indemnification are valid only to the extent not inconsistent with the Nebraska
Act.
Article XII of the company's Articles of Incorporation states that the
company shall have all powers to indemnify and make advances in connection with
such indemnification to its directors, officers and others to the fullest
extent of the law. This Article also states that the board of directors is
authorized, without shareholder action, to exercise the company's powers of
indemnification, whether by provision in the bylaws or otherwise.
Nebraska law provides that a director is not liable for any action
taken as long as such director discharged his or her duties (i) in good faith,
(ii) with the care of an ordinarily prudent person in a like position under the
same circumstances, and (iii) in a manner he or she reasonably believes to be
in the best interest of the company.
II-1
<PAGE> 118
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 5,560
NASD fee 2,500
American Stock Exchange fees 15,000
Trustees' fees and expenses 25,000
Legal fees and expenses 125,000
Accounting fees and expenses 80,000
Printing expenses 85,000
Miscellaneous expenses 11,940
--------
Total $350,000
========
</TABLE>
All of the above items except the registration fee are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In May 1997, the Registrant issued 15,000 shares of its common stock
to Joel H. Wiens, Michael J. Nelson, Max W. Revell, Timothy D. Wiens and as
custodian for two of his minor children in exchange for an 18.2% equity
interest in Firstate Bank of Colorado, which is now a wholly-owned subsidiary
of the Registrant. All of the purchasers were directors and/or officers of the
company. No underwriters were involved in the transaction and the issuance was
made in a transaction exempt from the requirements of Section 5 of the
Securities Act of 1933 pursuant to Section 4(2) thereof. Reliance on the
exemption was based on the fact that the transaction was limited to the
Registrant and its executive officers and directors.
ITEM 27. EXHIBITS
(a) Exhibits
Exhibit No. Description
1.1 Form of Underwriting Agreement (1).
3.1 Articles of Incorporation of First Western Corp. , as amended
and restated (1).
3.2 Amended Bylaws of First Western Corp. (1).
4.1 Form of Subordinated Indenture dated _______, 1998 to be
entered into between the Registrant and Wilmington Trust
Company, as Indenture Trustee (1).
4.2 Form of Junior Subordinated Debenture (included as an exhibit
to Exhibit 4.1).
4.3 Certificate of Trust of FW Capital I (1).
4.4 Trust Agreement of FW Capital I dated as of November 6, 1998
(1).
4.5 Form of Amended and Restated Trust Agreement of FW Capital I,
dated ______, 1998 (1).
4.6 Form of Preferred Security Certificate of FW Capital I
(included as an exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement (1).
4.8 Form of Agreement as to Expenses and Liabilities (included as
an exhibit to Exhibit 4.5).
II-2
<PAGE> 119
5.1 Form of Opinion of Jones & Keller, P.C. (1).
5.2 Form of Opinion and Consent of Richards, Layton & Finger, P.A.
(1).
8.1 Form of Opinion of Jones & Keller, P.C., as to certain federal
income tax matters (1).
10.1 Revolving Line of Credit dated February 19, 1998 between First
Western Corp. as borrower and National Bank of Commerce Trust
and Savings Association (1).
10.2 Advance, Pledge and Security Agreement dated October 21, 1997
between Federal Home Loan Bank of Topeka and First State Bank
(1).
10.3 Advance, Pledge and Security Agreement dated March 31, 1997
between Federal Home Loan Bank of Topeka and Firstate Bank of
Colorado (1).
10.4 Line of Credit agreement signed February 24, 1998 between
Firstate Bank of Colorado and Federal Home Loan Bank of Topeka
(1).
10.5 Federal Funds Purchased Line agreement between Firstate Bank
and Wells Fargo Bank (1).
10.6 Federal Funds Purchased Line agreement dated August 25, 1998
between Firstate Bank of Colorado and Bankers Bank of the West
(1).
10.7 Federal Funds Purchased Line agreement dated October 20, 1997
between Firstate Bank and Bankers Bank of the West (1).
10.8 Management Agreement between First Western Corp. and Western
Management Corporation dated January 21, 1997 (1).
10.9 Management Agreement between Firstate Bank of Colorado and
Western Management Corporation dated January 4, 1993 (1).
10.10 Management Agreement between Firstate Bank of Nebraska and
Western Management Corporation dated January 21, 1998 (1).
10.11 Management Agreement between First Mortgage Bancorp and
Western Management Corporation dated January 21, 1997 (1).
10.12 Electronic Data Processing Agreement between First Commerce
Technologies and Firstate Bank dated May 8, 1998 (1).
10.13 Electronic Data Processing Agreement between First Commerce
Technologies and Firstate Bank of Colorado dated April 14,
1998 (1).
11.1 Statement re Computation of per share earnings - see
Consolidated Financial Statements.
21 Subsidiaries of Registrant (1).
23.1 Consent of Clifton Gunderson L.L.C. (1).
23.2 Form of Consent of Jones & Keller, P.C. (included in Exhibit
5.1 above).
II-3
<PAGE> 120
23.3 Form of Consent of Richards, Layton & Finger, P.A. (included
in Exhibit 5.2 above).
24.1 A power of attorney is set forth on the signature page of this
Registration Statement.
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Subordinated Indenture (1).
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Amended and Restated Trust
Agreement (1).
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Preferred Securities Guarantee
Agreement (1).
27 Financial Data Schedule (1)
- ----------
(1) Filed herewith.
(2) To be filed by amendment.
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
each Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by each
Registrant of expenses incurred or paid by a director, officer or controlling
person of each Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Each Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Northglenn, State of Colorado, on this 12th day
of November, 1998.
FW Capital I First Western Corp.
By: /s/ Timothy D. Wiens By: /s/ Joel H. Wiens
---------------------------------------- ------------------------------
Timothy D. Wiens, Joel H. Wiens,
Administrative Trustee Chairman of the Board
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Joel H. Wiens and Timothy D. Wiens and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting upon said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities of First Western Corp. and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Joel H. Wiens Director, Chairman of the Board November 12, 1998
- ------------------------------- (Principal Executive Officer)
Joel H. Wiens
/s/ Timothy D. Wiens Director and Vice Chairman November 12, 1998
- ----------------------------
Timothy D. Wiens
/s/ Michael J. Nelson Director November 12, 1998
- -----------------------------
Michael J. Nelson
/s/ Max W. Revell Director November 12, 1998
- --------------------------------
Max W. Revell
/s/ Lynn M. Anthony Director November 12, 1998
- -----------------------------
Lynn M. Anthony
/s/ Ronald B. James Treasurer and Chief Financial November 12, 1998
- ------------------------------ Officer (Principal Accounting Officer)
Ronald B. James
</TABLE>
<PAGE> 122
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit No. Description
1.1 Form of Underwriting Agreement (1).
3.1 Articles of Incorporation of First Western Corp. , as amended
and restated (1).
3.2 Amended Bylaws of First Western Corp. (1).
4.1 Form of Subordinated Indenture dated _______, 1998 to be
entered into between the Registrant and Wilmington Trust
Company, as Indenture Trustee (1).
4.2 Form of Junior Subordinated Debenture (included as an exhibit
to Exhibit 4.1).
4.3 Certificate of Trust of FW Capital I (1).
4.4 Trust Agreement of FW Capital I dated as of November 6, 1998
(1).
4.5 Form of Amended and Restated Trust Agreement of FW Capital I,
dated ______, 1998 (1).
4.6 Form of Preferred Security Certificate of FW Capital I
(included as an exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement (1).
4.8 Form of Agreement as to Expenses and Liabilities (included as
an exhibit to Exhibit 4.5).
5.1 Form of Opinion of Jones & Keller, P.C. (1).
5.2 Form of Opinion and Consent of Richards, Layton & Finger, P.A.
(1).
8.1 Form of Opinion of Jones & Keller, P.C., as to certain federal
income tax matters (1).
10.1 Revolving Line of Credit dated February 19, 1998 between First
Western Corp. as borrower and National Bank of Commerce Trust
and Savings Association (1).
10.2 Advance, Pledge and Security Agreement dated October 21, 1997
between Federal Home Loan Bank of Topeka and First State Bank
(1).
10.3 Advance, Pledge and Security Agreement dated March 31, 1997
between Federal Home Loan Bank of Topeka and Firstate Bank of
Colorado (1).
10.4 Line of Credit agreement signed February 24, 1998 between
Firstate Bank of Colorado and Federal Home Loan Bank of Topeka
(1).
</TABLE>
<PAGE> 123
<TABLE>
<S> <C>
10.5 Federal Funds Purchased Line agreement between Firstate Bank
and Wells Fargo Bank (1).
10.6 Federal Funds Purchased Line agreement dated August 25, 1998
between Firstate Bank of Colorado and Bankers Bank of the West
(1).
10.7 Federal Funds Purchased Line agreement dated October 20, 1997
between Firstate Bank and Bankers Bank of the West (1).
10.8 Management Agreement between First Western Corp. and Western
Management Corporation dated January 21, 1997 (1).
10.9 Management Agreement between Firstate Bank of Colorado and
Western Management Corporation dated January 4, 1993 (1).
10.10 Management Agreement between Firstate Bank of Nebraska and
Western Management Corporation dated January 21, 1998 (1).
10.11 Management Agreement between First Mortgage Bancorp and
Western Management Corporation dated January 21, 1997 (1).
10.12 Electronic Data Processing Agreement between First Commerce
Technologies and Firstate Bank dated May 8, 1998 (1).
10.13 Electronic Data Processing Agreement between First Commerce
Technologies and Firstate Bank of Colorado dated April 14,
1998 (1).
11.1 Statement re Computation of per share earnings - see
Consolidated Financial Statements.
21 Subsidiaries of Registrant (1).
23.1 Consent of Clifton Gunderson L.L.C. (1).
23.2 Form of Consent of Jones & Keller, P.C. (included in Exhibit
5.1 above).
23.3 Form of Consent of Richards, Layton & Finger, P.A. (included
in Exhibit 5.2 above).
24.1 A power of attorney is set forth on the signature page of this
Registration Statement.
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Subordinated Indenture (1).
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Amended and Restated Trust
Agreement (1).
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company
to act as trustee under the Preferred Securities Guarantee
Agreement (1).
27 Financial Data Schedule (1)
</TABLE>
- ----------
(1) Filed herewith.
(2) To be filed by amendment.
<PAGE> 1
EXHIBIT 1.1
$20,000,000 PREFERRED SECURITIES*
FW CAPITAL I
_____% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION PREFERENCE OF $10 PER TRUST PREFERRED SECURITY)
UNDERWRITING AGREEMENT
December __, 1998
Howe Barnes Investments, Inc.
As Representative of the several Underwriters
named in Schedule A
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
First Western Corporation, a Nebraska corporation (the "Company"), and
its fiduciary subsidiary, FW Capital I, a statutory business trust organized
under the Delaware Business Trust Act (the "Delaware Act") (the "Trust" and,
together with the Company, the "Offerors"), propose, subject to the terms and
conditions stated herein, to issue and sell to you (the "Underwriters"), an
aggregate of $20,000,000, representing 2,000,000 securities of the Trust's ___%
Cumulative Trust Preferred Securities, with a liquidation preference of $10.00
per preferred security (the "Firm Preferred Securities"). In addition, the
Offerors propose to grant to the Underwriters an option to purchase up to
$3,000,000, representing 300,000 securities, of the Trust's ___% Cumulative
Trust Preferred Securities, with a liquidation preference of $10.00 per
preferred security (the "Option Preferred Securities") as provided in Section 2
hereof. The Firm Preferred Securities and the Option Preferred Securities are
hereinafter collectively referred to as the "Preferred Securities." The
Offerors propose that the Trust issue the Preferred Securities pursuant to a
Trust Agreement, as amended and restated, among Wilmington Trust Company, as
Property Trustee and Delaware Trustee, the administrative trustees named
therein (the "Administrative Trustees") and the Company (the "Trust
Agreement"). The Preferred Securities will be guaranteed by the Company with
respect to distributions and payments upon liquidation, redemption and
otherwise (the "Guarantee") pursuant to a Guarantee Agreement (the "Guarantee
Agreement"), to be dated December __, 1998, between the Company and Wilmington
Trust Company, as trustee (the "Guarantee Trustee"), and entitled to the
benefits of certain backup undertakings described in the Prospectus (as defined
herein) with respect to the Company's agreement pursuant to the Expense
Agreement (as defined herein) to pay all expenses relating to administration of
the Trust.
The proceeds of the sale of the Preferred Securities will be used to
purchase junior subordinated deferrable interest debentures (the "Junior
Subordinated Debentures") issued by the Company pursuant to an Indenture, to be
dated December __, 1998, between the Company and Wilmington Trust Company, as
trustee (the "Indenture").
- --------------------
* THE OFFERORS HAVE GRANTED TO THE UNDERWRITERS AN OPTION TO PURCHASE UP
TO $3,000,000, REPRESENTING 300,000 TRUST PREFERRED SECURITIES.
<PAGE> 2
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (File Nos. __________
and __________) and a related preliminary prospectus for the registration of
the Preferred Securities, the Guarantee and the Junior Subordinated Debentures,
under the Securities Act of 1933, as amended (the "Act") and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and
regulations thereunder. The registration statement, as amended, at the time it
was declared effective, including the information (if any) deemed to be part
thereof pursuant to Rule 430A under the Act, is herein referred to as the
"Registration Statement." The form of prospectus first filed by the Offerors
with the Commission pursuant to Rules 424(b) and 430A under the Act is referred
to herein as the "Prospectus." Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective or filed with the
Commission pursuant to Rule 424(a) under the Act is referred to herein as a
"Preliminary Prospectus." The Securities Exchange Act of 1934, as amended, is
referred to herein as the "Exchange Act." Copies of the Registration
Statement, including all exhibits and schedules thereto, any amendments thereto
and all Preliminary Prospectuses have been delivered to you.
The Offerors hereby confirm their agreement with respect to the
purchase of the Preferred Securities by the Underwriters as follows:
1. Representations and Warranties of the Offerors. (a) The
Offerors jointly and severally represent and warrant to, and agree with, each
of the Underwriters that:
(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to the
Registration Statement has been filed with the Commission as of the
date of this Agreement. No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the Commission
promulgated thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Offerors make no representation or warranty as to
information contained in or omitted in reliance upon, and in
conformity with, written information furnished to the Offerors by or
on behalf of any Underwriter, expressly for use in the preparation
thereof.
(iii) The Registration Statement conforms, and the
Prospectus and any amendments or supplements thereto will conform, in
all material respects to the requirements of the Act and the Trust
Indenture Act and the rules and regulations thereunder. Neither the
-2-
<PAGE> 3
Registration Statement nor any amendment thereto, and neither the
Prospectus nor any supplement thereto, contains or will contain, as
the case may be, any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Offerors make no representation or warranty as to
(i) information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in
reliance upon, and in conformity with, written information furnished
to the Offerors by or on behalf of any Underwriter, expressly for use
in the preparation thereof or (ii) information in those parts of the
Registration Statement which constitute the Statement of Eligibility
and Qualification ("Form T1") under the Trust Indenture Act.
(iv) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act
with full trust power and authority to own property and to conduct its
business as described in the Registration Statement and Prospectus and
is authorized to do business in each jurisdiction in which such
qualification is required, except where the failure to so qualify
would not have a material adverse effect on the Trust's condition
(financial or otherwise), earnings, business, prospects, assets,
results of operations or properties taken as a whole; the Trust has
conducted and will conduct no business other than the transactions
contemplated by the Trust Agreement and described in the Prospectus;
the Trust is not a party to or otherwise bound by any agreement other
than those described in the Prospectus; the Trust is and will be
classified for United States federal income tax purposes as a grantor
trust and not as an association taxable as a corporation; and the
Trust is and will be treated as a consolidated subsidiary of the
Company pursuant to generally accepted accounting principles.
(v) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Nebraska and is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"),
supervised by the Board of Governors of the Federal Reserve System
(the "Fed"). Except as otherwise noted to you, the Company does not
directly or indirectly own any stock or other equity interest in any
corporation, partnership, joint venture, unincorporated association or
other entity other than Firstate Bank, Kimball, Nebraska (the
"Nebraska Bank") and Firstate Bank of Colorado (the "Colorado Bank,"
and together with the Nebraska Bank, the "Banks"). The Banks and any
other entities owned by the Company being collectively referred to
herein as the "Subsidiaries". Each Subsidiary has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus, and is duly
qualified to transact business in all jurisdictions in which the
conduct of its business or its ownership or leasing or property
requires such qualification and the failure so to qualify would have a
material adverse effect on the business or condition, financial or
otherwise, of the Company and the Subsidiaries, taken as a whole. All
outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and
non-assessable, and are owned, directly or indirectly, by the Company
free and clear of all liens,
-3-
<PAGE> 4
encumbrances and security interests, except as otherwise noted to you.
No options, warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any obligations into,
shares of capital stock or ownership interests in any of the
Subsidiaries are outstanding.
(vi) All of the issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid
and nonassessable, were offered and sold in compliance with all
federal and state securities laws, and were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for
or purchase securities. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, the Junior Subordinated Debentures, the common
securities of the Trust held by the Company (the "Common Securities")
or the Preferred Securities. Neither the filing of the Registration
Statement nor the registration of the Preferred Securities, the
Guarantee or the Junior Subordinated Debentures gives rise to any
rights for or relating to the registration of any capital stock or
other securities of the Company or the Trust. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus.
(vii) Each of this Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement and the Agreement as to Expenses
and Liabilities (the "Expense Agreement") has been duly authorized,
executed and delivered by the Company and/or the Trust, as the case
may be, and constitutes a valid, legal and binding obligation of the
Company and/or the Trust, as the case may be, enforceable in
accordance with its terms, except as rights to indemnity hereunder may
be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity and, with
respect to Section 7 hereof, by the public policy underlying the
federal or state securities laws. The execution, delivery and
performance of this Agreement, the Indenture, the Trust Agreement, the
Guarantee Agreement and the Expense Agreement and the consummation of
the transactions herein or therein contemplated will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any indenture, mortgage, deed
of trust, loan agreement, lease, franchise, license or other agreement
or instrument to which the Trust, the Company or any of the
Subsidiaries is a party or by which the Trust, the Company or any of
the Subsidiaries is bound or to which any property or assets of the
Trust, the Company or any of the Subsidiaries is subject, the
Company's or any Subsidiary's charter or bylaws, the Trust Agreement
or the Trust's certificate of trust filed with the State of Delaware
on _______________, 1998 (the "Certificate of Trust") or any order,
rule, regulation or decree of any court or governmental agency or body
having jurisdiction over the Company, any Subsidiary or the Trust or
having jurisdiction over any of the properties of the Company, any
Subsidiary or the Trust. No consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Trust Agreement, the Guarantee Agreement
and the Expense Agreement or for the consummation of the transactions
contemplated hereby or thereby, including the issuance or
-4-
<PAGE> 5
sale of the Junior Subordinated Debentures by the Company and the
Common Securities and the Preferred Securities by the Trust, except
such as may be required under the Act, all of which have been obtained
or made, and under state securities or blue sky laws. Each of the
Company and the Trust, as the case may be, has full power and
authority to enter into this Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement and the Expense Agreement, as the
case may be, and to authorize, issue and sell the Junior Subordinated
Debentures or the Common Securities and the Preferred Securities, as
the case may be, as contemplated by this Agreement; and each of the
Indenture, the Trust Agreement and the Guarantee Agreement has been
duly qualified under the Trust Indenture Act and will conform in all
material respects to the statements relating thereto in the
Registration Statement and the Prospectus.
(viii) The Junior Subordinated Debentures have been duly
authorized by the Company and at the Closing Date will have been duly
executed by the Company and, when authenticated in the manner provided
for in the Indenture and delivered against payment therefor as
described in the Prospectus, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity, will be in the form contemplated by,
and entitled to the benefits of, the Indenture, will conform to the
statements relating thereto in the Prospectus, and will be owned by
the Trust free and clear of any security interest, pledge, lien,
encumbrance, claim or equity.
(ix) The Common Securities have been duly authorized by
the Trust Agreement and, when issued and delivered by the Trust to the
Company against payment therefor as described in the Prospectus, will
be validly issued and (subject to the terms of the Trust Agreement)
fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and will conform to all statements relating
thereto contained in the Prospectus; and at the Closing Date all of
the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest,
pledge, lien, encumbrance, claim or equity.
(x) The Preferred Securities have been duly authorized by
the Trust Agreement and, when issued and delivered pursuant to this
Agreement against payment of the consideration set forth herein, will
be validly issued and fully paid and non-assessable undivided
beneficial interests in the Trust, will be entitled to the benefits of
the Trust Agreement and will conform to the statements relating
thereto contained in the Prospectus; and holders of Preferred
Securities will be entitled to the same limitation of personal
liability under Delaware law as extended to stockholders of private
corporations for profit.
(xi) The Indenture, the Trust Agreement, the Guarantee
Agreement and the Expense Agreement are in substantially the
respective forms filed as exhibits to the Registration Statement.
-5-
<PAGE> 6
(xii) The Company's obligations under the Guarantee
Agreement are subordinated and junior in right of payment to all
Senior and Subordinated Debt (as defined in the Indenture) of the
Company.
(xiii) The Junior Subordinated Debentures are subordinate
and junior in right of payment to all Senior and Subordinated Debt of
the Company.
(xiv) Each of the Administrative Trustees of the Trust is
an officer of the Company and has been duly authorized by the Company
to execute and deliver the Trust Agreement.
(xv) The financial statements, together with the related
notes and schedules, contained in the Registration Statement and
Prospectus present fairly the consolidated financial position, results
of operations, shareholders' equity and cash flows of the Company and
its consolidated Subsidiaries on the basis stated therein at the
indicated dates and for the indicated periods. Such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of
results for such periods have been made, except as otherwise stated
therein. The selected financial and statistical data included in the
Registration Statement present fairly the information shown therein on
the basis stated in the Registration Statement and have been compiled
on a basis consistent with the financial statements presented therein.
(xvi) There is no action or proceeding pending or, to the
knowledge of the Trust or the Company, threatened or contemplated
against any of the Trust, the Company or any Subsidiary before any
court or administrative or regulatory agency which, if determined
adversely to the Trust, the Company or such Subsidiary would,
individually or in the aggregate, result in a material adverse change
in the business or condition (financial or otherwise), results of
operations, shareholders' equity or prospects of the Trust, the
Company or such Subsidiary, taken as a whole, except as set forth in
the Registration Statement.
(xvii) There are no contracts or documents of the Trust or
the Company or any Subsidiary that are required by the Act or by the
rules and regulations thereunder to be filed as exhibits to the
Registration Statement which contracts or documents have not been so
filed.
(xviii) The Company and the Subsidiaries have good and
marketable title to all properties and assets reflected as owned in
the financial statements hereinabove described (or as described as
owned in the Prospectus), in each case free and clear of all liens,
encumbrances and defects, except such as are described in the
Prospectus or do not substantially affect the value of such properties
and assets and do not materially interfere with the use made and
proposed to be made of such properties and assets by the Company and
the Subsidiaries; and any real property and buildings held under lease
by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and the
Subsidiaries.
-6-
<PAGE> 7
(xix) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, (A) there has not been any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the condition, financial or otherwise, of the Trust, the
Company and the subsidiaries taken as a whole, or the business
affairs, management, financial position, shareholders' equity or
results of operations of the Trust, the Company and the Subsidiaries,
taken as a whole, whether or not occurring in the ordinary course of
business, including, without limitation, any material increase in the
amount or number of classified assets of the Banks, any decrease in
net interest margin for any month to a level below ___%, or any
material decrease in the volume of loan originations, the amount of
deposits or the amount of loans, (B) there has not been any
transaction not in the ordinary course of business entered into by the
Trust, the Company or any of the Subsidiaries which is material to the
Trust, the Company and the Subsidiaries, taken as a whole, other than
transactions described or contemplated in the Registration Statement,
(C) the Trust, the Company and the Subsidiaries have not incurred any
material liabilities or obligations, which are not in the ordinary
course of business or which could result in a material reduction in
the future earnings of the Trust, the Company and the Subsidiaries,
(D) the Trust, the Company and the Subsidiaries have not sustained any
material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance, (E) there has not been any change
in the capital stock of the Company or the Subsidiaries (other than
upon the exercise of options and warrants described in the
Registration Statement), or any material increase in the short-term or
long-term debt (including capitalized lease obligations) of the
Company and the Subsidiaries, taken as a whole, and (F) there has not
been any declaration or payment of any dividends or any distributions
of any kind with respect to the capital stock of the Company or the
Subsidiaries other than any dividends or distributions described or
contemplated in the Registration Statement.
(xx) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter or Bylaws; the Trust is not in
violation of the Trust Agreement or its Certificate of Trust; and none
of the Trust, the Company, or the Subsidiaries is in violation of or
otherwise in default under any statute, or any rule, regulation,
order, judgment, decree or authorization of any court or governmental
or administrative agency or body having jurisdiction over the Trust,
the Company or any of the Subsidiaries or any of their properties, or
any indenture, mortgage, deed of trust, loan agreement, lease,
franchise, license or other agreement or instrument to which the
Trust, the Company or any of the Subsidiaries is a party or by which
any of them are bound or to which any property or assets of the Trust,
the Company or any of the Subsidiaries is subject, which violation or
default would have a material adverse effect on the business,
condition (financial or otherwise), results of operations,
shareholders' equity or prospects of the Trust, the Company and the
Subsidiaries, taken as a whole.
(xxi) The Trust, the Company and each of the Subsidiaries
holds and is operating in compliance with all licenses, approvals,
certificates and permits from governmental and regulatory authorities,
foreign and domestic, which are necessary to the conduct of its
business as described in the Prospectus. Without limiting the
generality of the foregoing, the
-7-
<PAGE> 8
Company has all necessary approvals of the Fed to own the stock of the
Subsidiaries. None of the Trust, the Company or any Subsidiary has
received notice of or has knowledge of any basis for any proceeding or
action relating specifically to the Trust, the Company or the
Subsidiaries for the revocation or suspension of any such consent,
authorization, approval, order, license, certificate or permit or any
other action or proposed action by any regulatory authority having
jurisdiction over the Trust, the Company or the Subsidiaries that
would have a material adverse effect on the Trust, the Company or any
Subsidiary.
(xxii) To the best of the Offerors' knowledge, Clifton
Gunderson L.L.C. which has certified certain of the financial
statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act
and the rules and regulations thereunder.
(xxiii) The Offerors have not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result
in, stabilization or manipulation of the price of the Preferred
Securities.
(xxiv) The Offerors' registration statement pursuant to
Section 12(g) of the Exchange Act with respect to the Preferred
Securities, has been declared effective by the Commission; the
Preferred Securities have been approved for quotation and trading,
upon notice of issuance, on the American Stock Exchange under the
symbol "FWC.Pr.A."
(xxv) The Offerors have not distributed and will not
distribute any prospectus or other offering material in connection
with the offering and sale of the Preferred Securities other than any
Preliminary Prospectus or the Prospectus or other materials permitted
by the Act to be distributed by the Company.
(xxvi) The deposit accounts of the Banks are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest
extent provided by law. No proceeding for the termination of such
insurance is pending or is threatened. Neither the Company nor any
Subsidiary has received or is subject to any directive or order from
the Fed, the FDIC, the Nebraska Department of Banking and Finance, the
Colorado Division of Banking, or any other regulatory authority to
make any material change in the method of conducting their respective
businesses that has not been complied with in all material respects.
(xxvii) Neither the Offerors nor any of their affiliates does
any business, directly or indirectly, with the government of Cuba or
with any person or entity located in Cuba.
(xxviii) The Trust, the Company and the Subsidiaries, to the
best of their knowledge, have filed all federal, state, local and
foreign tax returns or reports required to be filed, and have paid in
full all taxes indicated by said returns or reports and all
assessments received by it or any of them to the extent that such
taxes have become due and payable, except where the Trust, the Company
and the Subsidiaries are contesting in good faith such taxes and
assessments. The Company and the Subsidiaries have also filed all
required applications, reports, returns and other documents and
information with all state and federal banking authorities and
agencies.
-8-
<PAGE> 9
(xxix) The Trust, the Company and each of the Subsidiaries,
to the best of their knowledge, owns or licenses all patents, patent
applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets and other similar rights necessary for the
conduct of their businesses as described in the Prospectus. Neither
the Trust, the Company nor any of the Subsidiaries has any knowledge
of any infringement of any patents, patent applications, trademarks,
service marks, tradenames, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others, and none of the Trust, the Company or
any of the Subsidiaries has received any notice or claim of conflict
with the asserted rights of others with respect to any of the
foregoing.
(xxx) None of the Trust, the Company or any of the
Subsidiaries is an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or an "investment adviser" within the meaning
of the Investment Advisers Act of 1940, as amended.
(xxxi) The Company and its Subsidiaries maintain, and the
Trust will maintain, a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (C) access to records is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxxii) Other than as contemplated by this Agreement and as
disclosed in the Registration Statement, the Company has not incurred
any liability for any finder's or broker's fee or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(xxxiii) No report or application filed by the Company or any
of its subsidiaries with the Fed, the FDIC, the Nebraska Department of
Banking and Finance or the Colorado Division of Banking, as of the
date it was filed, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading when made or
failed to comply with the applicable requirements of the Fed, the
FDIC, the Nebraska Department of Banking and Finance or the Colorado
Division of Banking, as the case may be.
(xxxiv) The proceeds from the sale of the Preferred
Securities will constitute "Tier 1" capital (as defined in 12 C.F.R.
Part 325), subject to applicable regulatory restrictions on the amount
thereof that can be included in Tier 1 capital.
(xxxv) The Offerors meet all of the requirements for the use
of Form SB-2 to register the Preferred Securities, the Guarantee and
the Common Securities under the Act.
-9-
<PAGE> 10
(b) Any certificate signed by or on behalf of the Trust or the
Company and delivered to the Underwriters or counsel to the Underwriters shall
be deemed to be a representation and warranty of the Trust or the Company to
each Underwriter as to the matters covered thereby.
2. Purchase, Sale and Delivery of Preferred Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Trust agrees to issue
and sell to each Underwriter, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Trust, at a purchase price per Preferred
Security of $10.00, the number of Firm Preferred Securities set forth opposite
the name of such Underwriter in Schedule A hereto. As compensation to the
Underwriters for their commitments hereunder and in view of the fact that the
proceeds of the sale of the Preferred Securities (together with the entire
proceeds from the sale by the Trust to the Company of the Common Securities)
will be used to purchase the Junior Subordinated Debentures, the Company hereby
agrees to pay at the Closing Date to you a commission of $0.40 per Preferred
Security sold by the Trust hereunder.
The Firm Preferred Securities will be delivered by the Company to you
against payment of the purchase price therefor at the offices of Jones &
Keller, Denver, Colorado, or such other location as may be mutually acceptable,
at 8:00 a.m. Mountain time on December __, 1998, or such other time and date as
you and the Company may agree upon in writing, such time and date of delivery
being herein referred to as the "First Closing Date." The purchase price shall
be payable by wire transfer of immediately available funds to an account, such
account to be designated by the Trust at least two business days preceding the
First Closing Date. The Underwriters' commission shall be payable by wire
transfer of immediately available funds to an account, such account to be
designated by the Underwriters at least two business days preceding the First
Closing Date. Delivery of the Firm Preferred Securities may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by you. Certificates representing the Firm Preferred Securities, in
definitive form and in such denominations and registered in such names as you
may request upon at least two business days' prior notice to the Company shall
be prepared and will be made available for checking and packaging, not later
than 10:30 a.m., Central time, on the business day next preceding the First
Closing Date at the offices of Howe Barnes Investments, Inc., 135 South LaSalle
Street, Chicago, Illinois 60603, or such other location as may be mutually
acceptable.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 300,000 Option
Preferred Shares, at the same purchase price per share to be paid for the Firm
Preferred Shares, for use solely in covering any overallotments made by the
Underwriters in the sale and distribution of the Firm Preferred Shares. The
option granted hereunder may be exercised at any time (but not more than once)
within 30 days after the date of the initial public offering upon notice by you
to the Company setting forth the aggregate number of Option Preferred Shares as
to which the Underwriters are exercising the option, the names and
denominations in which the certificates for such shares are to be registered
and the time and place at which such certificates will be delivered. Such time
of delivery (which may not be earlier than the First Closing Date), being
herein referred to as the "Second Closing Date," shall be determined by you,
but if at any time other than the First
-10-
<PAGE> 11
Closing Date, shall not be earlier than three nor later than 10 full business
days after delivery of such notice of exercise. The number of Option Preferred
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Option Preferred Shares to be sold by the Company pursuant to
such notice of exercise by a fraction, the numerator of which is the number of
Firm Preferred Shares to be purchased by such Underwriter as set forth opposite
its name in Schedule A and the denominator of which is the total number of Firm
Preferred Shares (subject to such adjustments to eliminate any fractional share
purchases as you in your absolute discretion may make). Certificates for the
Option Preferred Shares will be made available at the Company's expense for
checking and packaging at 10:30 a.m., Chicago Time, on the business day
preceding the Second Closing Date. The manner of payment for and delivery of
the Option Preferred Shares shall be the same as for the Firm Preferred Shares
as specified in the preceding paragraph.
It is understood that any Underwriter may (but shall not be obligated
to) make payment to the Company on behalf of the other Underwriter for the
Preferred Securities to be purchased by such Underwriter. Any such payment
shall not relieve such other Underwriter of any of its obligations hereunder.
Nothing herein contained shall constitute the Underwriters an unincorporated
association or partner with either or both Offerors.
3. Offering by Underwriters. It is understood that the several
Underwriters propose to make a public offering of the Preferred Securities as
soon as the Underwriters deem it advisable to do so. The Preferred Securities
are to be initially offered to the public at the initial public offering price
set forth in the Prospectus. The Underwriters may from time to time thereafter
change the public offering price and other selling terms.
4. Covenants of the Offerors. The Offerors jointly and severally
covenant and agree with the several Underwriters that:
(a) The Offerors will prepare and timely file with the
Commission under Rule 424(b) under the Act a Prospectus containing
information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A under the Act, and
will not file any amendment to the Registration Statement or
supplement to the Prospectus of which the Underwriters shall not
previously have been advised and furnished with a copy and as to which
the Underwriters shall have reasonably objected in writing promptly
after reasonable notice thereof or which is not in compliance with the
Act or the rules and regulations thereunder.
(b) The Offerors will advise the Underwriters promptly of
any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use
of the Prospectus, of the suspension of the qualification of the
Preferred Securities for offering or sale in any jurisdiction, or of
the institution or threatening of any proceedings for that purpose,
and the Offerors will use their best efforts to prevent the issuance
of any such stop order preventing or suspending the use of the
Prospectus or suspending such qualification and to obtain as soon as
possible the lifting thereof, if issued.
-11-
<PAGE> 12
(c) The Offerors will cooperate with you and your counsel
in order to qualify the Preferred Securities for sale under the
securities laws of such jurisdictions as the Underwriters may
reasonably have designated in writing and to continue such
qualifications in effect for so long as the Underwriters may
reasonably request for distribution of the Preferred Securities (or
obtain exemptions from the application of such laws), provided that
neither Offeror shall be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction
where it is not now so qualified or required to file such a consent.
The Offerors will, from time to time, prepare and file such
statements, reports and other documents as may be requested by the
Underwriters for that purpose.
(d) The Offerors will furnish the Underwriters with as
many copies of any Preliminary Prospectus as the Underwriters may
reasonably request and, during the period when delivery of a
prospectus is required under the Act, the Offerors will furnish the
Underwriters with as many copies of the Prospectus in final form, or
as thereafter amended or supplemented, as the Underwriters may, from
time to time, reasonably request. The Offerors will deliver to the
Underwriters, at or before the Closing Date, two signed copies of the
Registration Statement and all amendments thereto including all
exhibits filed therewith, and will deliver to the Underwriters such
number of conformed copies of the Registration Statement, without
exhibits, and of all amendments thereto, as the Underwriters may
reasonably request.
(e) If, during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event
shall occur as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading, or if for
any other reason it shall be necessary at any time to amend or
supplement the Prospectus to comply with any law, the Offerors
promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will
not include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein in
light of the circumstances when it is so delivered, not misleading, or
so that the Prospectus will comply with law.
(f) The Offerors will make generally available to their
security holders, as soon as it is practicable to do so, but in any
event not later than 18 months after the effective date of the
Registration Statement, an earnings statement (which need not be
audited) in reasonable detail, covering a period of at least 12
consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 thereunder and
will advise you in writing when such statement has been so made
available.
-12-
<PAGE> 13
(g) The Company will, for five years from the First
Closing Date, deliver to each Underwriter, as soon as they are
available, copies of its annual report and copies of all other
documents, reports and information furnished by the Company to its
security holders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the
Act or the Exchange Act. The Company will deliver to each Underwriter
similar reports with respect to significant subsidiaries, as that term
is defined in the rules and regulations under the Act, which are not
consolidated in the Company's financial statements.
(h) The Offerors will apply the net proceeds from the
sale of the Junior Subordinated Debentures and the Preferred
Securities substantially in accordance with the purposes set forth
under "Use of Proceeds" in the Prospectus.
(i) The Offerors will comply with all registration,
filing and reporting requirements of the Exchange Act and the American
Stock Exchange.
5. Costs and Expenses. (a) The Offerors will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Offerors under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the
Offerors; the fees and disbursements of counsel for the Offerors; the cost of
preparing, printing and filing of the Registration Statement, Preliminary
Prospectuses and the Prospectus and any amendments and supplements thereto and
the printing, mailing and delivery to the Underwriters and dealers of copies
thereof and of this Agreement, the Selected Dealers Agreement, the Blue Sky
Memorandum, if deemed necessary by the Underwriters, after consultation with
the Offerors, and any supplements or amendments thereto (excluding, except as
provided below, fees and expenses of counsel to the Underwriters); the filing
fees of the Commission; the filing fees and expenses (including legal fees and
disbursements of counsel for the Underwriters) incident to securing any
required review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Preferred Securities; the fees and
expenses of the Indenture Trustee, including the fees and disbursements of
counsel for the Indenture Trustee in connection with the Indenture and Junior
Subordinated Debentures; the fees and expenses of the Property Trustee and the
Delaware Trustee, including the fees and disbursements of counsel for the
Property Trustee and the Delaware Trustee in connection with the Trust
Agreement and the Certificate of Trust; the fees and expenses of the Guarantee
Trustee, including the fees and disbursements of counsel for the Guarantee
Trustee in connection with the Guarantee and Guarantee Agreement; listing fees,
if any, transfer taxes and the expenses, including the fees and disbursements
of counsel for the Underwriters, incurred in connection with the qualification
of the Preferred Securities under state securities or Blue Sky laws; the fees
and expenses incurred in connection with the designation of the Preferred
Securities on the American Stock Exchange; the costs of preparing certificates
representing Junior Subordinated Debentures or Preferred Securities; the costs
and fees of any registrar or transfer agent and all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 5. In addition, the
Offerors will pay all travel and lodging expenses incurred by management of the
Offerors in connection with any informational "road show" meetings held in
connection with the offering and will also pay for the preparation of all
materials used in connection with such meetings. The Offerors shall not be
required to pay for any of the Underwriters' expenses (other than those related
to qualification of the Preferred Securities under state securities or Blue Sky
laws and those incident to securing any required review by the NASD
-13-
<PAGE> 14
of the terms of the sale of the Preferred Securities which shall be paid by the
Offerors as provided above) except that, if this Agreement shall not be
consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Underwriters pursuant to Sections
9(a) or 9(b) hereof, or by reason of any failure, refusal or inability on the
part of the Offerors to perform any undertaking or satisfy any condition of
this Agreement or to comply with any of the terms hereof on either of their
parts to be performed, unless such failure to satisfy said condition or to
comply with said terms shall be due to the default or omission of any
Underwriter, then the Offerors promptly upon request by the Underwriters shall
reimburse the several Underwriters for all actual, accountable out-of-pocket
expenses, up to $25,000, including fees and disbursements of counsel reasonably
incurred in connection with investigating, marketing and proposing to market
the Preferred Securities or in contemplation of performing their obligations
hereunder; but the Offerors shall not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated profits from
the sale by them of the Preferred Securities.
(b) Upon successful completion of the offering contemplated by this
Agreement, the Offerors will pay all reasonable and customary costs, expenses
and fees incident to tombstone advertisements of the offering and incurred with
the approval of the Company.
6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Preferred Securities on
the First Closing Date and the Option Preferred Securities on the Second
Closing Date are subject to the condition that all representations and
warranties of the Offerors contained herein are true and correct, at and as of
the First Closing Date or the Second Closing Date, as the case may be, and the
condition that each Offeror shall have performed all of its covenants and
obligations hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Act
and in accordance with Section 4(a) hereof; no stop order suspending
the effectiveness of the Registration Statement, as amended from time
to time, or any part thereof shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of
the Commission shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) The Underwriters shall have received on the First
Closing Date or the Second Closing Date, as the case may be, the
opinion of Jones & Keller, P.C., Denver, Colorado, counsel for the
Offerors, dated the Closing Date, addressed to the Underwriters, to
the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct
its business as described in the Prospectus. All of the issued
and outstanding shares of the capital stock of the Company
have been duly authorized and validly issued and are fully
paid and nonassessable. The holders of the Company's
outstanding
-14-
<PAGE> 15
securities are not entitled to any preemptive or other rights
to subscribe for the Junior Subordinated Debentures or the
Preferred Securities under the Company's Articles of
Incorporation or Bylaws and, to the knowledge of such counsel,
no such rights exist under any other agreement or arrangement.
The Company has authorized and outstanding capital stock as
described in the Prospectus.
(ii) Each Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in
the Prospectus. The outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is
fully paid and nonassessable and is owned, directly or
indirectly, by the Company, free and clear of all liens,
encumbrances and security interests, other than security
interests specifically disclosed in the Prospectus. To the
knowledge of such counsel, no options, warrants or other
rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into capital stock
or ownership interests in any Subsidiary are outstanding.
(iii) All of the issued and outstanding Common
Securities of the Trust are owned by the Company free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
(iv) The Trust Agreement, the Indenture, the
Guarantee, the Form T1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Indenture, the Form
T1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Trust Agreement, and the Form T1
Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Guarantee Agreement have been duly qualified
under the Trust Indenture Act.
(v) The Junior Subordinated Debentures are in the
form contemplated by the Indenture, have been duly authorized,
executed and delivered by the Company and, when authenticated
by the Indenture Trustee in the manner provided for in the
Indenture and delivered against payment therefor, will
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally and subject
to general principles of equity.
(vi) The Junior Subordinated Debentures are
subordinate and junior in right of payment to all "Senior and
Subordinated Debt" (as defined in the Indenture) of the
Company.
(vii) Under current law, the Trust 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 beneficial owner of Preferred Securities will be
treated as owning an undivided
-15-
<PAGE> 16
beneficial interest in the Junior Subordinated Debentures, and
stated interest on the Junior Subordinated Debentures
generally will be included in income by a holder of Preferred
Securities at the time such interest income is paid or accrued
in accordance with such holder's regular method of tax
accounting.
(viii) For federal income tax purposes, (a) the
Junior Subordinated Debentures will constitute indebtedness of
the Company and (b) the interest on the Junior Subordinated
Debentures will be deductible by the Company on an economic
accrual basis in accordance with Section 163(e) of the
Internal Revenue Code of 1986, as amended, and Treasury
Regulation Section 1.1637.
(ix) To the best of such counsel's knowledge and
information after due inquiry, the Trust is not required to be
authorized to do business in any other jurisdiction, except
where the failure to be so authorized would not have a
material adverse effect on the Trust's condition (financial or
otherwise), earnings, business, prospects, assets, results of
operations or properties taken as a whole and the Trust is not
a party to or otherwise bound by any material agreement other
than those described in the Prospectus.
(x) The Trust Agreement has been duly executed
and delivered by the Administrative Trustees.
(xi) To the best of such counsel's knowledge and
information after due inquiry, the Offerors are not in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or any other
instrument of which either of them is a party or by which
either of them may be bound, or to which any of the property
or assets of the Offerors is subject.
(xii) The Company has full corporate power and
authority and the Trust has full trust power and authority to
enter into this Agreement, the Indenture, the Trust Agreement,
the Guarantee Agreement and the Expense Agreement, as
applicable, and to issue the Junior Subordinated Debentures or
the Common Securities and Preferred Securities, as the case
may be, and to effect the transactions contemplated by this
Agreement, the Indenture, the Trust Agreement, the Guarantee
Agreement and the Expense Agreement, as applicable, and each
of this Agreement, the Indenture, the Trust Agreement, the
Guarantee Agreement and the Expense Agreement have been duly
authorized, executed and delivered by the Company and the
Trust, as applicable, and constitutes a valid, legal and
binding obligation of the Company and the Trust, as
applicable, enforceable in accordance with its terms (except
as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar
laws affecting the rights of creditors generally and subject
to general principles of equity). The execution, delivery and
performance of this Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement, the
-16-
<PAGE> 17
Preferred Securities, the Common Securities, the Junior
Subordinated Debentures and the Expense Agreement and the
consummation of the transactions herein or therein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, rule or regulation (except that such counsel need
express no opinion regarding any Blue Sky or state securities
laws), any lease, contract, indenture, mortgage, loan
agreement or other agreement or instrument known to such
counsel to which the Company, the Trust or any Subsidiary is a
party or by which it is bound or to which any of its property
is subject, the Company's or any Subsidiary's charter or
bylaws, or the Trust's Certificate or any permit, judgment,
order or decree known to such counsel of any court or
governmental agency or body having jurisdiction over the
Company, the Trust or any Subsidiary or any of their
respective properties, except for any breach, violation or
default which would not have a material adverse effect on the
Company or the Trust; and no consent, approval, authorization,
order of, designation, declaration or filing by or with, any
court or any regulatory, administrative or governmental agency
or body is required for the execution, delivery and
performance of this Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement, the Expense Agreement, the
Common Securities, the Preferred Securities, or the Junior
Subordinated Debentures, or for the consummation of the
transactions contemplated hereby or thereby (other than as may
be required by federal or state laws governing banks or bank
holding companies, the NASD, or by state securities and blue
sky laws, as to which such counsel need express no opinion),
including the issuance or sale of the Junior Subordinated
Debentures by the Company and the Common Securities and
Preferred Securities by the Trust, except (a) such as may be
required under the Act, which have been obtained or made, or
under state securities or blue sky laws, (b) such agreements,
instruments or obligations with respect to which valid
consents or waivers have been obtained by the Trust, the
Company or any of the Subsidiaries, and (c) the qualification
of the Trust Agreement, the Guarantee Agreement and the
Indenture under the Trust Indenture Act and the regulations
thereunder, all of which have been effected. The filing of
the Registration Statement and the registration of the Junior
Subordinated Debentures, the Guarantee and the Preferred
Securities under the Act does not give rise to any rights for
or relating to the registration of any shares of capital stock
or other securities of the Company.
(xiii) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel,
no stop order proceedings with respect thereto have been
instituted or are pending or threatened by the Commission.
(xiv) The Registration Statement, the Prospectus
and each amendment or supplement, thereto comply as to form in
all material respects with the requirements of the Act and the
rules and regulations thereunder (except that such counsel
need express no opinion as to the financial statements and
related financial schedules contained in the financial
statements, Registration Statement, the Prospectus and each
amendment or supplement thereto).
-17-
<PAGE> 18
(xv) The statements (A) in the Prospectus under
the captions "Risk Factors" -- Ranking of the Company's
Obligations Under the Junior Subordinated Debentures and the
Guarantee," and -- Option to Extend Interest Payment Period;
Tax Consequences; Market Price Consequences;" and "Certain
Federal Income Tax Consequences" and (B) in the Registration
Statement in [Item 24], insofar as such statements constitute
a summary of matters of law, are accurate summaries and fairly
present the information called for with respect to such
matters.
(xvi) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as
exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus which are not so
filed or described as required; and insofar as any statements
in the Registration Statement or the Prospectus constitute
summaries of any contract, agreement, document or instrument
to which the Trust, the Company or any Subsidiary is a party,
such statements are accurate summaries and fairly present the
information called for with respect to such matters.
(xvii) Such counsel knows of no legal or
governmental proceeding, pending or threatened, before any
court or administrative body or regulatory agency, to which
the Trust, the Company or any of the Subsidiaries is a party
or to which any of the properties of the Trust, the Company or
any of the Subsidiaries is subject that are required to be
described in the Registration Statement or Prospectus and are
not so described, or statutes or regulations that are required
to be described in the Registration Statement or the
Prospectus that are not so described (other than any banking
laws (as defined below), as to which counsel need express no
opinion).
(xviii) Neither the Company nor the Trust is, and
immediately upon completion of the sale of Preferred
Securities contemplated hereby, neither the Company nor the
Trust will be, an "investment company" or a company
"controlled" by an investment company under the Investment
Company Act of 1940, as amended.
(xix) To the best of such counsel's knowledge,
neither the Company nor any of the Subsidiaries is in
violation of its respective charter or bylaws.
Such counsel shall also state that on the basis of such counsel's
review and participation in conferences in connection with the preparation of
the Registration Statement and the Prospectus, such counsel has no reason to
believe that, as of its effective date, the Registration Statement or any
further amendment thereto made by the Offerors prior to the First Closing Date
or the Second Closing Date, as the case may be (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus or
any further amendment or supplement thereto made by the Offerors prior to the
First Closing Date or the Second Closing Date, as the case may be, (other than
the financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a material
fact or omitted to state a
-18-
<PAGE> 19
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of the First
Closing Date or the Second Closing Date, as the case may be, either the
Registration Statement or the Prospectus or any further amendment or supplement
thereto made by the Offerors prior to the First Closing Date or the Second
Closing Date, as the case may be, (other than the financial statements and
related schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
In rendering the above opinions, counsel may rely (i) as to matters of
law other than Nebraska and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local
counsel are satisfactory to them and they believe they and you are justified in
relying thereon and (ii) as to matters of fact, upon the representations of the
Trust and the Company contained in this Agreement and upon certificates of
trustees or officers of the Trust, the Company and of public officials.
(c) The Underwriters shall have received on the Closing Date the
opinion of ____________________ banking counsel for the Company, dated the
First Closing Date or the Second Closing Date, as the case may be, addressed to
the Underwriters, to the effect that:
(i) The Banks have been duly chartered to conduct the
business of banking in their state of domicile and the Company has all
necessary power and authority to own the Banks. The Company and the
Banks have all necessary consents and approvals under applicable
federal and state laws and regulations relating to banks and bank
holding companies ("banking laws") to own their respective assets and
carry on their respective businesses as currently conducted.
(ii) The statements in the Prospectus under the captions
"Risk Factors -- Dependence on Dividends from Subsidiary Banks, --
Competitive Banking Environment and -- Government Regulation and
Recent Legislation," insofar as such statements constitute a summary
of banking laws, are accurate summaries and fairly present the
information called for with respect to such matters.
(iii) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or administrative
body or regulatory agency, to which the Company or any of the
Subsidiaries is a party or to which any of the properties of the
Company or any of the Subsidiaries is subject that are required to be
described in the Registration Statement or Prospectus and are not so
described, or statutes or regulations that are required to be
described in the Registration Statement or the Prospectus that are not
so described.
(iv) The execution and delivery of this Agreement, the
Indenture, the Trust Agreement, the Guarantee Agreement and the
Expense Agreement and the consummation of the transactions herein and
therein contemplated do not and will not conflict with or result
-19-
<PAGE> 20
in a violation of or default under any banking laws, or any permit,
judgment, decree or order known to such counsel, or any lease,
contract, indenture, mortgage, loan agreement or other agreement or
other instrument or obligation known to such counsel to which the
Company or the Banks are a party or by which the Company or the Banks
or any of their respective properties is bound.
(v) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body under banking laws is
necessary in connection with the execution and delivery of this
Agreement, the Indenture, the Trust Agreement, the Guarantee Agreement
and the Expense Agreement and the consummation of the transactions
herein and therein contemplated, except such as have been obtained or
made, specifying the same.
(vi) The proceeds from the sale of the Preferred
Securities will constitute "Tier 1" capital (as defined in 12 C.F.R.
Part 325), subject to applicable regulatory limitations on the amount
thereof that can be included in Tier 1 capital.
(d) The Underwriters shall have received on the Closing
Date the opinion of Richards, Layton & Finger, P.A. counsel to
Wilmington Trust Company, as Property Trustee under the Trust
Agreement, Indenture Trustee under the Indenture, and Guarantee
Trustee under the Guarantee Agreement, dated the First Closing Date or
the Second Closing Date, as the case may be, addressed to the
Underwriters, to the effect that:
(i) Wilmington Trust Company is duly incorporated and is
validly existing in good standing as a banking corporation under the
laws of the State of Delaware.
(ii) Wilmington Trust Company has the power and authority
to execute, deliver and perform its obligations under the Trust
Agreement, the Indenture and the Guarantee Agreement.
(iii) Each of the Trust Agreement, the Indenture and the
Guarantee Agreement has been duly authorized, executed and delivered
by Wilmington Trust Company and constitutes a legal, valid and binding
obligation of Wilmington Trust Company, enforceable against Wilmington
Trust Company, in accordance with its terms.
(iv) The execution, delivery and performance by Wilmington
Trust Company of the Trust Agreement, the Indenture and the Guarantee
Agreement do not conflict with or constitute a breach of the charter
or by-laws of Wilmington Trust Company.
(v) No consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency
of the State of Delaware or the United States of America governing the
banking or trust powers of Wilmington Trust Company is required for
the execution, delivery or performance by Wilmington Trust Company of
the Trust Agreement, the Indenture and the Guarantee Agreement.
-20-
<PAGE> 21
(e) The underwriters shall have received on the First
Closing Date or the Second Closing Date, as the case may be, the
opinion of Richards, Layton & Finger, P.A., as special counsel for the
Offerors that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required as of the date hereof under the Delaware Act
with respect to the creation and valid existence of the Trust as a
business trust have been made.
(ii) Under the Trust Agreement and the Delaware Act, the
Trust has the trust power and authority to own property and to conduct
its business, all as described in the Prospectus.
(iii) The Trust Agreement constitutes a valid and binding
obligation of the Company, the Property Trustee and each of the
Administrative Trustees, and is enforceable against the Company, the
Property Trustee and each of the Administrative Trustees in accordance
with its terms.
(iv) Under the Trust Agreement and the Delaware Act, the
Trust has the trust power and authority (i) to execute and deliver,
and to perform its obligations under, this Agreement, and (ii) to
issue, and to perform its obligations under, the Preferred Securities
and the Common Securities.
(v) Under the Trust Agreement and the Delaware Act, the
execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations under this Agreement, have
been duly authorized by all necessary trust action on the part of the
Trust.
(vi) Under the Delaware Act, the certificate attached to
the Trust Agreement as Exhibit E is an appropriate form of certificate
to evidence ownership of the Preferred Securities. The Preferred
Securities and the Common Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications hereinafter expressed in this paragraph (vi), fully
paid and non-assessable undivided beneficial interests in the assets
of the Trust. The respective holders of the Preferred Securities and
the Common Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. Such counsel may
note that the respective holders of the Preferred Securities and the
Common Securities may be obligated, pursuant to the Trust Agreement,
to make certain payments under the Trust Agreement.
(vii) Under the Trust Agreement and the Delaware Act, the
issuance of the Preferred Securities and the Common Securities is not
subject to preemptive or similar rights.
(viii) The issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the purchase by the Trust of the
Junior Subordinated Debentures, the execution, delivery and
performance by the Trust of this Agreement and the Guarantee
-21-
<PAGE> 22
Agreement, the consummation by the Trust of the transactions
contemplated by this Agreement and compliance by the Trust with its
obligations under this Agreement do not violate (a) any of the
provisions of the Certificate of Trust or the Trust Agreement or (b)
any applicable Delaware law or Delaware administrative regulations.
(f) The Underwriters shall have received from Chapman and Cutler,
Chicago, Illinois, counsel for the Underwriters, an opinion dated the First
Closing Date or the Second Closing Date, as the case may be, with respect to
the formation of the Trust, the validity of the Preferred Securities, the
Indenture, the Trust Agreement, the Guarantee Agreement, the Expense Agreement,
this Agreement, the Registration Statement, the Prospectus, and other related
matters as the Underwriters may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters.
(g) The Underwriters shall have received on each of the date hereof,
the First Closing Date and any Second Closing Date a signed letter, dated as of
the date hereof, the First Closing Date or any Second Closing Date,
respectively, in form and substance satisfactory to the Underwriters, from
Clifton Gunderson L.L.C. to the effect that they are independent public
accountants with respect to the Trust, the Company and the Subsidiaries within
the meaning of the Act and the related rules and regulations and containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(h) Subsequent to the execution and delivery of this Agreement and
prior to the First Closing Date or the Second Closing Date, as the case may be,
there shall not have been any change or any development involving a reasonably
foreseeable change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Offerors
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in your reasonable judgment, is material and adverse to the Offerors and
makes it impracticable or inadvisable to proceed with the public offering or
the delivery of the Preferred Securities being delivered at the First Closing
Date or the Second Closing Date, as the case may be, on the terms and in the
manner contemplated in the Prospectus.
(i) The Underwriters shall have received on the First Closing Date
and the Second Closing Date, as the case may be, a certificate or certificates
of the chief executive officer and the principal financial officer of the
Company, to the effect that, as of such Closing Date each of them severally
represents as follows:
(i) The Prospectus was filed with the Commission pursuant
to Rule 424(b) within the applicable period prescribed for such filing
by the rules and regulations under the Act and in accordance with
Section 4 of this Agreement; no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been initiated or are, to his
knowledge, threatened by the Commission.
(ii) The representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct at and as of
the First Closing Date and the Second Closing Date, as the case may
be, and the Company has performed all of its obligations under this
Agreement to be performed at or prior to the First Closing Date and
the Second Closing Date, as the case may be.
-22-
<PAGE> 23
(j) The Underwriters shall have received on the First Closing Date
and the Second Closing Date, as the case may be, a certificate or certificates
of the Administrative Trustees, to the effect that, as of such Closing Date
each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant
to Rule 424(b) within the applicable period prescribed for such filing
by the rules and regulations under the Act and in accordance with
Section 4 of this Agreement; no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been initiated or are, to his
knowledge, threatened by the Commission.
(ii) The representations and warranties of the Trust set
forth in Section 1 of this Agreement are true and correct at and as of
the First Closing Date and the Second Closing Date, as the case may
be, and the Trust has performed all of its obligations under this
Agreement to be performed at or prior to the First Closing Date and
the Second Closing Date, as the case may be.
(k) The Offerors shall have furnished to the Underwriters such
further certificates and documents as the Underwriters may reasonably have
requested.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Underwriters and to Chapman
and Cutler, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Underwriters by notifying the Trust of such termination in writing or by
telegram at or prior to the First Closing Date. In such event, the Trust and
the Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 7 hereof).
Section 7. Indemnification. (a) The Offerors jointly and
severally agree to indemnify and hold harmless each Underwriter, each officer
and director thereof, and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or such persons may became subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus or the
Prospectus, including any amendments or supplements thereto, (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Preferred Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
losses, claims, damages or liabilities (or actions or proceedings in respect
-23-
<PAGE> 24
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Offerors shall not be liable (1) in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission, made in
the Registration Statement, any Preliminary Prospectus or the Prospectus,
including any amendments or supplements thereto, in reliance upon and in
conformity with written information furnished to the Offerors by any
Underwriter specifically for use therein or (2) in the case of any matter
covered by clause (iii) above to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such losses, claims, damages
or liabilities resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence, recklessness or willful misconduct.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Offerors and the trustees and directors and officers who have signed the
Registration Statement, and each person, if any, who controls the Offerors
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Offerors or any such person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, and will reimburse
any legal or other expenses reasonably incurred by the Offerors or any such
person in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Trust or the Company by or through the
Underwriters specifically for use therein. The obligations of the Underwriters
under this Section 7(b) are several in proportion to their respective
underwriting obligations and not joint.
(c) The Company agrees to indemnify the Trust against all loss,
liability, claim damage and expense whatsoever, which may become due from the
Trust under subsection (a).
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution provided
for in Section 7(e) shall be available with respect to a proceeding to any
party who shall fail to give notice of such proceeding as provided in this
Section 7(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such
-24-
<PAGE> 25
notice, but the failure to give such notice shall not relieve the indemnifying
party or parties from any liability which it or they may have to the
indemnified party otherwise than on account of the provisions of Section 7(a)
or (b). In case any such proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party and shall pay as incurred the fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel at its own
expense. Notwithstanding the foregoing, the indemnifying party shall pay
promptly as incurred the reasonable fees and expenses of the counsel retained
by the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it or other indemnified parties which are different from or
additional to those available to the indemnifying party. It is understood that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm at any time for all such indemnified parties. Such
firm shall be designated in writing by the Underwriters and shall be reasonably
satisfactory to the Offerors in the case of parties indemnified pursuant to
Section 7(a) and shall be designated in writing by the Offerors and shall be
reasonably satisfactory to the Underwriters in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7(a) or (b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors on the
one hand and the Underwriters on the other from the offering of the Preferred
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Offerors on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Offerors on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Offerors bears to
the total underwriting discounts and commissions received by the underwriters,
in each case as set forth on the cover page of the prospectus. The
-25-
<PAGE> 26
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Offerors on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Offerors and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 7(e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7(e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereto) referred to above in this Section 7(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(e), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Preferred Securities purchased by
such Underwriter; and no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 7(e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Offerors under this Section 7 shall be in
addition to any liability which the Offerors may otherwise have, and the
obligations of the Underwriters under this Section 7 shall be in addition to
any liability which the Underwriters may otherwise have.
Section 8. Notices. All communications hereunder shall be in
writing and, except as otherwise provided herein, will be mailed, delivered or
telegraphed and confirmed as follows: if to the Underwriters, to them c/o Howe
Barnes Investments, Inc., 135 South LaSalle Street, Suite 1500, Chicago,
Illinois 60603, Attention: Daniel E. Coughlin, Senior Vice President and
Director of Corporate Finance; if to the Company, to First Western Corporation,
11210 Huron Street, Northglenn, Colorado 80234, Attention: Timothy D. Wiens;
and if to the Trust, to it at c/o First Western Corporation, 11210 Huron
Street, Northglenn, Colorado 80234, Attention: Timothy D. Wiens. All notices
given by telegram shall be promptly confirmed by letter. Any notice to the
Trust shall also be copied to the Company at the address previously stated.
Any party may change its address for notice purposes by written notice to the
other parties.
Section 9. Termination. This Agreement may be terminated by you
by notice to the Offerors as follows:
(a) At any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination
shall be without liability on the part of the Offerors to the
Underwriters (except for the expenses to be paid or reimbursed
pursuant to Section 5 and except to the extent provided in Section 7
hereof) or of any Underwriter to the Offerors;
(b) At any time prior to the First Closing Date if any of
the following has occurred: (i) since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, any material adverse change in or affecting the condition,
-26-
<PAGE> 27
financial or otherwise, of the Trust, the Company and the Subsidiaries
taken as a whole or the business affairs, management, financial
position, shareholders' equity or results of operations of the Trust,
the Company and the Subsidiaries taken as a whole, whether or not
arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency
after the date hereof or other national or international calamity or
crisis or change in economic or political conditions if the effect of
such outbreak, escalation, declaration, emergency, calamity, crisis or
change on the financial markets of the United States would, in your
judgment, make the offering or delivery of the Preferred Securities
impracticable or inadvisable, (iii) suspension of trading in
securities on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on either such Exchange, or
a halt or suspension of trading in securities generally which are
quoted on the American Stock Exchange or (iv) declaration of a banking
moratorium by either federal authorities or New York or Nebraska or
Colorado state authorities; or
(c) As provided in Section 6 of this Agreement.
Section 10. Written Information. For all purposes under this
Agreement (including, without limitation, Section 1, Section 3 and Section 7
hereof), the Offerors understand and agree with each of the Underwriters that
the following constitutes the only written information furnished to the
Offerors by the Underwriters specifically for use in preparation of the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto: (i) the per share "Price to Public" and per
share "Underwriting Discounts and Commissions" set forth on the cover page of
the Prospectus, (ii) the information relating to stabilization set forth on
page ____ of the Preliminary Prospectus and the Prospectus, and (iii) the
information set forth in the third and sixth paragraphs under the caption
"Underwriting" in the Preliminary Prospectus and the Prospectus.
Section 11. Successors. This Agreement has been and is made solely
for the benefit of and shall be binding upon the Underwriters, the Trust and
the Company and their respective successors, executors, administrators, heirs
and assigns, and the trustees and controlling persons and the officers and
directors of any such controlling person referred to herein, and no other
person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Preferred Securities merely because of
such purchase.
Section 12. Miscellaneous. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Offerors or controlling persons thereof and
(c) delivery of and payment for the Preferred Securities under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
-27-
<PAGE> 28
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Illinois.
-28-
<PAGE> 29
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Offerors and the
Underwriters in accordance with its terms.
Very truly yours,
FW CAPITAL I, a Delaware business trust
By
Timothy D. Wiens
Administrative Trustee
FIRST WESTERN CORPORATION
By
Joel H. Wiens
President
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first above written.
HOWE BARNES INVESTMENTS, INC.
As Representative of the several
Underwriters named in Schedule A
By
Daniel E. Coughlin
Senior Vice President
-29-
<PAGE> 30
SCHEDULE A
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>
Howe Barnes Investments, Inc. . . . . . . . . . . .
---------
TOTAL: 2,000,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FIRST WESTERN CORP.
First Western Corp. (hereinafter referred to as the "Corporation"),
desiring to amend and restate its Articles of Incorporation, hereby submits the
following Amended and Restated Articles of Incorporation to the Secretary of
State of the State of Nebraska pursuant to the provisions of the Nebraska
Business Corporation Act:
FIRST: The Corporation desires to restate and amend its Articles of
Incorporation as currently in effect as hereinafter provided.
SECOND: The provisions set forth in these Amended and Restated
Articles of Incorporation supersede the original Articles of Incorporation and
all amendments thereto.
THIRD: The Articles of Incorporation of the Corporation are hereby
amended and restated by striking in their entirety all current Articles of the
Corporation, and by substituting in lieu thereof the following:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be First Western Corp.
ARTICLE II
PURPOSES
The nature of the business of the Corporation and the objects and
purposes to be transacted, promoted and carried on by it are as follows:
2.1 To acquire as principal, agent or partner, general or limited or
as a single or multibank holding company, by purchase, contract or otherwise,
financial institutions and to own, hold, manage, and sell, encumber or
otherwise dispose of and deal in financial institutions of every kind and
description, together with other non-banking activities that are closely
related to the operations of financial institutions.
2.2 To acquire as principal, agent or partner, general or limited, by
purchase, lease contract or otherwise, lands and interest in lands, buildings,
or other structures and to own, hold, improve, develop and manage the same, and
to erect or cause to be erected on any lands owned, held or occupied by the
Corporation, buildings or other structures with their appurtenances, and to
rebuild, enlarge, alter or improve any buildings or other structures now or
hereafter erected on any lands so owned, held or occupied; and to mortgage,
sell,
<PAGE> 2
lease or otherwise dispose of any lands or interests in lands and in buildings
or other structures at any time owned or held by the Corporation.
2.3 To invest in and to buy, sell or otherwise acquire or dispose
of and deal in loans secured by liens upon real and personal property both as
principal and as agent.
2.4 To invest, as principal or agent, or partner, general or
limited, in all forms of personal investment property, including without
limitation, securities, stocks, bonds, mutual funds and secured or unsecured
notes.
2.5 To purchase or otherwise acquire the whole or any part of the
property, assets, business, goodwill and rights and to undertake or assume the
whole or any part of the bonds, mortgages, franchises, leases, contracts,
indebtedness, guaranties, liabilities, and obligations of any person, firm,
association, corporation or organization, and to pay for the same or any part
or combination thereof, in cash, shares of the capital stock, bonds,
debentures, debenture stock, notes and other obligations of this corporation,
or otherwise, or by undertaking and assuming the whole or any part of the
liabilities or obligations of the transferor; and to conduct in any lawful
manner the whole or any part of the businesses so acquired and to exercise all
the powers necessary or convenient in and about the conduct, management and
carrying on of such business.
2.6 To borrow money for any of the purposes of this Corporation
and to issue bonds, debentures, debenture stock, notes or other obligations
therefore, and to secure the same by pledge or mortgage of the whole or any
part of the property of this Corporation whether real or personal, or to issue
bonds, debentures, debenture stock, notes or other obligations with any such
security.
2.7 To lend money, to guarantee, purchase, acquire, exchange,
hold, sell assign, transfer, mortgage, pledge, or otherwise dispose of shares
of the capital stock of, or any bonds, securities or evidences of indebtedness
created by any corporation or corporations organized under the laws of this
State or of any other state, district or county and also bonds or evidences of
indebtedness of the United States or any state, territory, dependency, or
county or subdivision or municipality thereof, and while the owner thereof to
exercise all rights, powers, and privileges of ownership, including the right
to vote thereon.
2.8 To transact any and all lawful business for which corporations
may be incorporated pursuant to the Nebraska Business Corporation Act now
existing or as hereafter amended, in any state, territory, district,
possession, dependency or other political subdivision of the United States of
America, or in any foreign country, to the extent that such business is not
forbidden by the laws of such state, territory, district, possession,
dependency or political subdivision of the United States or America or by such
foreign country.
2
<PAGE> 3
ARTICLE III
DURATION
This Corporation shall have perpetual existence, unless dissolved
according to law.
ARTICLE IV
CAPITAL STOCK
4.1 The Corporation is authorized to issue two classes of stock,
to be designated, respectively, "common stock" and "preferred stock." The
total number of shares that the Corporation is authorized to issue is
70,000,000 shares, of which 50,000,000 shares shall be common stock, $.001 par
value, and of which 20,000,000 shares shall be preferred stock, $.001 par
value.
4.2 The preferred stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, and the liquidation preferences of any wholly-unissued series of
preferred stock, and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issuance of shares of that series, but
not below the number of shares of such series then outstanding. In the event
that the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
4.3 The Board of Directors of the Corporation may dispose of,
issue, and sell shares in accordance with, and in such amounts as may be
permitted by, the laws of the State of Nebraska and the provisions of these
Articles of Incorporation, as amended from time to time, and for such
consideration, at such price or prices, at such time or times and upon such
terms and conditions (including the privilege of selectively repurchasing the
same) as the Board of Directors of the Corporation shall determine, without the
authorization or approval by any shareholder of the Corporation. Shares may be
disposed of, issued, and sold to such persons, firms or corporations as the
Board of Directors may determine, without any preemptive or other right on the
part of the owners or holders of other shares of the Corporation of any class
or kind to acquire such shares by reason of their ownership of such other
shares.
3
<PAGE> 4
ARTICLE V
RIGHTS OF SHAREHOLDERS
The rights and privileges relating to the shares of common stock named
in Article IV shall be as follows:
5.1 Holders of the shares of the common stock of the Corporation
shall not be entitled to the right to purchase or subscribe for any unissued or
treasury shares, or any additional shares to be issued by reason of any
increase of the authorized shares of the Corporation, or any bonds,
certificates of indebtedness, debentures, or other securities, rights,
warrants, or options, convertible into shares of any unissued or treasury
shares in accordance with their proportionate equity in the Corporation.
5.2 Each share of common stock shall be entitled to one vote,
either in person or by proxy, at all shareholders' meetings. Cumulative voting
shall be allowed in the election of directors.
5.3 All outstanding shares of common stock shall share equally in
dividends and upon liquidation. Dividends are payable at the discretion of the
Board of Directors at such times and in such amounts as they deem advisable,
subject, however, to the provisions of the laws of the State of Nebraska.
5.4 The Board of Directors may cause any stock issued by the
Corporation to be issued subject to such lawful restrictions, qualifications,
limitations or special rights as they deem fit, which restrictions,
qualifications, limitations or special rights may be created by provisions in
the Bylaws of the Corporation or in the minutes of any properly convened
meeting of the Board of Directors; provided, however, notice of such special
restrictions, qualifications, limitations or special rights must appear on the
certificate evidencing ownership of such stock.
ARTICLE VI
DIRECTORS
6.1 The affairs of the Corporation shall be governed by a Board of
Directors of not less than three (3) nor more than twelve (12) Directors as the
Bylaws may determine from time to time, who shall be elected in accordance with
the Bylaws of the Corporation.
6.2 Directors of the Corporation need not be residents of Nebraska
nor holders of shares of the Corporation's capital stock.
6.3 Meetings of the Board of Directors, regular or special, may be
held within or without Nebraska upon such notice as may be prescribed by the
Bylaws of the
4
<PAGE> 5
Corporation. Attendance of a Director at a meeting shall constitute a waiver
by him of notice of such meeting unless he attends only for the express purpose
of objecting to the transaction of any business at that meeting on the ground
that the meeting is not lawfully called or convened.
6.4 A majority of the number of Directors at any time constituting
the Board of Directors shall constitute a quorum for the transaction of
business, and the act of a majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
6.5 By resolution adopted by a majority of the number of Directors
at any time constituting the Board of Directors, the Board of Directors may
designate two or more Directors to constitute an executive committee which
shall have and may exercise, to the extent permitted by law or in such
resolution, all of the authority of the Board of Directors in the management of
the Corporation; provided, however, that such delegation of authority shall not
operate to relieve the Board of Directors or any member thereof of any
responsibility imposed on it or him by law.
6.6 Any vacancy in the Board of Directors, however caused, may be
filled by the affirmative vote of a majority of the remaining Directors, though
less than a quorum of the Board of Directors. A Director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
ARTICLE VII
PLACE OF BUSINESS
The address of the Corporation's principal office is 11210 Huron Street,
Northglenn, Colorado 80234. The Board of Directors may, however, from time to
time establish such other offices, branches, subsidiaries or divisions in such
other place or places within or without the State of Nebraska as it deems
advisable.
ARTICLE VIII
OFFICERS
The officers of the Corporation shall consist of a President, one or
more Vice Presidents as may be prescribed by the Bylaws of the Corporation, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors at such time and in such manner as may be prescribed by the Bylaws of
the Corporation. Any two or more offices may be held by the same person,
except the offices of President and Secretary.
5
<PAGE> 6
ARTICLE IX
BYLAWS
The Board of Directors shall have the power to make and adopt such
prudent Bylaws for the government of the Corporation not inconsistent with the
laws of the State of Nebraska or these Articles of Incorporation for the
purpose of regulating and carrying on the business of the Corporation within
the scope of its objects and purposes; and the Board of Directors from time to
time may change, alter or amend the same as may be beneficial to the interests
of the Corporation except as otherwise specifically provided therein.
ARTICLE X
MEETINGS OF SHAREHOLDERS
Meetings of shareholders of the Corporation shall be held at such
place within or without the State of Nebraska and at such times as may be
prescribed in the Bylaws of the Corporation. Special meetings of the
shareholders of the Corporation may be called by the President of the
Corporation, the Board of Directors, or by the record holder or holders of at
least ten percent (10%) of all shares entitled to vote at the meeting. At the
meeting of the shareholders, except to the extent otherwise provided by the
Bylaws, a quorum shall consist of a majority of the Shares entitled to vote at
the meeting, represented in person or by proxy and, if a quorum is present, the
affirmative vote of the majority of shares represented and entitled to vote at
the meeting shall be the act of the shareholders unless the vote of a greater
number or voting by classes is required by law.
ARTICLE XI
SALE OF ASSETS
Whenever the Board of Directors at any meeting thereof, by a
two-thirds (2/3) majority vote of the whole Board, determines that it is in the
best interests of the Corporation, the Corporation may sell, lease, exchange,
or convey all of its property and assets, including its good will and its
corporate franchises, upon such terms and conditions and for such consideration
as the Board of Directors shall deem expedient; provided, however, that the
sale or disposal of all or substantially all of the property and assets of the
Corporation shall be authorized or ratified by the affirmative vote of the
holders of at least a two-thirds (2/3) majority of the capital stock then
issued and outstanding and entitled to vote on such proposal, such vote to be
taken at a meeting of shareholders duly called for that purpose as provided by
the statutes of the State of Nebraska.
6
<PAGE> 7
ARTICLE XII
INDEMNIFICATION
The Corporation shall indemnify directors, officers and other persons
(including without limitation the power to advance expenses and the power to
purchase and maintain insurance with respect thereto) to the fullest extent
allowed by Nebraska law. The Board of Directors is hereby authorized on behalf
of the Corporation and without shareholder action to exercise all of the
Corporation's powers of indemnification, whether by provision in the Bylaws or
otherwise, to the extent not inconsistent with the Nebraska law.
ARTICLE XIII
ELIMINATION OF PERSONAL LIABILITY OF A DIRECTOR
To the fullest extent permitted by Nebraska law, as the same exists or
may hereafter be amended, a director of the Corporation shall not be liable to
the Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director.
ARTICLE XIV
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation expressly reserves the right to amend these Articles
of Incorporation and to alter, change, or repeal any provision contained herein
in any manner now or hereafter permitted by the Nebraska Business Corporation
Act, and the rights of all shareholders are expressly made subject to such
power of amendment. Whenever an amendment to these Articles of Incorporation
shall be required to be adopted by the shareholders of the Corporation, the
proposed amendment shall be adopted upon receiving the affirmative vote of a
two-thirds (2/3) majority of shares entitled to vote thereon.
FOURTH: The date of adoption of these Amended and Restated Articles of
Incorporation of the Corporation by the Board of Directors and the shareholders
of the Corporation was November 2, 1998.
FIFTH: These Amended and Restated Articles of Incorporation of the
Corporation were approved by the Corporation's Board of Directors and contain
amendments requiring shareholder approval.
SIXTH: The amendments were approved by the shareholders of the
Corporation, the following is the designation, number of outstanding shares,
number of votes entitled to be cast by each voting group entitled to vote
separately on each amendments, and the number of votes of each voting group
indisputably represented a the meeting:
7
<PAGE> 8
<TABLE>
<CAPTION>
Number of Votes
Number of Votes Represented
Designation Shares Outstanding Entitled to be Cast at the Meeting
- ----------- ------------------ ------------------- ---------------
<S> <C> <C> <C>
Common 140,000 140,000 140,000
</TABLE>
SEVENTH: The total number of undisputed votes cast by the holders of
the Corporation's common stock, the only voting group entitled to vote, was
140,000 on all amendments, which was sufficient for approval by such voting
group.
IN WITNESS WHEREOF, First Western Corp. has caused these Amended and
Restated Articles of Incorporation to be signed in its name and on its behalf
by its President this 6th day of November, 1998.
FIRST WESTERN CORP.
By: /s/ Timothy D. Wiens
----------------------------------------------------
Timothy D. Wiens, Vice President and Vice Chairman
8
<PAGE> 1
AMENDED BYLAWS EXHIBIT 3.2
OF
FIRST WESTERN CORP.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation
is located at 11210 Huron Street, Northglenn, Colorado 80234. The corporation
may change the location of such principal office and may have such other
offices, either within or outside Colorado, as the board of directors may
designate, or as the business of the corporation may require from time to time.
SECTION 2. REGISTERED OFFICE AND REGISTERED AGENT. The address of
the registered office of the corporation is 115 South Walnut, Kimball,
Nebraska, and the name of the initial registered agent at this address is Mike
Nelson. The registered office and the registered agent may be changed by the
board of directors at any time.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held on a date set by the board of directors within 120 days of the
end of the corporation's fiscal year or at any other time on any other day that
shall be fixed by the board of directors, for the purpose of electing directors
and for the transaction of any other business that may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday in Nebraska,
the meeting shall be held on the next succeeding business day. If the election
of directors shall not be held on the day designated in this Section 1 for an
annual meeting of the shareholders, or at any adjournment of the meeting, the
board of directors shall cause the election to be held at a special meeting of
the shareholders as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETING. Unless otherwise prescribed by statute,
special meetings of the shareholders may be called for any purpose by the
president, the board of directors, or by the holders of not less than 10% of
all outstanding shares of the corporation entitled to vote at the meeting.
SECTION 3. PLACE OF MEETING. The board of directors may designate
any place, either within or without Nebraska, as the place of meeting for any
annual or special meeting called by the board of directors. A waiver of notice
signed by all shareholders entitled to vote at a meeting may designate any
place, either within or without Nebraska, as the place for the holding of the
meeting. If no designation is made, or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Company.
<PAGE> 2
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed by
statute, be delivered not less than 10 nor more than 60 days before the date of
the meeting, either personally or by mail, by or at the direction of the
chairman of the board, the president, the secretary, or the officer or other
person authorized to give notice of the meeting, to each shareholder of record
entitled to vote at the meeting.
Notice of a special meeting shall include a description of the purpose
or purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to: (i) an amendment to the articles of
incorporation of the corporation; (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in which the
corporation's shares will be required; (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another entity which
this corporation controls, in each case with or without the goodwill; (iv) a
dissolution of the corporation; (v) restatement of the articles of
incorporation; or (vi) any other purpose for which a statement of purpose is
required by the Nebraska Business Corporation Act. Notice shall be given
personally or by mail, private carrier, telegraph, teletype, electronically
transmitted facsimile or other form of wire or wireless communication by or at
the direction of the chairman of the board, the president, the secretary, or
the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed and if in a comprehensible form,
such notice shall be deemed to be given and effective when deposited in the
United States mail, properly addressed to the shareholder at his address as it
appears in the corporation's current record of shareholders, with first class
postage prepaid. If notice is given other than by mail, and provided that such
notice is in a comprehensible form, the notice is given and effective on the
date actually received by the shareholder.
If requested by the person or persons lawfully calling such meeting,
the secretary shall give notice thereof at corporate expense. In order to be
entitled to receive notice of any meeting, a shareholder shall advise the
corporation in writing of any change in such shareholder's mailing address as
shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place, notice
need not be given of the new date, time or place if the new date, time or place
of such meeting is announced before adjournment at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is fixed for the
adjournment meeting, a new notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting as of the new record
date.
A shareholder may waive notice of a meeting before or after the time
and date of the meeting by a writing signed by such shareholder. Such waiver
shall be delivered to the corporation for filing with the corporate records,
but this delivery and filing shall not be conditions to the effectiveness of
the waiver. Further, by attending a meeting either in person or by proxy, a
shareholder waives objection to lack of notice or defective notice of
-2-
<PAGE> 3
the meeting unless the shareholder objects at the beginning of the meeting to
the holding of the meeting or the transaction of business at the meeting
because of lack of notice or defective notice. By attending the meeting, the
shareholder also waives any objection to consideration at the meeting of a
particular matter not within the purpose or purposes described in the meeting
notice unless the shareholder objects to considering the matter when it is
presented.
SECTION 5. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment of a meeting, or shareholders entitled to receive payment of
any distribution, or in order to make a determination of shareholders for any
other proper purpose, the board of directors of the corporation may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than 70 days and, in case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. If no
record date is fixed by the directors, the record date shall be the day before
the notice of the meeting is given to shareholders, or the date on which the
resolution of the board of directors providing for a distribution is adopted,
as the case may be. When a determination of shareholders entitled to vote at
any meeting of shareholders is made as provided in this Section 5, such
determination shall apply to any adjournment thereof unless the board of
directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
Unless otherwise specified when the record date is fixed, the time of day for
such determination shall be as of the corporation's close of business on the
record date.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be given
notice of action so taken shall be the date a writing upon which the action is
taken is first received by the corporation. The record date for determining
shareholders entitled to demand a special meeting shall be the date of the
earliest of any of the demands pursuant to which the meeting is called.
SECTION 6. SHAREHOLDERS' LIST. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make, before each
meeting of shareholders, a complete record of the shareholders entitled to vote
at the meeting or any adjournment of the meeting, arranged by voting groups and
within each voting group by class or series, in alphabetical order within each
class or series, with the address of, and the number of shares of each class or
series held by each shareholder. The shareholders' list shall be available for
inspection by any shareholder beginning two business days after the notice of
the meeting is given and continuing through the meeting, and any adjournment of
the meeting, at the principal office of the corporation or at a place
identified in the notice of the meeting in the city where the meeting will be
held. The shareholders' list shall be subject to inspection on the written
demand of any shareholder and, subject to restrictions of Nebraska law, to copy
the list during regular business hours and during the period it is available
for inspection. The original stock transfer books shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
-3-
<PAGE> 4
SECTION 7. QUORUM AND MANNER OF ACTING. Except as provided by law,
by the Articles of Incorporation or these Bylaws, a majority of the votes
entitled to be cast on a matter by a voting group represented in person or by
proxy, shall constitute a quorum of that voting group for action on the matter.
In the absence of a quorum at a meeting, a majority of the votes so represented
may adjourn the meeting from time to time without further notice, for a period
not to exceed 120 days for any one adjournment. If a quorum is present at such
adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of enough shareholders to
leave less than a quorum.
If a quorum exists, action on a matter other than the election of
directors by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast within the voting group
opposing the action, unless the vote of a greater number or voting by classes
is required by law or the articles of incorporation.
SECTION 8. PROXIES. At all meetings of shareholders, a shareholder
may vote by proxy by signing an appointment form or similar writing, either
personally or by his duly authorized attorney-in-fact. A shareholder may also
appoint a proxy by transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written agreement of the
appointment of the proxy, a proxy solicitor, proxy support service
organization, or other person duly authorized by the proxy to receive
appointments as agent for the proxy, or to the corporation. The transmitted
appointment shall set forth or be transmitted with written evidence from which
it can be determined that the shareholder transmitted or authorized the
transmission of the appointment. The proxy appointment form or similar writing
shall be filed with the secretary of the corporation before or at the time of
the meeting. The appointment of a proxy is effective when received by the
corporation and is valid for eleven months unless a different period is
expressly provided in the appointment form or similar writing.
Any complete copy, including an electronically transmitted facsimile,
of an appointment of a proxy may be substituted for or used in lieu of the
original appointment for any purpose for which the original appointment could
be used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless: (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent authorized
to tabulate votes before the proxy exercises his authority under the
appointment; or (ii) other notice of the revocation of the appointment is
received by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his authority under the appointment. Other
notice of revocation may, in the discretion of the corporation, be deemed to
include the appearance at a shareholders' meeting of the shareholder who
granted the proxy and his voting in person on any matter subject to a vote at
such meeting.
-4-
<PAGE> 5
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by the
shareholder (including a shareholder who is a successor to the shareholder who
granted the proxy) either personally or by his attorney-in-fact,
notwithstanding that the revocation may be a breach of an obligation of the
shareholder to another person not to revoke the appointment.
Subject to Section 10 of this Article II and any express limitation on
the proxy's authority appearing on the appointment form, the corporation is
entitled to accept the proxy's vote or other action as that of the shareholder
making the appointment.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote, except in the election of directors, and
each fractional share shall be entitled to a corresponding fractional vote on
each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are limited
or denied by the articles of incorporation as permitted by the Nebraska
Business Corporation Act. Cumulative voting is permitted in the election of
directors. Each record holder of stock shall be entitled to vote in the
election of directors and shall have as many votes for each of the shares owned
by him as there are directors to be elected and for whose election he has the
right to vote.
At each election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, shall be elected to the board of directors.
Unless the articles of incorporation provide otherwise, the shares of
the corporation are not entitled to be voted if they are owned, directly or
indirectly, by a second corporation, domestic or foreign, and the first
corporation owns, directly or indirectly, a majority of the shares entitled to
vote for directors of the second corporation except to the extent the second
corporation holds the shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
SECTION 10. VOTING OF SHARES BY CERTAIN SHAREHOLDERS. If the name
signed on a vote, consent, waiver, proxy appointment, or proxy appointment
revocation corresponds to the name of a shareholder, the corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, proxy
appointment or proxy appointment revocation and give it effect as the act of
the shareholder. If the name signed on a vote, consent, waiver, proxy
appointment or proxy appointment revocation does not correspond to the name of
a shareholder, the corporation, if acting in good faith, is nevertheless
entitled to accept the
-5-
<PAGE> 6
vote, consent, waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if: (i) the shareholder is an
entity and the name signed purports to be that of an officer or agent of the
entity; (ii) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation; (iii) the name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation has been presented with
respect to the vote, consent, waiver, proxy appointment or proxy appointment
revocation; (iv) the name signed purports to be that of a pledgee, beneficial
owner or attorney-in-fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to sign for
the shareholder has been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation; (v) two or more persons are
the shareholder as co-tenants or fiduciaries and the name signed purports to be
the name of at least one of the co-tenants or fiduciaries, and the person
signing appears to be acting on behalf of all the co-tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy appointment or proxy
appointment revocation is otherwise proper under rules established by the
corporation that are not inconsistent with this Section 10.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer
or agent authorized to tabulate votes, acting in good faith, has reasonable
basis for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who accepts or
rejects a vote, consent waiver, proxy appointment or proxy appointment
revocation in good faith and in accordance with the standards of this Section
10 is liable in damages for the consequences of the acceptance or rejection.
SECTION 11. MEETINGS BY TELECOMMUNICATION. Any or all of the
shareholders may participate in an annual or special shareholders' meeting by,
or the meeting may be conducted through the use of, any means of communication
by which all persons participating in the meeting may hear each other during
the meeting. A shareholder participating in a meeting by this means is deemed
to be present in person at the meeting.
SECTION 12. RECOGNITION PROCEDURE FOR BENEFICIAL OWNERS. The board
of directors may adopt by resolution a procedure whereby a shareholder of the
corporation may certify in writing to the corporation that all or a portion of
the shares registered in the name of such shareholder are held for the account
of a specified person or persons. The resolution may set forth: (i) the types
of nominees to which it applies; (ii) the rights or privileges that the
corporation will recognize in a beneficial owner, which may include rights and
privileges other than voting; (iii) the form of certification and the
information to be contained therein; (iv) if the certification is with respect
to a record date, the time within which the certification must be received by
the corporation; (v) the period for which the nominee's use of the procedure is
effective; and (vi) such other provisions with respect to
-6-
<PAGE> 7
the procedure as the board deems necessary or desirable. Upon receipt by the
corporation of a certificate complying with the procedure established by the
board of directors, the persons specified in the certification shall be deemed,
for the purpose or purposes set forth in the certification, to be the
registered holders of the number of shares specified in place of the
shareholder making the certification.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of, its board of directors, except as
otherwise provided in the Nebraska Business Corporation Act.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
directors of the corporation shall be fixed from time to time by a resolution
of the board of directors, but in no instance shall there be less than three or
more than 12 directors. No decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. A director shall be a
natural person who is 18 years of age or older. A director need not be a
resident of Nebraska or a shareholder of the corporation. Each director shall
hold office until his successor shall have been elected and qualified.
There shall be a chairman of the board, who has been elected from
among the directors. He shall preside at all meetings of the shareholders and
of the board of directors. He shall have such other powers and duties as may
be prescribed by the board of directors.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without notice immediately after, and at the same place
as, the annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place, either within or without Nebraska, for the
holding of additional regular meetings without other notice.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president or any two directors. The person or persons authorized to call
special meetings of the board of directors may fix any place, either within or
without Nebraska, as the place for holding any special meeting of the board of
directors called by them.
SECTION 5. NOTICE OF MEETING. Notice of the date, time and place of
any special meeting shall be given to each director at least two days prior to
the meeting by written notice either personally delivered or mailed to each
director at his business address, or by notice transmitted by private courier,
telegraph, telex, electronically transmitted facsimile or other form of wire or
wireless communication. If mailed, such notice shall be deemed to be given and
to be effective on the earlier of: (i) five days after such notice is
deposited
-7-
<PAGE> 8
in the United States mail, properly addressed, with first class postage
prepaid; or (ii) the date shown on the return receipt, if mailed by registered
or certified mail return receipt requested, provided that the receipt is signed
by or on behalf of the director to whom the notice is addressed. If notice is
given by telex, electronically transmitted facsimile or other similar form of
wire or wireless communication, such notice shall be deemed to be given and to
be effective when sent, and with respect to a telegram, such notice shall be
deemed to be given and to be effective when the telegram is delivered to the
telegraph company. If a director has designated in writing one or more
reasonable addresses or facsimile numbers for delivery of notice to him, notice
sent by mail, telegraph, telex, electronically transmitted facsimile or other
form of wire or wireless communication shall not be deemed to have been given
or to be effective unless sent to such addresses or facsimile numbers, as the
case may be.
A director may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such director. Such waiver shall be
delivered to the secretary for filing with the corporate records, but such
delivery and filing shall not be conditions to the effectiveness of the waiver.
Further, a director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless at the beginning of the meeting,
or promptly upon his later arrival, the director objects to holding the meeting
or transacting business at the meeting because of lack of notice or defective
notice and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by
the board of directors pursuant to Section 2 of this Article III or, if no
number is fixed, a majority of the number in office immediately before the
meeting begins, shall constitute a quorum for the transaction of business at
any meeting of the board of directors, but if less than the majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
SECTION 7. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors or any committee designated
by the board of directors may be taken without a meeting if a written consent
(or counterparts thereof) that sets forth the action so taken is signed by all
of the directors entitled to vote with respect to the action taken. Such
consent shall have the same force and effect as a unanimous vote of the
directors or committee members and may be stated as such in any document.
Unless the consent specifies a different effective time or date, action taken
under this Section 7 is effective at the time of date the last director signs a
writing describing the action taken, unless, before such time, any director has
revoked his consent by a writing signed by the director and received by the
chairman of the board, the president or the secretary of the corporation.
-8-
<PAGE> 9
SECTION 8. TELEPHONIC MEETINGS OF DIRECTORS. The board of directors
may permit any director (or any member of a committee designated by the board)
to participate in a regular or special meeting of the board of directors or a
committee thereof through the use of any means of communication by which all
directors participating in the meeting can hear each other during the meeting.
A director participating in a meeting in this manner is deemed to be present in
person at the meeting.
SECTION 9. VACANCIES. Any director may resign at any time by giving
written notice to the corporation. Such resignation shall take effect at the
time the notice is received by the corporation unless the notice specifies a
later effective date. Unless otherwise specified in the notice of resignation,
the corporation's acceptance of such resignation shall not be necessary to make
it effective. Any vacancy on the board of directors may be filled by the
affirmative vote of a majority of the board of directors or in any other manner
permitted by the Nebraska Business Corporation Act. If the directors remaining
in office constitute fewer than a quorum of the board, the directors may fill
the vacancy by the affirmative vote of a majority of all the directors
remaining in office. The director shall hold office until the next annual
shareholders' meeting at which directors are elected.
SECTION 10. COMPENSATION. By resolution of the board of directors,
any director may be paid any one or more of the following: his expenses, if
any, of attendance at meetings, a fixed sum for attendance at each meeting, a
stated salary as director, or such other compensation as the corporation and
the director may reasonably agree upon. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors or committee of the board at
which action on any corporate matter is taken shall be presumed to have
assented to all action taken at the meeting unless: (i) the director objects
at the beginning of the meeting, or promptly upon his arrival, to the holding
of the meeting or the transaction of business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting; (ii) the
director contemporaneously requests that his dissent or abstention as to any
specific action taken be entered in the minutes of the meeting; or (iii) the
director causes written notice of his dissent or abstention as to any specific
action to be received by the presiding officer of the meeting before its
adjournment or by the corporation promptly after the adjournment of the
meeting. A director may dissent to a specific action at a meeting while
assenting to others. The right to dissent to a specific action taken at a
meeting of the board of directors or a committee of the board shall not be
available to a director who voted in favor of such action.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES. By resolution adopted by
a majority of all the directors in office when the action is taken, the board
of directors may designate from among its members an executive committee and
one or more other committees, and appoint one or more members of the board of
directors to serve on them. To the extent provided in the resolution, each
committee shall have all the authority of the board of directors, except that
no such committee shall have the authority to: (i) authorize distributions;
(ii) approve or propose to shareholders actions or proposals required by the
Nebraska Business Corporation Act to be approved by shareholders; (iii) fill
vacancies on
-9-
<PAGE> 10
the board of directors or any committee thereof; (iv) amend the articles of
incorporation, (v) adopt, amend or repeal the bylaws; (vi) approve a plan of
merger not requiring shareholder approval; (vii) authorize or approve the
reacquisition of shares unless pursuant to a formula or method prescribed by
the board of directors; or (viii) authorize or approve the issuance or sale of
shares, or contract for the sale of shares or determine the designations and
relative rights, preferences and limitations of a class or series of shares,
except that the board of directors may authorize a committee to do so within
limits specifically prescribed by the board of directors. The committee shall
then have full power within the limits set by the board of directors to adopt
any final resolution setting forth all preferences, limitations and relative
rights of such class or series and to authorize an amendment of the articles of
incorporation stating the preferences, limitations and relative rights of a
class or series for filing with the Secretary of State under the Nebraska
Business Corporation Act.
Sections 3, 4, 5, 6, 7, 8 or 11 of this Article III, which govern
meetings, notice, waiver of notice, quorum, voting requirements and action
without a meeting of the board of directors, shall apply to committees and
their members appointed under this Section 12.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant to its
authority shall alone constitute compliance by any member of the board of
directors or a member of the committee in question with his responsibility to
conform to the standard of care set forth in Section 13 of this Article III.
SECTION 13. STANDARD OF CARE. A director shall perform his duties as
a director, including without limitation his duties as a member of any
committee of the board, in good faith, in a manner he reasonably believes to be
in the best interests of the corporation, and with the care an ordinarily
prudent person in a like position would exercise under similar circumstances.
In performing his duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by the persons herein
designated. However, he shall not be considered to be acting in good faith if
he has knowledge concerning the matter in question that would cause such
reliance to be unwarranted. A director shall not be liable to the corporation
or its shareholders for any action he takes or omits to take as a director if,
in connection with such action or omission, he performs his duties in
compliance with this Section 13.
The designated persons on whom a director is entitled to rely are:
(i) one or more officers or employees of the corporation whom the director
reasonably believes to be reliable and competent in the matters presented; (ii)
legal counsel, public accountant, or other person as to matters which the
director reasonably believes to be within such person's professional or expert
competence; or (iii) a committee of the board of directors on which the
director does not serve if the director reasonably believes the committee
merits confidence.
-10-
<PAGE> 11
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the corporation shall be a
chairman of the board, a president, a secretary and a treasurer, each of whom
shall be appointed by the board of directors and shall be a natural person 18
years of age or older. One person may hold more than one office. The board of
directors may appoint such other officers and assistant officers, including one
or more vice presidents, assistant secretaries and assistant treasurers, as
they may consider necessary.
SECTION 2. APPOINTMENT AND TERM OF OFFICE. The officers of the
corporation shall be appointed by the board of directors at each regular
meeting of the board held immediately after each annual meeting of the
shareholders. If the appointment of officers is not made at such meeting, such
appointments shall be made as determined by the board of directors. Each
officer shall hold office until the first of the following occurs: his
successor shall have been duly appointed and qualified, his death, his
resignation, or his removal in the manner provided in Section 3 of this Article
IV. In the event that an officer is employed by the corporation pursuant to an
employment contract duly authorized and approved by the board of directors, an
officer may be appointed for the term of, and in accordance with the provisions
of, such employment contract.
SECTION 3. RESIGNATION AND REMOVAL. An officer may resign at any
time by giving written notice of resignation to the corporation. The
resignation is effective when the notice is received by the corporation unless
the notice specifies a later effective date.
Any officer may be removed at any time with or without cause by the
board of directors. Such removal does not effect the contract rights, if any,
of the corporation or of the person so removed. The appointment of an officer
shall not in itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office, however occurring,
may be filled by the board of directors. If an officer resigns and his
resignation is made effective at a later date, the board of directors may
permit the officer to remain in office until the effective date and may fill
the pending vacancy before the effective date if the board of directors
provides that the successor shall not take office until the effective date. In
the alternative, the board of directors may remove the officer at any time
before the effective date and may fill the resulting vacancy.
SECTION 5. CHAIRMAN OF THE BOARD. The chairman of the board shall
preside at all meetings of shareholders and of the board of directors. He may
sign and execute all authorized instruments, contracts, or other obligations on
behalf of the corporation. He shall have such other powers and duties as may
be prescribed by the board of directors.
-11-
<PAGE> 12
SECTION 6. PRESIDENT. In the absence of the chairman of the board,
the president shall preside at all meetings of shareholders and all meetings of
the board of directors. Subject to the direction and supervision of the board
of directors, the president shall be the chief executive officer of the
corporation, and shall have general and active control of its affairs and
business and general supervision of its officers, agents and employees. Unless
otherwise directed by the board of directors, the president shall attend in
person or by substitute appointed by him, or shall execute on behalf of the
corporation, written instruments appointing a proxy or proxies to represent the
corporation at, all meetings of the shareholders of any other corporation in
which the corporation holds any stock. On behalf of the corporation, the
president may in person or by substitute or by proxy execute written waivers of
notice and consents with respect to any such meetings. At all such meetings
and otherwise, the president, in person or by substitute or proxy, may vote the
stock held by the corporation, execute written consents and other instruments
with respect to such stock, and exercise any and all rights and powers incident
to the ownership of said stock, subject to the instructions, if any, of the
board of directors. The president may sign all instruments, contracts and
other obligations which the board of directors has authorized to be executed,
and shall have such additional authority and duties as are appropriate and
customary for the office of president and chief executive officer, except as
the same may be expanded or limited by the board of directors from time to
time.
SECTION 7. VICE PRESIDENTS. If appointed by the board of directors,
the vice presidents shall assist the president and shall perform such duties as
may be assigned to them by the president or by the board of directors. In the
absence of the president, the vice president, if any (or, if more than one, the
vice presidents in the order designated by the board of directors, or if the
board makes no such designation, then the vice president designated by the
president, or if neither the board nor the president makes any such
designation, the senior vice president as determined by first election to that
office), shall have the powers and perform the duties of the president.
SECTION 8. SECRETARY. The secretary shall: (i) prepare and maintain
as permanent records the minutes of the proceedings of the shareholders and the
board of directors, a record of all actions taken by the shareholders or board
of directors without a meeting, a record of all actions taken by a committee or
the board of directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of shareholders
and of the board of directors of any committee thereof; (ii) see that all
notices are duly given in accordance with the provisions of these bylaws and as
required by law; (iii) serve as custodian of the corporate records and of the
seal of the corporation and affix the seal to all documents when authorized by
the board of directors; (iv) keep at the corporation's registered office or
principal office a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of shareholders
arranged by voting group and by class or series of shares within each voting
group, that is alphabetical within each class or series and that shows the
address of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (v) maintain at the corporation's
principal office the originals or copies of the corporation's articles of
incorporation, bylaws, minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group
or to the holders of any class or
-12-
<PAGE> 13
series of shares as a group, a list of the names and business addresses of the
current directors and officers, a copy of the corporation's most recent
corporate report filed with the Nebraska Secretary of State, and financial
statements, if any, showing in reasonable detail the corporation's assets and
liabilities and results of operations for the last three years; (vi) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent; (vii) authenticate records of the
corporation; and (viii) in general, perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the chairman of the board, the president or by the board of directors.
Assistant secretaries, if any, shall have the same duties and powers, subject
to supervision by the secretary. The directors and/or shareholders may,
however, respectively designate a person other than the secretary or assistant
secretary to keep the minutes of their respective meetings.
Any books, records, or minutes of the corporation may be in written
form or in any form capable of being converted into written form within a
reasonable time.
SECTION 9. TREASURER. The treasurer shall be the principal financial
officer of the corporation, shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. Subject to the limits imposed by the board of
directors, he shall receive and give receipts and acquittances for money paid
in on account of the corporation, and shall pay out of the corporation's funds
on hand all bills, payrolls and other just debts of the corporation of whatever
nature upon maturity. He shall perform all other duties incident to the office
of the treasurer and, upon request of the board, shall make such reports to it
as may be required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers and perform such
other duties as may from time to time be prescribed by the board of directors,
the chairman of the board, or the president. The assistant treasurers, if
any, shall have the same powers and duties, subject to the supervision of the
treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account as
required by the Nebraska Business Corporation Act, prepare and file all local,
state and federal tax returns, prescribe and maintain an adequate system of
internal accounting controls and prepare and furnish to the chairman of the
board, the president and the board of directors statements of account showing
the financial position of the corporation and the results of its operations.
SECTION 10. SALARIES. The salaries of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving a salary by reason of the fact that he is also a director of the
corporation.
-13-
<PAGE> 14
ARTICLE V
CONTRACTS, LOANS AND CHECKS
SECTION 1. CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in the manner that shall from time to time be
determined by resolution of the board of directors.
ARTICLE VI
SHARES
SECTION 1. CERTIFICATES. The board of directors shall be authorized
to issue any of its classes of shares with or without certificates. The fact
that the shares are not represented by certificates shall have no effect on the
rights and obligations of shareholders. If the shares are represented by
certificates, such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name of the
corporation by the chairman of the board, the president or one or more vice
presidents, and by the secretary or an assistant secretary. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, such certificate may nonetheless be issued by the corporation with the
same effect as if he were such officer at the date of its issue. All
certificates shall be consecutively numbered, and the names of the owners, the
number of shares, and the date of issue shall be entered on the books of the
corporation. Each certificate representing shares shall state upon its face:
(i) that the corporation is organized under the laws of Nebraska; (ii) the name
of the person to whom issued; (iii) the number and class of the shares and the
designation of the series, if any, that the certificate represents; (iv) the
par value, if any, of each share represented by the certificate; (v) a
conspicuous statement, on the front or the back, that the corporation will
furnish to the shareholder, on request in writing and without charge,
information concerning the designations, preferences, limitations, and relative
rights applicable to each class, the variations in preferences, limitations,
and rights determined for each series, and the authority of the board of
directors to determine variations for future classes or series; and (vi) any
restrictions imposed by the corporation under the transfer of the shares
represented by the certificate.
-14-
<PAGE> 15
If shares are not represented by certificates, within a reasonable
time following the issue or transfer of such shares, the corporation shall send
the shareholder a complete written statement of all of the information required
to be provided to holders of uncertificated shares by the Nebraska Business
Corporation Act.
SECTION 2. CONSIDERATION FOR SHARES. Certificated or uncertificated
shares shall not be issued until the shares represented thereby are fully paid.
The board of directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the
corporation, including cash, promissory notes, services performed or other
securities of the corporation. Future services shall not constitute payment or
partial payment for shares of the corporation. The promissory note of a
subscriber or an affiliate of a subscriber shall not constitute payment or
partial payment for shares of the corporation unless the note is negotiable and
is secured by collateral, other than the shares being purchased, having a fair
market value at least equal to the principal amount of the note. For purposes
of this Section 2, a "promissory note" means a negotiable instrument on which
there is an obligation to pay independent of collateral and does not include a
non-recourse note.
SECTION 3. LOST CERTIFICATES. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of directors may
direct the issuance of a new certificate in lieu thereof upon such terms and
conditions in conformity with law as the board may prescribe. The board of
directors may in its discretion require an affidavit of lost certificate and/or
a bond in such form and amount and with such surety as it may determine before
issuing a new certificate.
SECTION 4. TRANSFER OF SHARES. Upon surrender to the corporation or
to a transfer agent of the corporation of a certificate of stock duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, and receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and other
restrictions, the corporation shall issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be kept at
its principal office or by the person and at the place designated by the board
of directors.
Except as otherwise expressly provided in Sections 10 and 12 of
Article II of these bylaws, and except for the assertion of dissenters' rights
to the extent provided in the Nebraska Business Corporation Act, the
corporation shall be entitled to treat the registered holder of any shares of
the corporation as the owner thereof for all purposes, and the corporation
shall not be bound to recognize any equitable or other claim to, or interest
in, such shares or rights deriving from such shares on the part of any person
other than the registered holder, including without limitation any purchaser,
assignee or transferee of such shares or rights deriving from such shares,
unless and until such other person becomes the registered holder of such
shares, whether or not the corporation shall have either actual or constructive
notice of the claimed interest of such other person.
-15-
<PAGE> 16
SECTION 5. TRANSFER AGENT, REGISTRARS AND PAYING AGENTS. The board
may in its discretion appoint one or more transfer agents, registrars and
agents for making payment upon any class of stock, bond, debenture or other
security of the corporation. Such agents and registrars may be located either
within or outside Nebraska. They shall have such rights and duties and shall
be entitled to such compensation as may be agreed.
SECTION 6. DISTRIBUTIONS TO SHAREHOLDERS. As used in this Section 6,
"distribution" means a direct or indirect transfer by the corporation of money
or other property, except its own shares, or incurrence of indebtedness by the
corporation, to or for the benefit of any of its shareholders in respect of any
of its shares. A distribution may be in any form, including a declaration or
payment of a dividend; a purchase, redemption, or other acquisition of shares;
or distribution of indebtedness. The board of directors may authorize, and the
corporation may make, distributions to the shareholders subject to the
limitations set forth in this Section 6. The board of directors may fix in
advance a date as the record date for determining shareholders entitled to a
distribution, other than one involving a purchase, redemption, or other
acquisition of the corporation's shares. If a record date is necessary but no
record date is so fixed in advance, the record date is the date the board of
directors authorizes the distribution.
No distribution may be made if, after giving it effect: (i) the
corporation would not be able to pay its debts as they become due in the usual
course of business; or (ii) the corporation's total assets would be less than
the sum of its total liabilities plus (unless the articles of incorporation
permit otherwise) the amount that would be needed, if the corporation were to
be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those receiving the distribution. The board of directors may base a
determination that a distribution is not prohibited either on financial
statements prepared on the basis of accounting practices and principles that
are reasonable under the circumstances or on a fair valuation or other method
that is reasonable under the circumstances.
Except as provided elsewhere in this Section 6, the time for measuring
the effect of a distribution under this Section 6 is: (i) in the case of
distribution by purchase, redemption, or other acquisition of the corporation's
shares, as of the earlier of: (A) the date money or other property is
transferred or debt is incurred by the corporation; or (B) the date the
shareholder ceases to be a shareholder with respect to the acquired shares;
(ii) in the case of any other distribution of indebtedness, as of the date the
indebtedness is distributed; and (iii) in all other cases, as of either: (A)
the date the distribution is authorized, if the payment occurs within 120 days
after the date of authorization; or (B) the date the payment is made, if it
occurs more than 120 days after the date of authorization.
Indebtedness of a corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations
under this Section 6 if its terms provide that payment of principal and
interest thereon are made only if and to the extent that payment of a
distribution to shareholders could then be made under the Nebraska Business
Corporation Act. If the indebtedness is issued as a distribution, each payment
of principal or interest thereon is treated as a distribution the effect of
which is measured on the date the payment is actually made.
-16-
<PAGE> 17
SECTION 7. SHARE OPTIONS AND OTHER RIGHTS. As used in this Section
7, "rights" means rights, options, warrants, or convertible securities
entitling the holders thereof to purchase, receive, or acquire shares or
fractions of shares of the corporation or assets or debts or other obligations
of the corporation. The corporation may create and issue rights, except as
precluded or limited by provisions contained in the articles of incorporation
at the time of such creation or issuance. The board of directors shall
determine the terms upon which the rights are issued, their form and content,
and the consideration, if any, for which shares or fractions of shares, assets,
or debts or other obligations of the corporation are to be issued pursuant to
the rights.
ARTICLE VII
INSURANCE AND BENEFITS
SECTION 1. INSURANCE. By action of the board of directors,
notwithstanding any interest of the directors in the action, the corporation
may purchase and maintain insurance, in such scope and amounts as the board of
directors deems appropriate, on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the corporation, or who, while a
director, officer, employee, fiduciary or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of any other foreign or domestic profit
or nonprofit corporation or of any partnership, joint venture, trust, profit or
nonprofit unincorporated association, limited liability company, or other
enterprise or employee benefit plan, against any liability asserted against, or
incurred by, him in that capacity or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of Article VII of these bylaws or applicable
law. Any such insurance may be procured from any insurance company designated
by the board of directors of the corporation, whether such insurance company is
formed under the laws of Nebraska or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the corporation
has an equity interest or any other interest, through stock ownership or
otherwise.
SECTION 2. BENEFITS. The board of directors shall have authority to
provide for, or to delegate authority to an appropriate committee to provide
for, any and all manner of benefits or payments, however characterized or
described, to directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of services rendered by the directors,
officers and employees to the corporation.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. SEAL. The board of directors may adopt a corporate seal,
which shall be circular in form and shall contain the name of the corporation,
the state of incorporation, and the words "Corporate Seal".
SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be
as established by the board of directors.
-17-
<PAGE> 18
SECTION 3. AMENDMENTS. The board of directors shall have power, to
the maximum extent permitted by the Nebraska Business Corporation Act, to make,
amend and repeal the bylaws of the corporation at any regular or special
meeting of the board unless the shareholders, in making, amending or repealing
a particular bylaw, expressly provide that the directors may not amend or
repeal such bylaw. The shareholders also shall have the power to make, amend
or repeal the bylaws of the corporation at any annual meeting or at any special
meeting called for that purpose.
SECTION 4. RECEIPT OF NOTICES BY THE CORPORATION. Notices,
shareholder writings consenting to action, and other documents or writings
shall be deemed to have been received by the corporation when they are actually
received: (i) at the registered office of the corporation in Nebraska; (ii) at
the principal office of the corporation (as that office is designated in the
most recent document filed by the corporation with the Secretary of State
designating a principal office); (iii) by the secretary of the corporation
wherever the secretary may be found; or (iv) by any other person authorized
from time to time by the board of directors or the president to receive such
writings, wherever such person is found.
SECTION 5. GENDER. The masculine gender is used in these bylaws as a
matter of convenience only and shall be interpreted to include the feminine and
neuter genders as the circumstances indicate.
SECTION 6. CONFLICTS. In the event of any irreconcilable conflict
between these bylaws and either the corporation's articles of incorporation or
applicable law, the latter shall control.
SECTION 7. DEFINITIONS. Except as otherwise specifically provided in
these bylaws, all terms used in these bylaws shall have the same definition as
in the Nebraska Business Corporation Act.
The foregoing amended bylaws are the true and correct bylaws of First
Western Corp. as of November 6, 1998.
/s/ Timothy D. Wiens
--------------------------------
Timothy D. Wiens, Vice President
and Vice Chairman
-18-
<PAGE> 1
EXHIBIT 4.1
FIRST WESTERN CORPORATION
AS ISSUER
TO
WILMINGTON TRUST COMPANY,
AS TRUSTEE
SUBORDINATED INDENTURE
DATED AS OF __________, 1998
_____% Junior Subordinated Debentures
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS 1
ARTICLE II
DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND EXCHANGE OF
THE JUNIOR SUBORDINATED DEBENTURES 7
2.1 Designation and Principal Amount 7
2.2 Maturity 7
2.3 Form and Payment 7
2.4 Global Subordinated Debenture 8
2.5 Interest 9
2.6 Execution, Authentication, Delivery and Dating 9
2.7 Registration and Transfer 10
2.8 Mutilated, Destroyed, Lost and Stolen Junior Subordinated Debentures 10
ARTICLE III
REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES 11
3.1 Redemption 11
3.2 Special Event Redemption 11
3.3 Optional Redemption by Company 12
3.4 Notice of Redemption 12
3.5 Payment upon Redemption 13
3.6 No Sinking Fund 13
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD 13
4.1 Extension of Interest Payment Period 13
4.2 Notice of Extension 14
4.3 Limitation of Transactions During Extension 14
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY 14
5.1 Payment of Principal and Interest 14
5.2 Maintenance of Agency 14
5.3 Paying Agents 15
5.4 Appointment to Fill Vacancy in Office of Trustee 15
5.5 Compliance with Consolidation Provisions 15
5.6 Restrictions on Certain Payments 16
5.7 Covenants as to the Trust 16
ARTICLE VI
SECURITYHOLDERS' LISTS AND REPORTS 16
6.1 Company to Furnish Trustee Names and Addresses of Securityholders 16
6.2 Preservation of Information; Communications with Securityholders 17
6.3 Reports by the Company 17
6.4 Reports by the Trustee 17
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT 18
7.1 Events of Default 18
7.2 Collection of Indebtedness and Suits for Enforcement by Trustee 19
7.3 Application of Moneys Collected 20
7.4 Limitation on Suits 20
7.5 Rights and Remedies Cumulative; Delay or Omission Not Waiver 21
7.6 Control by Securityholders 21
7.7 Undertaking to Pay Costs 22
ARTICLE VIII
FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE 22
8.1 Form of Junior Subordinated Debenture 22
8.2 Original Issue of Junior Subordinated Debentures 22
ARTICLE IX
CONCERNING THE TRUSTEE 22
9.1 Certain Duties and Responsibilities of the Trustee 22
9.2 Certain Rights of Trustee 23
9.3 Trustee Not Responsible for Recitals or Issuance of the Junior
Subordinated Debentures 24
9.4 May Hold Junior Subordinated Debentures 24
9.5 Moneys Held in Trust 24
9.6 Compensation and Reimbursement 24
9.7 Reliance on Officers' Certificate 25
9.8 Disqualification; Conflicting Interests 25
9.9 Corporate Trustee Required; Eligibility 25
9.10 Resignation and Removal; Appointment of Successor 25
9.11 Acceptance of Appointment by Successor 26
9.12 Merger, Conversion, Consolidation or Succession to Business 27
9.13 Preferential Collection of Claims Against the Company 27
9.14 Appointment of Authenticating Agent 27
ARTICLE X
CONCERNING THE SECURITYHOLDERS 28
10.1 Evidence of Action by Securityholders 28
10.2 Proof of Execution by Securityholders 29
10.3 Who May Be Deemed Owners 29
10.4 Certain Junior Subordinated Debentures Owned by Company Disregarded 29
10.5 Actions Binding on Future Securityholders 29
ARTICLE XI
SUPPLEMENTAL INDENTURES 30
11.1 Supplemental Indentures Without the Consent of Securityholders 30
11.2 Supplemental Indentures with Consent of Securityholders 30
11.3 Effect of Supplemental Indentures 31
11.4 Junior Subordinated Debentures Affected by Supplemental Indentures 31
11.5 Execution of Supplemental Indentures 31
ARTICLE XII
SUCCESSOR CORPORATION 32
12.1 Company May Consolidate, Etc. 32
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
12.2 Successor Substituted 32
12.3 Evidence of Consolidation, Etc., to Trustee 32
ARTICLE XIII
SATISFACTION AND DISCHARGE 32
13.1 Satisfaction and Discharge of Indenture 32
13.2 Discharge of Obligations 33
13.3 Deposited Moneys to Be Held in Trust 33
13.4 Payment of Monies Held by Paying Agents 33
13.5 Repayment to Company 33
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS 33
14.1 No Recourse 33
ARTICLE XV
MISCELLANEOUS PROVISIONS 34
15.1 Effect on Successors and Assigns 34
15.2 Actions by Successor 34
15.3 Surrender of Company Powers 34
15.4 Notices 34
15.5 Governing Law 34
15.6 Treatment of Junior Subordinated Debentures as Debt 34
15.7 Compliance Certificates and Opinions 34
15.8 Payments on Business Days 35
15.9 Conflict with Trust Indenture Act 35
15.10 Counterparts 35
15.11 Separability 35
15.12 Assignment 35
15.13 Acknowledgment of Rights 35
ARTICLE XVI
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES 36
16.1 Agreement to Subordinate 36
16.2 Default on Senior and Subordinated Debt 36
16.3 Liquidation; Dissolution; Bankruptcy 36
16.4 Subrogation 37
16.5 Trustee to Effectuate Subordination 38
16.6 Notice by the Company 38
16.7 Rights of the Trustee; Holders of Senior and Subordinated Debt 39
16.8 Subordination May Not Be Impaired 39
</TABLE>
-iii-
<PAGE> 5
FIRST WESTERN CORPORATION
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED,
AND SUBORDINATED INDENTURE, DATED AS OF __________, 1998
<TABLE>
<CAPTION>
Trust Indenture Act Section Subordinated Indenture Section
- --------------------------- ------------------------------
<S> <C>
Section 310 15.9
Section 310 (b) 9.8
Section 311 15.9
Section 311 (a) 9.13
(b) 9.13
Section 312 15.9
Section 312 (b) 6.2
Section 313 15.9
Section 313 (a) 6.4
(b) 6.4
(c) 6.4
Section 314 15.9
Section 315 15.9
Section 316 15.9
Section 317 15.9
</TABLE>
- -------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Subordinated Indenture.
-iv-
<PAGE> 6
SUBORDINATED INDENTURE (the "Indenture"), dated as of __________,
1998, between First Western Corporation, a Nebraska corporation (the "Company")
and Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Trustee");
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its securities to be known as its _____% Junior Subordinated
Debentures due __________, 2028 (hereinafter referred to as the "Junior
Subordinated Debentures"), the form and substance of such Junior Subordinated
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture; and
WHEREAS, FW Capital I, a Delaware statutory business trust (the
"Trust"), has offered to the public $20,000,000 , and a possible additional
amount of up to $3,000,000 pursuant to the Underwriters' Over-Allotment Option,
for a total of up to $23,000,000 aggregate liquidation amount of its _____%
Cumulative Preferred Securities (the "Preferred Securities"), representing
undivided beneficial interests in the assets of the Trust and proposes to
invest the proceeds from such offering, together with the proceeds of the
issuance and sale by the Trust to the Company of $618,560, and a possible
additional amount of up to $92,790 related to the Underwriters' Over-Allotment
Option with respect to the Preferred Securities, for a total of up to $711,350
aggregate liquidation amount of its _____% Common Securities, in $20,618,560,
and a possible additional amount of up to $711,350 related to the Underwriters'
Over-Allotment Option with respect to the Preferred Securities, for a total of
up to $23,711,350 aggregate principal amount of the Junior Subordinated
Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this Indenture and all requirements necessary to make this Indenture a
valid instrument in accordance with its terms, and to make the Junior
Subordinated Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company; and
WHEREAS, to provide the terms and conditions upon which the Junior
Subordinated Debentures are to be authenticated, issued and delivered, the
Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Junior Subordinated Debentures by the holders thereof, it is mutually
covenanted and agreed as follows for the equal and ratable benefit of the
holders of Junior Subordinated Debentures:
ARTICLE I
DEFINITIONS
The terms defined in this Section (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section and shall include the plural
as well as the singular. All other terms used in this Indenture that are
defined in the Trust Indenture Act of 1939, as amended, or that are by
reference in said Trust Indenture Act defined in the Securities Act of 1933, as
amended (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of the
execution of this Indenture.
"Accelerated Maturity Date" means, if the Company elects to accelerate
the Maturity Date in accordance with Section 2.2, the date selected by the
Company which is prior to the Scheduled Maturity Date, but is on or after
__________, 2003.
-1-
<PAGE> 7
"Additional Sums" shall have the meaning set forth in Section 2.5(c).
"Administrative Trustees" has the meaning set forth in the Trust
Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f)
if the specified Person is an individual, any entity of which the specified
Person is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to
the Junior Subordinated Debentures appointed by the Trustee pursuant to Section
9.14.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
any duly authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means any day other than a day on which federal or
state banking institutions in the State of Colorado are authorized or obligated
by law, executive order or regulation to close or a day on which the Trustee is
closed.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any
proposed 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 or administrative pronouncement or action 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 Preferred Securities (or any substantial portion
thereof) as "Tier I 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.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company. The Certificate need not comply with the provisions of Section
15.7.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with Preferred Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
-2-
<PAGE> 8
"Company" means First Western Corporation, a corporation duly
organized and existing under the laws of the State of Nebraska, and, subject to
the provisions of Article Twelve, shall also include its successors and
assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.5(a).
"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"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) 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 for which such Person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Depositary" means, with respect to Junior Subordinated Debentures
issued as a Global Subordinated Debenture, The Depository Trust Company, New
York, New York, another clearing agency, or any successor registered as a
clearing agency under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to either Section 2.1 or 2.4.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Trust Agreement and the Junior Subordinated Debentures held by the
Property Trustee are to be distributed to the holders of the Trust Securities
issued by the Trust pro rata in accordance with the Trust Agreement.
"Distributions" shall have the meaning set forth in the Trust
Agreement.
"Event of Default" means any event specified in Section 7.1, continued
for the period of time, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Global Subordinated Debenture" means a Junior Subordinated Debenture
executed by the Company and
-3-
<PAGE> 9
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with this Indenture, which shall be registered
in the name of the Depositary or its nominee.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America that, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on
any such Governmental Obligation held by such custodian for the account of the
holder of such depositary receipt; provided, however, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by
the custodian in respect of the Governmental Obligation or the specific payment
of principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Herein," "hereof," and "hereunder," and other words of similar
import, refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment of
interest on the Junior Subordinated Debentures, means the date specified in the
Junior Subordinated Debenture as the fixed date on which an installment of
interest with respect to the Junior Subordinated Debentures is due and payable.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Company Event" means the receipt by the Company and the
Trust of an Opinion of Counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which
Change in Investment Company Act Law becomes effective on or after the date of
original issuance of the Preferred Securities under the Trust Agreement.
"Junior Subordinated Debentures" means the _____% Junior Subordinated
Debentures due 2028 authenticated and delivered under this Indenture.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Maturity Date" shall have the meaning set forth in Section 2.2.
"Non Book-Entry Preferred Securities" shall have the meaning set forth
in Section 2.4(a).
"Officers' Certificate" means a certificate signed by the Vice
Chairman, the President or a Vice President and by the Chief Accounting Officer
or the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company that is delivered to the Trustee in accordance with
the terms hereof. Each such certificate shall include the statements provided
for in Section 15.7, if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
may be an employee of or counsel for the Company, that is delivered to the
Trustee in accordance with the terms hereof. Each such opinion shall include
the statements provided for in Section 15.7, if and to the extent required by
the provisions thereof.
-4-
<PAGE> 10
"Outstanding," when used with reference to Junior Subordinated
Debentures means, subject to the provisions of Section 10.4, as of any
particular time, all Junior Subordinated Debentures theretofore authenticated
and delivered by the Trustee under this Indenture, except (a) Junior
Subordinated Debentures theretofore canceled by the Trustee or any paying
agent, or delivered to the Trustee or any paying agent for cancellation or that
have previously been canceled; (b) Junior Subordinated Debentures or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been
set aside and segregated in trust by the Company (if the Company shall act as
its own paying agent); provided, however, that if such Junior Subordinated
Debentures or portions of such Junior Subordinated Debentures are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been given as provided in Article Three, or provision satisfactory to the
Trustee shall have been made for giving such notice; and (c) Junior
Subordinated Debentures in lieu of or in substitution for which other Junior
Subordinated Debentures shall have been authenticated and delivered pursuant to
the terms of Section 2.8.
"Person" means any individual, corporation, partnership, joint
venture, joint-stock company, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Junior Subordinated Debenture" means every previous
Junior Subordinated Debenture evidencing all or a portion of the same debt as
that evidenced by such particular Junior Subordinated Debenture; and, for the
purposes of this definition, any Junior Subordinated Debenture authenticated
and delivered under Section 2.8 in lieu of a lost, destroyed or stolen Junior
Subordinated Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Junior Subordinated Debenture.
"Preferred Securities" means undivided beneficial interests in the
assets of the Trust which rank pari passu with Common Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Preferred Securities Certificate" has the meaning set forth in the
Trust Agreement.
"Preferred Securities Guarantee" means any guarantee that the Company
may enter into with the Property Trustee or other Persons that operates
directly or indirectly for the benefit of holders of Preferred Securities of
the Trust.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Redemption Price" means the amount equal to 100% of the principal
amount of Junior Subordinated Debentures to be redeemed plus any accrued and
unpaid interest thereon to the date of the redemption of such Junior
Subordinated Debentures.
"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means __________, 2028.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 2.7.
"Securityholder," "Holder," "Registered Holder," or other similar
term, means the Person or Persons in whose name or names particular Junior
Subordinated Debentures shall be registered in the Securities Register.
-5-
<PAGE> 11
"Senior and Subordinated Debt" means 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 of the Company, whether incurred on or prior to the date
of this 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
Junior Subordinated Debentures or to other Debt which is pari passu with, or
subordinated to, the Junior Subordinated Debentures; provided, however, that
Senior and Subordinated Debt shall 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 any 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 Junior
Subordinated Debentures as a result of the subordination provisions of this
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,
(v) the Preferred Securities Guarantee, and (vi) any other debt securities
issued pursuant to this Indenture.
"Special Event" means a Tax Event, an Investment Company Event or a
Capital Treatment Event.
"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person, or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries, and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Company and the Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official 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 Junior Subordinated Debentures there is more than an insubstantial risk
that (i) interest payable by the Company on the Junior Subordinated Debentures
is not, or within 90 days after the date of such Opinion of Counsel will not
be, deductible by the Company, in whole or in part, for United States federal
income tax purposes, (ii) the Trust 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 Junior Subordinated
Debentures, or (iii) the Trust 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.
"Trust" means FW Capital I, a Delaware statutory business trust
created for the purpose of issuing Trust Securities in connection with the
issuance of Junior Subordinated Debentures under this Indenture.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated as of __________, 1998, of the Trust.
"Trustee" means Wilmington Trust Company and, subject to the
provisions of Article Nine, shall also include its successors and assigns, and,
if at any time there is more than one Person acting in such capacity hereunder,
"Trustee" shall mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939 as in
force at the date of execution of this Indenture; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
-6-
<PAGE> 12
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Securities" means Common Securities and Preferred Securities of
the Trust.
"Underwriters' Over-Allotment Option" means the option, exercisable
within 30 days after the date of the prospectus, granted to the underwriters in
the offering to the public of Preferred Securities, to purchase up to
$3,000,000 additional Preferred Securities at the same price per Preferred
Security as paid for the other Preferred Securities issued pursuant to the
prospectus.
"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.
ARTICLE II
DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND
EXCHANGE OF THE JUNIOR SUBORDINATED DEBENTURES
2.1 DESIGNATION AND PRINCIPAL AMOUNT. There is hereby authorized
a series of Securities designated the "_____% Junior Subordinated Debentures
due 2028," limited in aggregate principal amount to $20,618,560, and a possible
additional amount of up to $3,092,790 related to the Underwriters'
Over-Allotment Option with respect to the Preferred Securities, for a total of
up to $23,711,350 aggregate principal amount, which amount shall be as set
forth in any written order of the Company for the authentication and delivery
of Junior Subordinated Debentures pursuant to Section 8.2 of this Indenture.
2.2 MATURITY.
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to accelerate the Maturity Date
to be a date prior to the Scheduled Maturity Date in accordance with
Section 2.2(b), the Accelerated Maturity Date.
(b) The Company may, at any time before the day which is 90 days
before the Scheduled Maturity Date, elect to shorten the Maturity Date only
once to the Accelerated Maturity Date, provided that the Company has received
the prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve.
(c) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice to the Registered
Holders of the Junior Subordinated Debentures, the Property Trustee and the
Trustee of the acceleration of the Maturity Date and the Accelerated Maturity
Date at least 90 days before the Accelerated Maturity Date.
2.3 FORM AND PAYMENT. Except as provided in Section 2.4, the
Junior Subordinated Debentures shall be issued in fully registered certificated
form without interest coupons. Principal and interest on the Junior
Subordinated Debentures issued in certificated form will be payable, the
transfer of such Junior Subordinated Debentures will be registrable and such
Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures bearing identical terms and provisions at the office or agency of
the Trustee; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the Holder at such address as shall
appear in the Securities Register. Notwithstanding the foregoing, so long as
the Holder of any Junior Subordinated Debentures is the Property Trustee, the
payment of the principal of and interest (including Compounded
-7-
<PAGE> 13
Interest and Additional Sums, if any) on such Junior Subordinated Debentures
held by the Property Trustee will be made at such place and to such account as
may be designated by the Property Trustee.
2.4 GLOBAL SUBORDINATED DEBENTURE.
(a) In connection with a Dissolution Event,
(i) the Junior Subordinated Debentures in certificated
form may be presented to the Trustee by the Property Trustee in
exchange for a Global Subordinated Debenture in an aggregate principal
amount equal to the aggregate principal amount of all outstanding
Junior Subordinated Debentures (a "Global Subordinated Debenture"), to
be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Administrative Trustees. The Company upon any such presentation shall
execute a Global Subordinated Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture. Payments on the Junior
Subordinated Debentures issued as a Global Subordinated Debenture will
be made to the Depositary; and
(ii) if any Preferred Securities are held in non
book-entry certificated form, the Junior Subordinated Debentures in
certificated form may be presented to the Trustee by the Property
Trustee and any Preferred Securities Certificate which represents
Preferred Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial interests in Junior Subordinated
Debentures presented to the Trustee by the Property Trustee having an
aggregate principal amount equal to the aggregate Liquidation Amount
of the Non Book-Entry Preferred Securities until such Preferred
Securities Certificates are presented to the Securities Registrar for
transfer or reissuance at which time such Preferred Securities
Certificates will be canceled and a Junior Subordinated Debenture,
registered in the name of the holder of the Preferred Securities
Certificate or the transferee of the holder of such Preferred
Securities Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities Certificate canceled, will be executed by the
Company and delivered to the Trustee for authentication and delivery
in accordance with this Indenture. On issue of such Junior
Subordinated Debentures, Junior Subordinated Debentures with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.
(b) A Global Subordinated Debenture may be transferred, in whole
but not in part, only to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Company or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
for such series shall no longer be registered or in good standing under the
Exchange Act or other applicable statute or regulation, and a successor
Depositary for such series is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such condition, as the
case may be, the Company will execute, and the Trustee, upon written notice
from the Company, will authenticate and deliver the Junior Subordinated
Debentures in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Subordinated Debenture in exchange for such Global
Subordinated Debenture. In addition, the Company may at any time determine
that the Junior Subordinated Debentures shall no longer be represented by a
Global Subordinated Debenture. In such event the Company will execute, and the
Trustee, upon receipt of an Officers' Certificate evidencing such determination
by the Company, will authenticate and deliver the Junior Subordinated
Debentures in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Subordinated Debenture in exchange for such Global
Subordinated Debenture. Upon the exchange of the Global Subordinated Debenture
for such Junior Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, the Global Subordinated Debenture shall
-8-
<PAGE> 14
be canceled by the Trustee. Such Junior Subordinated Debentures in definitive
registered form issued in exchange for the Global Subordinated Debenture shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee shall deliver such
Junior Subordinated Debentures to the Depositary for delivery to the Persons in
whose names such Junior Subordinated Debentures are so registered.
2.5 INTEREST.
(a) Each Junior Subordinated Debenture will bear interest at the
rate of _____% per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article Four)
quarterly in arrears on the 15th day of January, April, July and October in
each year (each, an "Interest Payment Date"), commencing on April 15, 1999,
to the Person in whose name such Junior Subordinated Debenture or any
Predecessor Junior Subordinated Debenture is registered at the close of
business on the regular record date for such interest installment, which, in
respect of (i) Junior Subordinated Debentures of which the Property Trustee is
the Holder and the Preferred Securities are in book-entry only form or (ii) a
Global Subordinated Debenture, shall be the close of business on the Business
Day next preceding that Interest Payment Date. Notwithstanding the foregoing
sentence, if (i) the Junior Subordinated Debentures are held by the Property
Trustee and the Preferred Securities are no longer in book-entry only form or
(ii) the Junior Subordinated Debentures are not represented by a Global
Subordinated Debenture, the record date for such interest installment shall be
the first day of the month in which such payment is to be made. The amount of
each interest payment due with respect to the Junior Subordinated Debentures
will include amounts accrued through the date the interest payment is due.
(b) The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed will be computed on
the basis of the actual number of days elapsed in such a quarterly period. In
the event that any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(c) If, at any time while the Property Trustee is the Holder of
any Junior Subordinated Debentures, the Trust or the Property Trustee is
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States, or
any other taxing authority, then, in any case, the Company will pay as
additional interest ("Additional Sums") on the Junior Subordinated Debentures
held by the Property Trustee such additional amounts as shall be required so
that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other government
charges been imposed.
2.6 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Junior
Subordinated Debentures shall be executed on behalf of the Company by its Vice
Chairman, its President or any Vice President and attested by its Secretary or
Assistant Secretary. The signature of any of these officers on the Junior
Subordinated Debentures may be manual or facsimile.
Junior Subordinated Debentures bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Junior Subordinated Debentures or did not hold such offices at the date
of such Junior Subordinated Debentures.
-9-
<PAGE> 15
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Junior Subordinated Debentures executed
by the Company to the Trustee for authentication, together with a Company order
for the authentication and delivery of such Junior Subordinated Debentures.
The Trustee in accordance with such Company order shall authenticate and
deliver such Junior Subordinated Debentures as in this Indenture provided and
not otherwise.
Upon the initial issuance, each Junior Subordinated Debenture shall be
dated __________, 1998, and thereafter Junior Subordinated Debentures issued
hereunder shall be dated the date of their authentication.
No Junior Subordinated Debenture shall be entitled to any benefit
under this Indenture or be valid or obligatory for any purpose unless there
appears on such Junior Subordinated Debenture a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Junior Subordinated Debenture shall be
conclusive evidence, and the only evidence, that such Junior Subordinated
Debenture has been duly authenticated and delivered hereunder and is entitled
to the benefits of this Indenture.
2.7 REGISTRATION AND TRANSFER. The Company shall cause to be kept
at the Corporate Trust Office of the Trustee a register (the register
maintained in such office or any other office or agency pursuant to Section 5.2
being herein sometimes referred to as the "Securities Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of the Junior Subordinated Debentures and
transfers of the Junior Subordinated Debentures. The Trustee is hereby
appointed "Securities Registrar" for the purpose of registering the Junior
Subordinated Debentures and transfers of the Junior Subordinated Debentures as
herein provided.
Upon surrender for registration of transfer of any Junior Subordinated
Debenture at an office or agency of the Company designated pursuant to Section
5.2 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, a new Junior Subordinated Debenture of the authorized
denomination.
All Junior Subordinated Debentures issued upon any registration of
transfer of Junior Subordinated Debentures shall be valid obligations of the
Company, evidencing the same debt and entitled to the same benefits under this
Indenture as the Junior Subordinated Debentures surrendered upon such
registration of transfer.
Every Junior Subordinated Debenture presented or surrendered for
registration of transfer shall be duly endorsed for transfer (if so required by
the Company or the Trustee), or shall be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer of
Junior Subordinated Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer of Junior Subordinated Debentures.
The Company shall not be required to issue or register the transfer of
any Junior Subordinated Debenture during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Junior Subordinated Debentures selected for redemption pursuant to Article
Three and ending at the close of business on the day of such mailing.
2.8 MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR SUBORDINATED
DEBENTURES. If any mutilated Junior Subordinated Debenture is surrendered to
the Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Junior Subordinated Debenture of like tenor
and principal amount and bearing a number not contemporaneously outstanding.
-10-
<PAGE> 16
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Junior
Subordinated Debenture and (ii) such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Junior Subordinated Debenture has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Junior Subordinated Debenture, a new Junior
Subordinated Debenture of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Junior
Subordinated Debenture has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Junior Subordinated
Debenture, pay such Junior Subordinated Debenture.
Upon the issuance of any new Junior Subordinated Debenture under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Junior Subordinated Debenture issued pursuant to this
Section in lieu of any destroyed, lost or stolen Junior Subordinated Debenture
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Junior Subordinated Debenture
shall be at any time enforceable by anyone, and shall be entitled to all of the
benefits of this Indenture.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Junior
Subordinated Debentures.
ARTICLE III
REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES
3.1 REDEMPTION. Subject to the Company having received prior
approval of the Federal Reserve, if then required under the applicable capital
guidelines or policies of the Federal Reserve, the Company may redeem the
Junior Subordinated Debentures in accordance with this Article Three.
3.2 SPECIAL EVENT REDEMPTION. Subject to the Company having
received the prior approval of the Federal Reserve, if then required under the
applicable capital guidelines or policies of the Federal Reserve, if a Special
Event has occurred and is continuing, then, notwithstanding Section 3.3, the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the Holders of the Junior Subordinated Debentures to redeem the
Junior Subordinated Debentures, in whole but not in part, for cash within 90
days following the occurrence of such Special Event (the "90-Day Period") at
the Redemption Price, provided that if at the time there is available to the
Company the opportunity to eliminate, within the 90-Day Period, the Tax Event
by taking some ministerial action ("Ministerial Action"), such as filing a form
or making an election, or pursuing some other similar reasonable measure which
has no adverse effect on the Company, the Trust or the Holders of the Trust
Securities issued by the Trust, the Company shall pursue such Ministerial
Action in lieu of redemption, and, provided, further, that the Company shall
have no right to redeem the Junior Subordinated Debentures while the Trust is
pursuing any Ministerial Action to eliminate the Tax Event. The Redemption
Price shall be paid prior to 2:00 p.m., Denver, Colorado time, on the date of
such redemption or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 12:00 noon, Denver, Colorado time, on the date such
Redemption Price is to be paid.
-11-
<PAGE> 17
3.3 OPTIONAL REDEMPTION BY COMPANY.
(a) Except as otherwise may be specified in this Indenture, the
Company shall have the right to redeem the Junior Subordinated Debentures, in
whole or in part, from time to time, on or after __________, 2003, at the
Redemption Price. Any redemption pursuant to this Section 3.3 will be made
upon not less than 30 days nor more than 60 days notice to the Holders of the
Junior Subordinated Debentures, at the Redemption Price. If the Junior
Subordinated Debentures are only partially redeemed pursuant to this Section
3.3, the Junior Subordinated Debentures will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided, that if at the time of
redemption the Junior Subordinated Debentures are registered as a Global
Subordinated Debenture, the Depositary shall determine, in accordance with its
procedures, the principal amount of such Junior Subordinated Debentures held by
each Holder of Junior Subordinated Debentures to be redeemed. The Redemption
Price shall be paid prior to 2:00 p.m., Denver, Colorado time, on the date of
such redemption or at such earlier time as the Company determines provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 12:00 noon, Denver, Colorado time, on the date such
Redemption Price is to be paid.
(b) If a partial redemption of the Junior Subordinated Debentures
would result in the delisting of the Preferred Securities issued by the Trust
from the American Stock Exchange or any other national securities exchange,
quotation system or other organization on which the Preferred Securities may
then be listed, if any, the Company shall not be permitted to effect such
partial redemption and may only redeem the Junior Subordinated Debentures in
whole or in part to such extent as would not cause such delisting.
3.4 NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to
redeem all or, as the case may be, a portion of the Junior Subordinated
Debentures in accordance with the right reserved so to do, the Company shall,
or shall cause the Trustee to, give notice of such redemption to Holders of the
Junior Subordinated Debentures to be redeemed by mailing, first class postage
prepaid, a notice of such redemption not less than 30 days and not more than 60
days before the date fixed for redemption to such Holders at their last
addresses as they shall appear upon the Securities Register. Any notice that
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Registered Holder receives the notice. In
any case, failure duly to give such notice to the Holder of any Junior
Subordinated Debenture designated for redemption in whole or in part, or any
defect in the notice, shall not affect the validity of the proceedings for the
redemption of any other Junior Subordinated Debentures. In the case of any
redemption of Junior Subordinated Debentures prior to the expiration of any
restriction on such redemption provided elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the Redemption Price, and shall state that payment of the
Redemption Price of such Junior Subordinated Debentures to be redeemed will be
made at the office or agency of the Company in Northglenn, Colorado, upon
presentation and surrender of such Junior Subordinated Debentures, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, that from and after said date interest will cease to accrue. If
less than all the Junior Subordinated Debentures are to be redeemed, the notice
to the Holders of Junior Subordinated Debentures to be redeemed in whole or in
part shall specify the particular Junior Subordinated Debentures to be so
redeemed. In case any Junior Subordinated Debenture is to be redeemed in part
only, the notice that relates to such Junior Subordinated Debenture shall state
the portion of the principal amount thereof to be redeemed, and shall state
that on and after the redemption date, upon surrender of such Junior
Subordinated Debenture, a new Junior Subordinated Debenture or Junior
Subordinated Debentures in principal amount equal to the unredeemed portion
thereof shall be issued to the Holder.
(b) If less than all the Junior Subordinated Debentures are to be
redeemed, the Company shall give the Trustee at least 45 days' notice in
advance of the date fixed for redemption as to the aggregate principal amount
of Junior Subordinated Debentures to be redeemed, and thereupon the Trustee
shall select, by lot or in such other manner as it shall deem appropriate and
fair in its discretion and that may provide for the selection of a portion or
-12-
<PAGE> 18
portions (equal to ten U.S. dollars ($10) or any integral multiple thereof),
the Junior Subordinated Debentures to be redeemed and shall thereafter promptly
notify the Company in writing of the numbers of the Junior Subordinated
Debentures to be redeemed, in whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its Vice Chairman, its President or any
Vice President, instruct the Trustee or any paying agent to call all or any
part of the Junior Subordinated Debentures for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or in the name of the Trustee or the paying agent, as the
Trustee or such paying agent may deem advisable. In any case in which notice
of redemption is to be given by the Trustee or any such paying agent, the
Company shall deliver or cause to be delivered to, or permit to remain with,
the Trustee or such paying agent, as the case may be, such Securities Register,
transfer books or other records, or suitable copies or extracts therefrom,
sufficient to enable the Trustee or such paying agent to give any notice by
mail that may be required under the provisions of this Section.
3.5 PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been
completed as above provided, the Junior Subordinated Debentures or portions of
Junior Subordinated Debentures to be redeemed specified in such notice shall
become due and payable on the date and at the place stated in such notice at
the Redemption Price (which includes interest accrued to the date fixed for
redemption) and interest on such Junior Subordinated Debentures or portions of
Junior Subordinated Debentures shall cease to accrue on and after the date
fixed for redemption, unless the Company shall default in the payment of such
Redemption Price with respect to any such Junior Subordinated Debentures or
portions thereof. On presentation and surrender of such Junior Subordinated
Debentures on or after the date fixed for redemption at the place of payment
specified in the notice, such Junior Subordinated Debentures shall be paid and
redeemed at the Redemption Price (which includes the interest accrued thereon
to the date fixed for redemption) (but if the date fixed for redemption is an
Interest Payment Date, the interest installment payable on such date shall be
payable to the Registered Holder at the close of business on the applicable
record date pursuant to Section 2.5(a)).
(b) Upon presentation of any Junior Subordinated Debenture that is
to be redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Junior Subordinated Debenture
is presented shall deliver to the Holder thereof, at the expense of the
Company, a new Junior Subordinated Debenture or Junior Subordinated Debentures
of authorized denominations in principal amount equal to the unredeemed portion
of the Junior Subordinated Debenture so presented.
3.6 NO SINKING FUND. The Junior Subordinated Debentures are not
entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
4.1 EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of
Default has occurred and is continuing, the Company shall have the right, at
any time and from time to time during the term of the Junior Subordinated
Debentures, to defer payments of interest by extending the interest payment
period of such Junior Subordinated Debentures for a period not exceeding 20
consecutive quarters (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period may extend beyond the Maturity Date.
To the extent permitted by applicable law, interest, the payment of which has
been deferred because of the extension of the interest payment period pursuant
to this Section 4.1, will bear interest thereon at the Coupon Rate compounded
quarterly for each quarter of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Junior Subordinated
Debentures, including any Additional Sums and Compounded Interest (together,
"Deferred Interest") that shall be payable to the Holders of the
-13-
<PAGE> 19
Junior Subordinated Debentures in whose names the Junior Subordinated
Debentures are registered in the Securities Register on the record date for the
Interest Payment Date coinciding with the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided that such period together with
all such further extensions thereof shall not exceed 20 consecutive quarters,
or extend beyond the Maturity Date. Upon the termination of any Extended
Interest Payment Period and upon the payment of all Deferred Interest then due,
the Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Company
may prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
4.2 NOTICE OF EXTENSION.
(a) If the Property Trustee is the only Registered Holder of the
Junior Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its selection
of such Extended Interest Payment Period one Business Day before the earlier of
(i) the next succeeding date on which Distributions are payable, or (ii) the
date the Trust is required to give notice of the record date, or the date such
Distributions are payable, to the Preferred Securities holders or to the
American Stock Exchange or other applicable self regulatory organization, if
any, but in any event at least one Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Junior
Subordinated Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give the Holders of the Junior Subordinated
Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period at least one Business Day before the earlier of (i) the
next succeeding Interest Payment Date, or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to the
Holders of the Junior Subordinated Debentures or to the American Stock Exchange
or other applicable self regulatory organization, if any.
(c) The quarter in which any notice is given pursuant to paragraph
(a) or paragraph (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
4.3 LIMITATION OF TRANSACTIONS DURING EXTENSION. If: (i) the
Company shall exercise its right to defer payment of interest as provided in
Section 4.1; or (ii) there shall have occurred any Event of Default, then the
Company shall be subject to the restrictions on payments set forth under
Section 5.6.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
5.1 PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and
punctually pay or cause to be paid the principal of and interest on the Junior
Subordinated Debentures at the time and place and in the manner provided herein
and established with respect to such Junior Subordinated Debentures.
5.2 MAINTENANCE OF AGENCY. So long as any Junior Subordinated
Debentures remain Outstanding, the Company agrees to maintain an office or
agency in Northglenn, Colorado, or at such other location or locations as may
be designated as provided in this Section 5.2, where (i) Junior Subordinated
Debentures may be presented for payment, (ii) Junior Subordinated Debentures
may be presented as hereinabove authorized for registration of transfer and
exchange, and (iii) notices and demands to or upon the Company in respect of
the Junior Subordinated Debentures and this Indenture may be given or served,
such designation to continue with respect to such office or agency until the
Company shall, by written notice signed by its Vice Chairman, its President or
a Vice President and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee
-14-
<PAGE> 20
with the address thereof, such presentations, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, notices
and demands.
5.3 PAYING AGENTS.
(a) If the Company shall appoint one or more paying agents for the
Junior Subordinated Debentures, other than the Trustee, the Company will cause
each such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of
this Section:
(i) that it will hold all sums held by it as such agent
for the payment of the principal of or interest on the Junior
Subordinated Debentures (whether such sums have been paid to it by
the Company or by any other obligor) in trust for the benefit of the
Persons entitled thereto;
(ii) that it will give the Trustee notice of any failure
by the Company (or by any other obligor) to make any payment of the
principal of or interest on the Junior Subordinated Debentures when
the same shall be due and payable;
(iii) that it will, at any time during the continuance of
any failure referred to in the preceding paragraph (a)(ii) above, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such paying agent; and
(iv) that it will perform all other duties of paying agent
as set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect
to the Junior Subordinated Debentures, it will on or before each due date of
the principal of or interest on Junior Subordinated Debentures, set aside,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay such principal or interest so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of such action, or any failure (by it or
any other obligor) to take such action. Whenever the Company shall have one or
more paying agents for the Junior Subordinated Debentures, it will, prior to
each due date of the principal of or interest on the Junior Subordinated
Debentures, deposit with the paying agent a sum sufficient to pay the principal
or interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal or interest, and (unless such paying
agent is the Trustee) the Company will promptly notify the Trustee of this
action or failure so to act.
(c) Notwithstanding anything in this Section to the contrary, (i)
the agreement to hold sums in trust as provided in this Section is subject to
the provisions of Section 13.5, and (ii) the Company may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or direct any paying agent to pay, to the Trustee all
sums held in trust by the Company or such paying agent, such sums to be held by
the Trustee upon the same terms and conditions as those upon which such sums
were held by the Company or such paying agent; and, upon such payment by any
paying agent to the Trustee, such paying agent shall be released from all
further liability with respect to such money.
5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 9.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will
not, while any of the Junior Subordinated Debentures remain Outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other company unless the provisions of
Article Twelve hereof are complied with.
-15-
<PAGE> 21
5.6 RESTRICTIONS ON CERTAIN PAYMENTS. If at any time (i) there
shall have occurred any event of which the Company has actual knowledge that
(a) with the giving of notice or the lapse of time, or both, would constitute
an Event of Default and (b) in respect to which the Company shall not have
taken reasonable steps to cure, or (ii) the Company shall have given notice of
its election of an Extended Interest Payment Period as provided herein with
respect to the Junior Subordinated Debentures and shall not have rescinded such
notice, or such Extended Interest Payment Period, or any extension thereof,
shall be continuing; or (iii) while the Junior Subordinated Debentures are held
by the Trust, the Company shall be in default with respect to its payment of
any obligation under the Preferred Securities Guarantee, then 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 or (2) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company
(including the Junior Subordinated Debentures) that rank pari passu with or
junior in interest to the Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any Subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock, (b) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of
stock under any such plan in the future or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the Preferred Securities
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's benefit plans for its directors,
officers or employees).
5.7 COVENANTS AS TO THE TRUST. For so long as the Trust
Securities of the Trust remain outstanding, the Company will (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company's ownership of the Common Securities, (ii) use its
reasonable efforts to cause the Trust (a) to remain a business trust, except
in connection with a distribution of Junior Subordinated Debentures, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement, and
(b) to otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax purposes, and
(iii) to use its reasonable efforts to cause each Holder of Trust Securities
to be treated as owning an individual beneficial interest in the Junior
Subordinated Debentures.
If the Junior Subordinated Debentures are to be issued as a Global
Subordinated Debenture in connection with the distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities issued by
the Trust upon a Dissolution Event, the Company will use its best efforts to
list such Junior Subordinated Debentures on the American Stock Exchange or on
such other exchange or quotation system as the Preferred Securities may then be
listed.
ARTICLE VI
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS. The Company will furnish or cause to be furnished to the
Trustee (a) on each regular record date (as defined in Section 2.5(a)) a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Holders as of such regular record date, provided that the Company shall
not be obligated to furnish or cause to furnish such list at any time that the
list shall not differ in any respect from the most recent list furnished to the
Trustee by the Company and (b) at such other times as the Trustee may request
in writing within 30 days after the receipt by the Company of any such request,
a list of similar form and content as of a date not more than 15 days prior to
the time such list is furnished; provided, however, that, in either case, no
such list need be furnished if the Trustee shall be the Securities Registrar.
-16-
<PAGE> 22
6.2 PRESERVATION OF INFORMATION; COMMUNICATIONS WITH
SECURITYHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
Holders contained in the most recent list furnished to it as provided in
Section 6.1 and as to the names and addresses of Holders received by the
Trustee in its capacity as Securities Registrar (if acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided
in Section 6.1 upon receipt of a new list so furnished.
(c) Securityholders may communicate as provided in Section 312(b)
of the Trust Indenture Act with other Securityholders with respect to their
rights under this Indenture or under the Junior Subordinated Debentures.
6.3 REPORTS BY THE COMPANY.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to any applicable rules and regulations of the Commission.
(b) The Company covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail,
first-class postage prepaid, or reputable over-night delivery service that
provides for evidence of receipt, to the Securityholders, as their names and
addresses appear upon the Securities Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to subsections (a) and (b)
of this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
6.4 REPORTS BY THE TRUSTEE.
(a) Beginning January 31, 1999, on or before January 31 in each
year in which any of the Junior Subordinated Debentures are Outstanding, the
Trustee shall transmit by mail, first class postage prepaid, to the
Securityholders, as their names and addresses appear upon the Securities
Register, a brief report dated as of the preceding December 31, if and to the
extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with the Company, and
also with the Commission.
-17-
<PAGE> 23
ARTICLE VII
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
7.1 EVENTS OF DEFAULT.
(a) Whenever used herein, "Event of Default" means any one or more
of the following events that has occurred and is continuing:
(i) the Company defaults in the payment of any
installment of interest upon any of the Junior Subordinated
Debentures, as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the
Company in accordance with the terms of this Indenture shall not
constitute a default in the payment of interest for this purpose;
(ii) the Company defaults in the payment of the principal
of any of the Junior Subordinated Debentures as and when the same
shall become due and payable whether at maturity, upon redemption, by
declaration or otherwise;
(iii) the Company fails to observe or perform any other of
its covenants or agreements hereunder with respect to the Junior
Subordinated Debentures for a period of 90 days after the date on
which written notice of such failure, requiring the same to be
remedied and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Company by the Trustee, by
registered or certified mail, or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Junior Subordinated
Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (1) commences a voluntary case, (2) consents to the
entry of an order for relief against it in an involuntary case, (3)
consents to the appointment of a custodian of it or for all or
substantially all of its property or (4) makes a general assignment
for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order
under any Bankruptcy Law that (1) is for relief against the Company in
an involuntary case, (2) appoints a custodian of the Company for all
or substantially all of its property, or (3) orders the liquidation of
the Company, and the order or decree remains unstayed and in effect
for 90 days; or
(vi) in the event Junior Subordinated Debentures are
issued to the Trust or a trustee of the Trust in connection with the
issuance of Trust Securities by the Trust, the Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or
otherwise terminated its existence, except in connection with (1) the
distribution of Junior Subordinated Debentures to holders of Trust
Securities in liquidation of their interests in the Trust, (2) the
redemption of all of the outstanding Trust Securities of the Trust or
(3) certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Junior Subordinated Debentures shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Junior Subordinated Debentures then Outstanding hereunder, by
notice in writing to the Company (and to the Trustee if given by such
Securityholders) may declare the principal of all the Junior Subordinated
Debentures to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, notwithstanding
anything contained in this Indenture or in the Junior Subordinated Debentures
to the contrary.
(c) At any time after the principal of the Junior Subordinated
Debentures shall have been so declared due and payable, and before any judgment
or decree for the payment of the moneys due shall have been obtained or
-18-
<PAGE> 24
entered as hereinafter provided, the Holders of a majority in aggregate
principal amount of the Junior Subordinated Debentures then Outstanding, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if: (i) the Company has paid or deposited with
the Trustee a sum sufficient to pay all matured installments of interest upon
all the Junior Subordinated Debentures and the principal of any and all Junior
Subordinated Debentures that shall have become due otherwise than by
acceleration (with interest upon such principal and, to the extent that such
payment is enforceable under applicable law, upon overdue installments of
interest, at the rate per annum expressed in the Junior Subordinated Debentures
to the date of such payment or deposit) and the amount payable to the Trustee
under Section 9.6, and (ii) any and all Events of Default under this Indenture,
other than the nonpayment of principal on Junior Subordinated Debentures that
shall not have become due by their terms, shall have been remedied or waived as
provided in Section 7.6. Should the Holders fail to annul such declaration and
waive such default, then the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities shall have such right.
No such rescission and annulment shall extend to or shall affect any
subsequent default or impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right
with respect to Junior Subordinated Debentures under this Indenture and such
proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case the Company and the
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company and the Trustee
shall continue as though no such proceedings had been taken.
7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
(a) The Company covenants that (i) in case it shall default in the
payment of any installment of interest on any of the Junior Subordinated
Debentures as and when the same shall have become due and payable, and such
default shall have continued for a period of 90 Business Days, or (ii) in case
it shall default in the payment of the principal of any of the Junior
Subordinated Debentures when the same shall have become due and payable,
whether upon maturity of the Junior Subordinated Debentures or upon redemption
or upon declaration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the Holders of the Junior
Subordinated Debentures, the whole amount that then shall have become due and
payable on all such Junior Subordinated Debentures for principal or interest,
or both, as the case may be, with interest upon the overdue principal and (to
the extent that payment of such interest is enforceable under applicable law
and, if the Junior Subordinated Debentures are held by the Trust or a trustee
of the Trust, without duplication of any other amounts paid by the Trust or
trustee in respect thereof) upon overdue installments of interest at the rate
per annum expressed in the Junior Subordinated Debentures; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, and the amount payable to the Trustee under Section
9.6.
(b) If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or other obligor
upon the Junior Subordinated Debentures and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the
Company or other obligor upon the Junior Subordinated Debentures, wherever
situated.
(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property of either, the
Trustee shall have power to intervene in such proceedings and take any action
therein that may be permitted by the court and shall (except as may be
otherwise provided by law) be entitled to file such proofs of claim and other
papers and documents as may be necessary or advisable in order to have the
claims of the Trustee and of the Holders of
-19-
<PAGE> 25
Junior Subordinated Debentures allowed for the entire amount due and payable by
the Company under this Indenture at the date of institution of such proceedings
and for any additional amount that may become due and payable by the Company
after such date, and to collect and receive any moneys or other property
payable or deliverable on any such claim, and to distribute the same after the
deduction of the amount payable to the Trustee under Section 9.6; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Holders to make such payments to the Trustee, and, in
the event that the Trustee shall consent to the making of such payments
directly to such Securityholders, to pay to the Trustee any amount due it under
Section 9.6.
(d) All rights of action and of asserting claims under this
Indenture may be enforced by the Trustee without the possession of any of the
Junior Subordinated Debentures, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for payment to the Trustee of
any amounts due under Section 9.6, be for the ratable benefit of the Holders of
the Junior Subordinated Debentures.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Junior Subordinated Debentures or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
7.3 APPLICATION OF MONEYS COLLECTED. Any moneys collected by the
Trustee pursuant to this Article with respect to the Junior Subordinated
Debentures shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such moneys on account of
principal or interest, upon presentation of the Junior Subordinated Debentures,
and notation thereon the payment, if only partially paid, and upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.6;
SECOND: To the payment of all Senior and Subordinated Debt of the
Company if and to the extent required by Article Sixteen; and
THIRD: To the payment of the amounts then due and unpaid upon Junior
Subordinated Debentures for principal and interest, in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Junior Subordinated Debentures for principal and interest, respectively.
7.4 LIMITATION ON SUITS. No Holder shall have any right by virtue
of or by availing any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (i) such Holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof;
(ii) the Holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debentures then Outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name
as trustee hereunder; (iii) such Holder or Holders shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby; and (iv) the Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action,
-20-
<PAGE> 26
suit or proceeding; and (v) during such 60 day period, the Holders of a
majority in principal amount of the Junior Subordinated Debentures do not give
the Trustee a direction inconsistent with the request.
Notwithstanding any other provisions of this Indenture to the
contrary, the right of any Holder to receive payment of the principal of and
interest on the Junior Subordinated Debentures on or after the respective due
dates (or in the case of redemption, on the redemption date), or to institute
suit for the enforcement of any such payment on or after such respective dates
or redemption date, shall not be impaired or affected without the consent of
such Holder; and by accepting a Junior Subordinated Debenture hereunder it is
expressly understood, intended and covenanted by the Holder thereof with every
other such Holder and the Trustee, that no one or more Holders shall have any
right in any manner whatsoever by virtue of or by availing any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or seek to obtain priority over or preference to any such other
Holders, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders of
Junior Subordinated Debentures. For the protection and enforcement of the
provisions of this Section, each and every Securityholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER.
(a) Except as otherwise provided in Section 7.2, all powers and
remedies given by this Article to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the Holders of the Junior
Subordinated Debentures, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to such Junior Subordinated
Debentures.
(b) No delay or omission of the Trustee or of any Holder of any of
the Junior Subordinated Debentures to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall impair any
such right or power, or shall be construed to be a waiver of any such default
or on acquiescence therein; and, subject to the provisions of Section 7.4,
every power and remedy given by this Article or by law to the Trustee or the
Securityholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Securityholders.
7.6 CONTROL BY SECURITYHOLDERS. The Holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
Outstanding, determined in accordance with Section 10.4, shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee; provided, however, that such direction shall not be in conflict
with any rule of law or with this Indenture. Subject to the provisions of
Section 9.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
Outstanding affected thereby, determined in accordance with Section 10.4, may
on behalf of the Holders of all of the Junior Subordinated Debentures waive any
past default in the performance of any of the covenants contained herein and
its consequences, except (i) a default in the payment of the principal of or
interest on any of the Junior Subordinated Debentures as and when the same
shall become due by its terms otherwise than by acceleration (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal has been deposited with the Trustee in accordance with
Section 7.1(c)), (ii) a default in the covenants contained in Section 5.6 or
(iii) in respect of a covenant or provision hereof which under Article Eleven
cannot be modified or amended without the consent of the Holder of each
Outstanding Junior Subordinated Debenture affected; provided, however, that if
the Junior Subordinated Debentures are held by the Trust or a Trustee of the
Trust, such waiver or modification to such waiver shall not be effective until
the Holders of a majority in Liquidation Amount of Trust Securities of the
Trust shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each Outstanding Junior
Subordinated Debenture is required, such waiver shall not be effective until
each Holder of the Trust Securities of the Trust shall have consented to such
waiver. Upon any such waiver, the default
-21-
<PAGE> 27
covered thereby shall be deemed to be cured for all purposes of this Indenture
and the Company, the Trustee and the Holders of the Junior Subordinated
Debentures shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
7.7 UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each Holder of any Junior Subordinated Debentures by such Holder's
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 10% in aggregate principal amount of the
Outstanding Junior Subordinated Debentures, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on the Junior Subordinated Debentures on or after the due dates
thereof.
ARTICLE VIII
FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE
8.1 FORM OF JUNIOR SUBORDINATED DEBENTURE. The Junior
Subordinated Debenture and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the forms contained as Exhibit A to
this Indenture, attached hereto and incorporated herein by reference.
8.2 ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES. Junior
Subordinated Debentures in the aggregate principal amount of $20,618,560 may,
upon execution of this Indenture, and a possible additional amount of up to
$3,092,790 related to the Underwriters' Over-Allotment Option with respect to
the Preferred Securities may, upon exercise of the Underwriters' Over-Allotment
Option, be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver the
Junior Subordinated Debentures to or upon the written order of the Company,
signed by its Chairman, its Vice Chairman, its Vice Chairman, its President or
any Vice President, without any further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
9.1 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Junior Subordinated Debentures such
duties and only such duties as are specifically set forth in this Indenture,
and no implied covenants shall be read into this Indenture against the Trustee.
In case an Event of Default has occurred (that has not been cured or waived),
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express
-22-
<PAGE> 28
provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirement of this Indenture;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in
principal amount of the Junior Subordinated Debentures at the time
Outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Indenture; and
(iv) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably
assured to it.
9.2 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in
Section 9.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company by the Vice Chairman, the
President or any Vice President and by the Secretary or an Assistant Secretary
or the Chief Accounting Officer thereof (unless other evidence in respect
thereof is specifically prescribed herein);
(c) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted hereunder
in good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (that has not been cured or waived) to exercise such of the rights
and powers vested in it by this Indenture, and to use the same degree of care
and skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(e) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
-23-
<PAGE> 29
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
security, or other papers or documents, unless requested in writing so to do by
the Holders of not less than a majority in principal amount of the Outstanding
Junior Subordinated Debentures (determined as provided in Section 10.4);
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and
(g) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
9.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF THE JUNIOR
SUBORDINATED DEBENTURES.
(a) The recitals contained herein and in the Junior Subordinated
Debentures shall be taken as the statements of the Company and the Trustee
assumes no responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Junior Subordinated Debentures.
(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Junior Subordinated Debentures or of
the proceeds of such Junior Subordinated Debentures, or for the use or
application of any moneys paid over by the Trustee in accordance with any
provision of this Indenture, or for the use or application of any moneys
received by any paying agent other than the Trustee.
9.4 MAY HOLD JUNIOR SUBORDINATED DEBENTURES. The Trustee or any
paying agent or Securities Registrar, in its individual or any other capacity,
may become the owner or pledgee of Junior Subordinated Debentures with the same
rights it would have if it were not Trustee, paying agent or Securities
Registrar.
9.5 MONEYS HELD IN TRUST. Subject to the provisions of Section
13.5, all moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any moneys received by
it hereunder except such as it may agree with the Company to pay thereon.
9.6 COMPENSATION AND REIMBURSEMENT.
(a) The Company covenants and agrees to pay to the Trustee, and
the Trustee shall be entitled to, such reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee
of an express trust), as the Company and the Trustee may from time to time
agree in writing, for all services rendered by it in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee, and, except as otherwise expressly
provided herein, the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all Persons not regularly in its employ) except any such
expense,
-24-
<PAGE> 30
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify the Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of
the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Junior Subordinated Debentures upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of the Junior Subordinated Debentures.
9.7 RELIANCE ON OFFICERS' CERTIFICATE. Except as otherwise
provided in Section 9.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering or omitting to take any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted to be
taken by it under the provisions of this Indenture upon the faith thereof.
9.8 DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has
or shall acquire any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Trustee and the Company shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
9.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all
times be a Trustee with respect to the Junior Subordinated Debentures issued
hereunder which shall at all times be a corporation organized and doing
business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or examination by federal,
state, territorial, or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. The Company may not, nor may any
Person directly or indirectly controlling, controlled by, or under common
control with the Company, serve as Trustee. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
specified in Section 9.10.
9.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee, or any successor hereafter appointed, may at any
time resign by giving written notice thereof to the Company and by transmitting
notice of resignation by mail, first-class postage prepaid, to the
Securityholders, as their names and addresses appear upon the Securities
Register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Securityholder who has been a bona
fide Holder of Junior Subordinated Debentures for at least six months may,
subject to the provisions of Section 7.7, on
-25-
<PAGE> 31
behalf of such Securityholder and all other Holders, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any one of the following shall occur:
(i) the Trustee shall fail to comply with the provisions
of Section 9.8 after written request therefor by the Company or by any
Securityholder who has been a bona fide Holder of Junior Subordinated
Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.9 and shall fail to resign after
written request therefor by the Company or by any such Securityholder;
or
(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or commence a voluntary
bankruptcy proceeding, or a receiver of the Trustee or of its property
shall be appointed or consented to, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.7, unless the Trustee's duty to resign is stayed as
provided herein, any Securityholder who has been a bona fide Holder of Junior
Subordinated Debentures for at least six months may, on behalf of that Holder
and all other Holders, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee. Such court
may thereupon after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Junior Subordinated Debentures at the time Outstanding may at any time remove
the Trustee by so notifying the Trustee and the Company and may appoint a
successor Trustee with the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.11.
9.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor trustee,
every such successor trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all
the rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.
(b) Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts
referred to in paragraph (a) of this Section.
(c) No successor trustee shall accept its appointment unless at
the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.
-26-
<PAGE> 32
(d) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Company shall transmit notice of the succession
of such trustee hereunder by mail, first-class postage prepaid, to the
Securityholders, as their names and addresses appear upon the Securities
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
9.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified and eligible under the provisions of this Article Nine, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. In case any
Junior Subordinated Debentures shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Junior Subordinated Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Junior
Subordinated Debentures.
9.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship described in Section 311(b) of the Trust Indenture
Act. A Trustee who has resigned or been removed shall be subject to Section
311(a) of the Trust Indenture Act to the extent included therein.
9.14 APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of
the Junior Subordinated Debentures remain Outstanding, the Trustee may appoint
an Authenticating Agent or Agents which shall be authorized to act on behalf of
the Trustee to authenticate Junior Subordinated Debentures issued upon original
issuance, exchange, registration of transfer or partial redemption thereof or
pursuant to Section 2.8, and Junior Subordinated Debentures so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Junior Subordinated Debentures by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $10,000,000 and subject to supervision or
examination by federal or state authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of such supervision or examining authority, for the purposes of
this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
notice of resignation or upon such
-27-
<PAGE> 33
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the
Company and shall mail written notice of such appointment by first-class mail,
postage prepaid, to all Securityholders as their names and addresses appear in
the Securities Register. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with the like effect as if originally
named as an Authenticating Agent herein. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 9.6.
If an appointment is made pursuant to this Section, the Junior
Subordinated Debentures may have endorsed thereon, in lieu of the form of
certificate of authentication set forth in Section 8.1, a certificate of
authentication in the following form:
"This is one of the Junior Subordinated Debentures described in the
within mentioned Indenture."
------------------------------
As Trustee
By:
---------------------------
As Authenticating Agent
By:
---------------------------
Authorized Signature
ARTICLE X
CONCERNING THE SECURITYHOLDERS
10.1 EVIDENCE OF ACTION BY SECURITYHOLDERS. Whenever in this
Indenture it is provided that the Holders of a majority or specified percentage
in aggregate principal amount of the Junior Subordinated Debentures may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the Holders of such majority or specified
percentage have joined therein may be evidenced by any instrument or any number
of instruments of similar tenor executed by such Holders in Person or by agent
or proxy appointed in writing.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
other action, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other action may be given before or after the record date,
but only the Securityholders of record at the close of business on the record
date shall be deemed to be Securityholders for the purposes of determining
whether Securityholders of the requisite proportion of Outstanding Junior
Subordinated Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other action, and
for that purpose the Outstanding Junior Subordinated Debentures shall be
computed as of the record date; provided, however, that no such authorization,
agreement or consent by such Securityholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
-28-
<PAGE> 34
10.2 PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the
provisions of Section 6.1, proof of the execution of any instrument by a
Securityholder (such proof will not require notarization) or his agent or proxy
and proof of the holding by any Person of any of the Junior Subordinated
Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Junior Subordinated Debentures shall be
proved by the Securities Register or by a certificate of the Securities
Registrar thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
10.3 WHO MAY BE DEEMED OWNERS. Prior to the due presentment for
registration of transfer of any Junior Subordinated Debenture, the Company, the
Trustee, any paying agent and any Securities Registrar may deem and treat the
Person in whose name such Junior Subordinated Debenture shall be registered
upon the books of the Company as the absolute owner of such Junior Subordinated
Debenture (whether or not such Junior Subordinated Debenture shall be overdue
and notwithstanding any notice of ownership or writing thereon made by anyone
other than the Securities Registrar) for the purpose of receiving payment of or
on account of the principal of and (subject to Section 2.3) interest on such
Junior Subordinated Debenture and for all other purposes; and neither the
Company nor the Trustee nor any paying agent nor any Securities Registrar shall
be affected by any notice to the contrary.
10.4 CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY COMPANY
DISREGARDED. In determining whether the Holders of the requisite aggregate
principal amount of Junior Subordinated Debentures have concurred in any
direction, consent or waiver under this Indenture, the Junior Subordinated
Debentures that are owned by the Company or any other obligor on the Junior
Subordinated Debentures or by any Person directly or indirectly controlling or
controlled by or under common control with the Company or any other obligor on
the Junior Subordinated Debentures shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Junior Subordinated Debentures that the
Trustee actually knows are so owned shall be so disregarded. The Junior
Subordinated Debentures so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right with respect
to such Junior Subordinated Debentures and that the pledgee is not a Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.
10.5 ACTIONS BINDING ON FUTURE SECURITYHOLDERS. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 10.1,
of the taking of any action by the Holders of the majority or percentage in
aggregate principal amount of the Junior Subordinated Debentures specified in
this Indenture in connection with such action, any Holder who is shown by the
evidence to have consented to such action may, by filing written notice with
the Trustee, and upon proof of holding as provided in Section 10.2, revoke such
action so far as concerns such Holder's Junior Subordinated Debentures. Except
as aforesaid any such action taken by the Holder shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Holder's Junior Subordinated Debentures, and of any Junior Subordinated
Debentures issued in exchange therefor, on registration of transfer thereof or
in place thereof, irrespective of whether or not any notation in regard thereto
is made upon such Junior Subordinated Debentures. Any action taken by the
Holders of the majority or percentage in aggregate principal amount of the
Junior Subordinated Debentures specified in this Indenture in connection with
such action shall be conclusively binding upon the Company, the Trustee and the
Holders of all the Junior Subordinated Debentures.
-29-
<PAGE> 35
ARTICLE XI
SUPPLEMENTAL INDENTURES
11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
SECURITYHOLDERS. In addition to any supplemental indenture otherwise
authorized by this Indenture, the Company and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as then in
effect), without the consent of the Securityholders, for one or more of the
following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, or in
the Junior Subordinated Debentures, provided that any such action does not
materially adversely affect the interests of the Holders or the holders of the
Preferred Securities so long as they remain outstanding;
(b) to comply with Article Twelve;
(c) to provide for uncertificated Junior Subordinated Debentures
in addition to or in place of certificated Junior Subordinated Debentures;
(d) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
(e) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Junior Subordinated Debentures, as herein set
forth;
(f) to make any change that does not adversely affect the rights
of any Securityholder in any material respect; or
(g) to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or to add to the rights of
the Holders.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed by the Company and the Trustee without the consent of
the Holders of any of the Junior Subordinated Debentures at the time
Outstanding, notwithstanding any of the provisions of Section 11.2.
11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With
the consent (evidenced as provided in Section 10.1) of the Holders of not less
than a majority in aggregate principal amount of the Junior Subordinated
Debentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into
an indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner not covered by Section 11.1 the rights of the Holders of the
Junior Subordinated Debentures under this Indenture; provided, however, that no
such supplemental indenture shall without the consent of the Holders of each
Junior Subordinated Debenture then Outstanding, (i) change (except as expressly
provided herein pursuant to Section 2.2) the stated maturity of the Junior
Subordinated Debentures or reduce the principal amount thereof; or reduce the
rate or extend (except as expressly provided herein pursuant to Section 4.1)
the time of payment of interest thereon; or (ii) reduce the percentage of
principal amount of Junior Subordinated Debentures, the Holders of which are
required to consent to any such supplemental indenture; provided, further, that
-30-
<PAGE> 36
if the Junior Subordinated Debentures are held by the Trust or a trustee of the
Trust, such supplemental indenture shall not be effective until the holders of
a majority in aggregate Liquidation Amount of Preferred Securities shall have
consented to such supplemental indenture; provided further, that if the consent
of the Holder of each Outstanding Junior Subordinated Debenture is required,
such supplemental indenture shall not be effective until each Holder of the
Trust Securities shall have consented to such supplemental indenture.
It shall not be necessary for the consent of the Securityholders to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.
11.3 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article or of Section
12.1, this Indenture shall be deemed to be modified and amended in accordance
therewith.
11.4 JUNIOR SUBORDINATED DEBENTURES AFFECTED BY SUPPLEMENTAL
INDENTURES. Junior Subordinated Debentures, affected by a supplemental
indenture, authenticated and delivered after the execution of such supplemental
indenture pursuant to the provisions of this Article or of Section 12.1, may
bear a notation in form approved by the Company, as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new Junior
Subordinated Debentures so modified as to conform, in the opinion of the Board
of Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Junior Subordinated Debentures then
Outstanding.
11.5 EXECUTION OF SUPPLEMENTAL INDENTURES. Upon the request of the
Company, accompanied by Board Resolutions authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of Securityholders required to consent thereto as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion but shall not be obligated to enter into such
supplemental indenture. The Trustee, subject to the provisions of Section 9.1,
may receive an Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant to this Article is authorized or permitted by, and
conforms to, the terms of this Article and that it is proper for the Trustee
under the provisions of this Article to join in the execution thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first-class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Securityholders as their names and addresses appear upon the Securities
Register. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
ARTICLE XII
SUCCESSOR CORPORATION
12.1 COMPANY MAY CONSOLIDATE, ETC. The Company shall not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person shall consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) in case the Company consolidates with or merges into another Person
or conveys or transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Company's obligations on the Junior Subordinated
Debentures issued under this Indenture; (ii) immediately after giving effect
thereto, no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing; and (iii) such successor Person expressly assumes the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be kept and performed by the Company by executing and delivering a
supplemental indenture in form and substance satisfactory to the Trustee.
-31-
<PAGE> 37
12.2 SUCCESSOR SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor Person
by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and interest on all of the Junior Subordinated Debentures
Outstanding and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
Person shall succeed to and be substituted for the Company, with the same
effect as if it had been named as the Company herein, and thereupon the
predecessor corporation shall be relieved of all obligations and covenants
under this Indenture and the Junior Subordinated Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not in
substance) may be made in the Junior Subordinated Debentures thereafter to be
issued as may be appropriate.
12.3 EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE. The Trustee,
subject to the provisions of Section 9.1, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply with the
provisions of this Article.
ARTICLE XIII
SATISFACTION AND DISCHARGE
13.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time: (a)
the Company shall have delivered to the Trustee for cancellation all Junior
Subordinated Debentures theretofore authenticated (other than any Junior
Subordinated Debentures that shall have been destroyed, lost or stolen and that
shall have been replaced or paid as provided in Section 2.8) and Junior
Subordinated Debentures for whose payment money or Governmental Obligations
have theretofore been deposited in trust or segregated and held in trust by the
Company (and thereupon repaid to the Company or discharged from such trust, as
provided in Section 13.5); or (b) all such Junior Subordinated Debentures not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit or cause to be deposited with the Trustee as trust funds the entire
amount in moneys or Governmental Obligations sufficient or a combination
thereof sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Junior
Subordinated Debentures not theretofore delivered to the Trustee for
cancellation, including principal and interest due or to become due to such
date of maturity or date fixed for redemption, as the case may be, and if the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company; then this Indenture shall thereupon cease to be of further effect
except for the provisions of Sections 2.2, 2.3, 2.4, 2.5, 4.1, 4.2, 4.3 and
9.10, that shall survive until the date of maturity or redemption date, as the
case may be, and Sections 9.6 and 13.5, that shall survive to such date and
thereafter, and the Trustee, on demand of the Company and at the cost and
expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.
13.2 DISCHARGE OF OBLIGATIONS. If at any time all such Junior
Subordinated Debentures not theretofore delivered to the Trustee for
cancellation or that have not become due and payable as described in Section
13.1 shall have been paid by the Company by depositing irrevocably with the
Trustee, as trust funds, moneys or an amount of Governmental Obligations
sufficient to pay at maturity or upon redemption all such Junior Subordinated
Debentures not theretofore delivered to the Trustee for cancellation, including
principal and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then after
the date such moneys or Governmental
-32-
<PAGE> 38
Obligations, as the case may be, are deposited with the Trustee the obligations
of the Company under this Indenture shall cease to be of further effect except
for the provisions of Sections 2.2, 2.3, 2.4, 2.5, 4.1, 4.2, 4.3, 9.6, 9.10 and
13.5 hereof that shall survive until such Junior Subordinated Debentures shall
mature and be paid. Thereafter, Sections 9.6 and 13.5 shall survive.
13.3 DEPOSITED MONEYS TO BE HELD IN TRUST. All monies or
Governmental Obligations deposited with the Trustee pursuant to Sections 13.1
or 13.2 shall be held in trust and shall be available for payment as due,
either directly or through any paying agent (including the Company acting as
its own paying agent), to the Holders of the Junior Subordinated Debentures for
the payment or redemption of which such moneys or Governmental Obligations have
been deposited with the Trustee.
13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS. In connection with
the satisfaction and discharge of this Indenture all moneys or Governmental
Obligations then held by any paying agent under the provisions of this
Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.
13.5 REPAYMENT TO COMPANY. Any monies or Governmental Obligations
deposited with any paying agent or the Trustee, or then held by the Company in
trust for payment of principal of or interest on the Junior Subordinated
Debentures that are not applied but remain unclaimed by the Holders of such
Junior Subordinated Debentures for at least two years after the date upon which
the principal of or interest on such Junior Subordinated Debentures shall have
respectively become due and payable, shall be repaid to the Company on
_________ of each year or (if then held by the Company) shall be discharged
from such trust; and thereupon the paying agent and the Trustee shall be
released from all further liability with respect to such moneys or Governmental
Obligations, and the Holder of any of the Junior Subordinated Debentures
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
14.1 NO RECOURSE. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of any Junior Subordinated
Debenture, or for any claim based thereon or otherwise in respect thereof,
shall be had against any incorporator, stockholder, officer or director as
such, past, present or future, of the Company or of any predecessor or
successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or
of any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Junior Subordinated Debentures or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer or director as
such, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Junior Subordinated Debentures or implied therefrom,
are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of such
Junior Subordinated Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 EFFECT ON SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company or the Trustee shall bind their respective successors and
assigns, whether so expressed or not.
-33-
<PAGE> 39
15.2 ACTIONS BY SUCCESSOR. Any act or proceeding by any provision
of this Indenture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and performed with
like force and effect by the corresponding board, committee or officer of any
corporation that shall at the time be the lawful sole successor of the Company.
15.3 SURRENDER OF COMPANY POWERS. The Company by instrument in
writing executed by authority of 2/3 (two-thirds) of its Board of Directors
and delivered to the Trustee may surrender any of the powers reserved to the
Company, and thereupon such power so surrendered shall terminate both as to the
Company and as to any successor corporation.
15.4 NOTICES. Except as otherwise expressly provided herein any
notice or demand that by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Junior
Subordinated Debentures to or on the Company may be given or served by being
deposited first-class postage prepaid in a post-office letterbox addressed
(until another address is filed in writing by the Company with the Trustee), as
follows: c/o First Western Corporation, 11210 Huron Street,, Northglenn,
Colorado 80234, Attention: Vice Chairman. Any notice, election, request or
demand by the Company or any Securityholder to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the Corporate Trust Office of the Trustee.
15.5 GOVERNING LAW. This Indenture and each Junior Subordinated
Debenture shall be deemed to be a contract made under the internal laws of the
State of Colorado and for all purposes shall be construed in accordance with
the laws of said state, provided that the immunities and the standard of care
of the Trustee shall be governed by Delaware law.
15.6 TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT. It is
intended that the Junior Subordinated Debentures will be treated as
indebtedness and not as equity for federal income tax purposes. The provisions
of this Indenture shall be interpreted to further this intention.
15.7 COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion delivered to the Trustee with
respect to compliance with a condition or covenant in this Indenture shall
include (1) a statement that the Person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in
the opinion of such Person, such Person has made such examination or
investigation as is necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
15.8 PAYMENTS ON BUSINESS DAYS. In any case where the date of
maturity of interest or principal of the Junior Subordinated Debentures or the
date of redemption of the Junior Subordinated Debentures shall not be a
Business Day, then payment of interest or principal will be made on the next
succeeding Business Day (without any additional interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
-34-
<PAGE> 40
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable.
15.9 CONFLICT WITH TRUST INDENTURE ACT. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
15.10 COUNTERPARTS. This Indenture may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
15.11 SEPARABILITY. In case any one or more of the provisions
contained in this Indenture or in the Junior Subordinated Debentures shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Indenture or of the Junior Subordinated Debentures, but this
Indenture and the Junior Subordinated Debentures shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein
or therein.
15.12 ASSIGNMENT. The Company will have the right at all times to
assign any of its respective rights or obligations under this Indenture to a
direct or indirect wholly-owned Subsidiary of the Company, provided that, in
the event of any such assignment, the Company will remain liable for all such
obligations. Subject to the foregoing, this Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the parties
hereto.
15.13 ACKNOWLEDGMENT OF RIGHTS. The Company acknowledges that, with
respect to any Junior Subordinated Debentures held by the Trust or a trustee of
the Trust, if the Property Trustee of the Trust fails to enforce its rights
under this Indenture as the Holder of the Junior Subordinated Debentures held
as the assets of the Trust, any holder of Preferred Securities may institute
legal proceedings directly against the Company to enforce such Property
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Property Trustee or any other Person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on
the redemption date), the Company acknowledges that a holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debentures. This Section 15.13 may not be
amended without the prior written consent of the holders of all of the
Preferred Securities.
ARTICLE XVI
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES
16.1 AGREEMENT TO SUBORDINATE. The Company covenants and agrees,
and each Holder of Junior Subordinated Debentures issued hereunder by such
Holder's acceptance thereof likewise covenants and agrees, that all Junior
Subordinated Debentures shall be issued subject to the provisions of this
Article Sixteen; and each Holder, whether upon original issue or upon transfer
or assignment thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of and interest on all
Junior Subordinated Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior and Subordinated Debt, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Sixteen shall prevent the occurrence of
any default or Event of Default hereunder.
-35-
<PAGE> 41
16.2 DEFAULT ON SENIOR AND SUBORDINATED DEBT. In the event and
during the continuation of any default by the Company in the payment of
principal, premium, interest or any other payment due on any Senior and
Subordinated Debt of the Company or in the event that the maturity of any
Senior and Subordinated Debt of the Company has been accelerated because of a
default, then, in either case, no payment shall be made by the Company with
respect to the principal of or interest on the Junior Subordinated Debentures.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 16.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior and
Subordinated Debt or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior and Subordinated
Debt (or their representative or representatives or a trustee) notify the
Trustee in writing within 90 days of such payment of the amounts then due and
owing on the Senior and Subordinated Debt and only the amounts specified in
such notice to the Trustee shall be paid to the holders of Senior and
Subordinated Debt.
16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment by the
Company or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due upon all Senior and Subordinated Debt of the Company shall
first be paid in full, or payment thereof provided for in money in accordance
with its terms, before any payment is made by the Company on account of the
principal or interest on the Junior Subordinated Debentures; and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee
would be entitled to receive from the Company, except for the provisions of
this Article Sixteen, shall be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment
or distribution, or by the Holders or by the Trustee under the Indenture if
received by them or it, directly to the holders of Senior and Subordinated Debt
of the Company (pro rata to such holders on the basis of the respective amounts
of Senior and Subordinated Debt held by such holders, as calculated by the
Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior and Subordinated Debt may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior and
Subordinated Debt in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior and
Subordinated Debt, before any payment or distribution is made to the Holders or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior and Subordinated Debt of the Company is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior and
Subordinated Debt or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
such Senior and Subordinated Debt may have been issued, and their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior and Subordinated Debt of the Company, as the case may be,
remaining unpaid to the extent necessary to pay such Senior and Subordinated
Debt in full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior and Subordinated Debt.
For purposes of this Article Sixteen, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article Sixteen with respect to the Junior Subordinated Debentures to the
payment of all Senior and Subordinated Debt of the Company, as the case may be,
that may at the time be outstanding, provided that (i) such
-36-
<PAGE> 42
Senior and Subordinated Debt is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of such Senior and Subordinated Debt are not, without the consent
of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Twelve of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 16.3 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Twelve of this
Indenture. Nothing in Section 16.2 or in this Section 16.3 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 9.6 of this
Indenture.
16.4 SUBROGATION. Subject to the payment in full of all Senior and
Subordinated Debt of the Company, the rights of the Holders of the Junior
Subordinated Debentures shall be subrogated to the rights of the holders of
such Senior and Subordinated Debt to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior and Subordinated Debt until the principal of and interest on the Junior
Subordinated Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior and
Subordinated Debt of any cash, property or securities to which the Holders of
the Junior Subordinated Debentures or the Trustee would be entitled except for
the provisions of this Article Sixteen, and no payment over pursuant to the
provisions of this Article Sixteen to or for the benefit of the holders of such
Senior and Subordinated Debt by Holders of the Junior Subordinated Debentures
or the Trustee, shall, as between the Company, its creditors other than holders
of Senior and Subordinated Debt of the Company, and the Holders of the Junior
Subordinated Debentures, be deemed to be a payment by the Company to or on
account of such Senior and Subordinated Debt. It is understood that the
provisions of this Article Sixteen are and are intended solely for the purposes
of defining the relative rights of the Holders of the Junior Subordinated
Debentures, on the one hand, and the holders of such Senior and Subordinated
Debt on the other hand.
Nothing contained in this Article Sixteen or elsewhere in this
Indenture or in the Junior Subordinated Debentures is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
and Subordinated Debt of the Company, and the Holders of the Junior
Subordinated Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Junior Subordinated Debentures the
principal of and interest on the Junior Subordinated Debentures as and when the
same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the Junior
Subordinated Debentures and creditors of the Company, other than the holders of
Senior and Subordinated Debt of the Company, nor shall anything herein or
therein prevent the Trustee or the Holder of any Junior Subordinated Debenture
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Sixteen
of the holders of such Senior and Subordinated Debt in respect of cash,
property or securities of the Company, as the case may be, received upon the
exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article Sixteen, the Trustee, subject to the provisions of Section 9.1,
and the Holders of the Junior Subordinated Debentures shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Junior Subordinated Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior and
Subordinated Debt and other indebtedness of the Company, as the case may be,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Sixteen.
16.5 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Junior
Subordinated Debentures by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Sixteen and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
-37-
<PAGE> 43
16.6 NOTICE BY THE COMPANY. The Company shall give prompt written
notice to a Responsible Officer of the Trustee of any fact known to the Company
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Junior Subordinated Debentures pursuant to the provisions of
this Article Sixteen. Notwithstanding the provisions of this Article Sixteen
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Junior Subordinated
Debentures pursuant to the provisions of this Article Sixteen, unless and until
a Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior and Subordinated Debt or from
any trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Junior Subordinated Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to such date.
The Trustee, subject to the provisions of Section 9.1, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior and Subordinated Debt of
the Company (or a trustee on behalf of such holder), to establish that such
notice has been given by a holder of such Senior and Subordinated Debt or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of such Senior and Subordinated Debt to
participate in any payment or distribution pursuant to this Article Sixteen,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior and Subordinated
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article Sixteen, and, if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR AND SUBORDINATED
DEBT. The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Sixteen in respect of any Senior and
Subordinated Debt at any time held by it, to the same extent as any other
holder of Senior and Subordinated Debt, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior and Subordinated Debt of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article
Sixteen, and no implied covenants or obligations with respect to the holders of
such Senior and Subordinated Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of such Senior and Subordinated Debt and, subject to the provisions of
Section 9.1, the Trustee shall not be liable to any holder of such Senior and
Subordinated Debt if it shall pay over or deliver to Holders of Junior
Subordinated Debentures, the Company or any other Person money or assets to
which any holder of such Senior and Subordinated Debt shall be entitled by
virtue of this Article Sixteen or otherwise.
16.8 SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or
future holder of any Senior and Subordinated Debt of the Company to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior and Subordinated Debt of the Company may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders of the Junior Subordinated Debentures, without incurring responsibility
to the Holders of the
-38-
<PAGE> 44
Junior Subordinated Debentures and without impairing or releasing the
subordination provided in this Article Sixteen or the obligations hereunder of
the Holders of the Junior Subordinated Debentures to the holders of such Senior
and Subordinated Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior and Subordinated Debt, or otherwise amend or supplement in
any manner such Senior and Subordinated Debt or any instrument evidencing the
same or any agreement under which such Senior and Subordinated Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior and Subordinated Debt;
(iii) release any Person liable in any manner for the collection of such Senior
and Subordinated Debt; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
FIRST WESTERN CORPORATION
By:
-----------------------------------------
Name: Timothy D. Wiens
Title: Vice Chairman
WILMINGTON TRUST COMPANY, AS TRUSTEE
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
STATE OF COLORADO )
) ss:
CITY AND COUNTY OF DENVER )
On the _______ day of ____________, 1998, before me personally came
Timothy D. Wiens, to me known, who, being by me duly sworn, did depose and say
that he is the Vice Chairman of FIRST WESTERN CORPORATION, one of the
corporations described in and which executed the above instrument; and that he
signed his name thereto on behalf of said corporation by authority of the Board
of Directors of said corporation.
Witness my hand and official seal:
---------------------------------------------
Notary Public
My Commission Expires:
-----------------------
-39-
<PAGE> 45
STATE OF )
) ss:
COUNTY OF )
On the _______ day of___________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is the _______________________ of WILMINGTON TRUST COMPANY,
one of the corporations described in and which executed the above instrument;
and that he/she signed his/her name thereto on behalf of said corporation by
authority of the Board of Directors of said corporation.
Witness my hand and official seal:
---------------------------------------------
Notary Public
My Commission Expires:
-----------------------
-40-
<PAGE> 46
EXHIBIT A
(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)
This Junior Subordinated Debenture is a Global Subordinated Debenture
within the meaning of the Indenture hereinafter referred to and is registered
in the name of a Depositary or a nominee of a Depositary. This Junior
Subordinated Debenture is exchangeable for Junior Subordinated Debentures
registered in the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Indenture, and no transfer
of this Junior Subordinated Debenture (other than a transfer of this Junior
Subordinated Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in such limited
circumstances.
Unless this Junior Subordinated Debenture is presented by an
authorized representative of Wilmington Trust Company (Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001) to the issuer or its
agent for registration of transfer, exchange or payment, and any Junior
Subordinated Debenture issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of Wilmington Trust
Company (and any payment hereon is made to Cede & Co. or to such other entity
as is requested by an authorized representative of Wilmington Trust Company),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch the registered owner hereof, Cede & Co., has an
interest herein.
Certificate No. Registered Principal Amount
_____________ $20,618,560
CUSIP No. __________
FIRST WESTERN CORPORATION
_____% JUNIOR SUBORDINATED DEBENTURE
DUE __________, 2028
First Western Corporation, a Nebraska corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Wilmington Trust
Company or registered assigns, the principal sum of Twenty Million Six Hundred
Eighteen Thousand Five Hundred and Sixty Dollars ($20,618,560) on __________,
2028 (which date may be shortened as provided in the Indenture, the "Stated
Maturity"), and to pay interest on said principal sum from __________, 1998, or
from the most recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on the 15th day of
January, April, July and October in each year commencing April 15, 1999, at
the rate of _____% per annum until the principal hereof shall have become due
and payable, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
quarterly. The amount of each interest payment due with respect to the Junior
Subordinated Debentures will include amounts accrued through the date the
interest payment is due. The amount of interest payable on any Interest
Payment Date shall 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 this Junior
Subordinated Debenture is not a Business Day (as defined in the Indenture),
then payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the person in
A-1
<PAGE> 47
whose name this Junior Subordinated Debenture (or one or more Predecessor
Junior Subordinated Debentures, as defined in the Indenture) is registered at
the close of business on the regular record date for such interest installment,
which shall be the close of business on the business day next preceding such
Interest Payment Date unless otherwise provided in the Indenture. The
principal of and the interest on this Junior Subordinated Debenture shall be
payable at the office or agency of the Trustee (as defined in the Indenture)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the Registered Holder (as defined in
the Indenture) at such address as shall appear in the Securities Register (as
defined in the Indenture). Notwithstanding the foregoing, so long as the
Holder of this Junior Subordinated Debenture is the Property Trustee (as
defined in the Indenture), the payment of the principal of and interest on this
Junior Subordinated Debenture will be made at such place and to such account as
may be designated by the Property Trustee.
The Stated Maturity may be shortened at any time by the Company to any
date not earlier than __________, 2003, subject to the Company having received
prior approval of the Federal Reserve (as defined in the Indenture) if then
required under applicable capital guidelines or policies of the Federal
Reserve.
The indebtedness evidenced by this Junior Subordinated Debenture is,
to the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior and Subordinated Debt (as
defined in the Indenture), and this Junior Subordinated Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Junior Subordinated Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior and Subordinated Debt, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Junior Subordinated Debenture shall not be entitled to any
benefit under the Indenture, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Junior Subordinated Debenture are continued on
the reverse side hereof and such continued provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated: __________, 1998 FIRST WESTERN CORPORATION
By:
-------------------------------
Name: Timothy D. Wiens
Title: Vice Chairman
ATTEST:
By:
---------------------------------
Name:
--------------------------------
Title: Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
A-2
<PAGE> 48
CERTIFICATE OF AUTHENTICATION
This is one of the Junior Subordinated Debentures described in the
within-mentioned Indenture.
Dated: WILMINGTON TRUST COMPANY, as Trustee
---------------------------
By:
-------------------------------
Authorized Signature
A-3
<PAGE> 49
[FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE]
_____% JUNIOR SUBORDINATED DEBENTURE
(CONTINUED)
This Junior Subordinated Debenture is one of the junior subordinated
debentures of the Company (herein sometimes referred to as the "Junior
Subordinated Debentures"), specified in the Indenture, all issued under and
pursuant to a Subordinated Indenture dated as of __________, 1998 (the
"Indenture") duly executed and delivered between the Company and Wilmington
Trust Company, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Junior Subordinated Debentures. The Junior Subordinated
Debentures are limited in aggregate principal amount as specified in the
Indenture.
Because of the occurrence and continuation of a Special Event (as
defined in the Indenture), in certain circumstances, this Junior Subordinated
Debenture may become due and payable at the option of the Company at the
principal amount together with any interest accrued thereon (the "Redemption
Price"). The Redemption Price shall be paid prior to 2:00 p.m. Denver,
Colorado time, on the date of such redemption or at such earlier time as the
Company determines.
The Company shall have the right to redeem this Junior Subordinated
Debenture at the option of the Company, in whole or in part, from time to time,
on or after __________, 2003, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued but unpaid interest thereon to
the date of such redemption. Any redemption pursuant to this paragraph will be
made upon not less than 30 days nor more than 60 days notice. If the Junior
Subordinated Debentures are only partially redeemed by the Company pursuant to
this paragraph, the Junior Subordinated Debentures will be redeemed pro rata or
by lot or by any other method utilized by the Trustee; provided that if, at the
time of redemption, the Junior Subordinated Debentures are registered as a
Global Subordinated Debenture (as defined in the Indenture), the Depositary (as
defined in the Indenture) shall determine the principal amount of such Junior
Subordinated Debentures held by each Junior Subordinated Debenture Holder to be
redeemed in accordance with its procedures.
In the event of redemption of this Junior Subordinated Debenture in
part only, a new Junior Subordinated Debenture for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
In case an Event of Default (as defined in the Indenture), shall have
occurred and be continuing, the principal of all of the Junior Subordinated
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
Outstanding, as defined in the Indenture, to execute supplemental indentures
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the Junior
Subordinated Debentures; provided, however, that no such supplemental indenture
shall (i) change the stated maturity of the Junior Subordinated Debentures
except as provided in the Indenture, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, without the
consent of the Holder of each Junior Subordinated Debenture so affected, or
(ii) reduce the aforesaid percentage of Junior Subordinated Debentures, the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holders of each Junior Subordinated Debenture then
Outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Junior Subordinated Debentures at the time Outstanding, on behalf of all of the
Holders of the Junior Subordinated Debentures, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the
A-4
<PAGE> 50
payment of the principal of or interest on any of the Junior Subordinated
Debentures. Any such consent or waiver by the registered Holder of this Junior
Subordinated Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Junior Subordinated Debenture and of any Junior Subordinated Debenture
issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Junior Subordinated Debenture.
No reference herein to the Indenture and no provision of this Junior
Subordinated Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of
and interest on this Junior Subordinated Debenture at the time and place and at
the rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Junior Subordinated Debentures and from time to time to extend the interest
payment period of such Junior Subordinated Debentures for up to 20 consecutive
quarters (an "Extended Interest Payment Period"), at the end of which period
the Company shall pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Junior Subordinated Debentures
to the extent that payment of such interest is enforceable under applicable
law). Before the termination of any such Extended Interest Payment Period, the
Company may further extend such Extended Interest Payment Period, provided that
such Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters or extend beyond the Stated
Maturity. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional amounts
then due, the Company may commence a new Extended Interest Payment Period.
The Company has agreed that if at any time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default and (b) in respect to which the Company shall not have taken reasonable
steps to cure, or (ii) the Company shall have given notice of its election of
an Extended Interest Payment Period as provided herein and shall not have
rescinded such notice, or such Extended Interest Payment Period, or any
extension thereof, shall be continuing; or (iii) while the Junior Subordinated
Debentures are held by the Trust, the Company shall be in default with respect
to its payment of any obligation under the Preferred Securities Guarantee, then
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 or (2) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Company (including the Junior Subordinated Debentures) that rank pari passu
with or junior in interest to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
or junior in interest to the Junior Subordinated Debentures (other than (a)
dividends or distributions in common stock, (b) any declaration of a dividend
in connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Preferred Securities Guarantee and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans for
its directors, officers or employees).
As provided in the Indenture and subject to certain limitations
therein set forth, this Junior Subordinated Debenture is transferable by the
registered Holder hereof on the Securities Register of the Company, upon
surrender of this Junior Subordinated Debenture for registration of transfer at
the office or agency of the Trustee accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Junior Subordinated
Debentures of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
A-5
<PAGE> 51
Prior to due presentment for registration of transfer of this Junior
Subordinated Debenture, the Company, the Trustee, any paying agent and the
Securities Registrar (as defined in the Indenture) may deem and treat the
Registered Holder hereof as the absolute owner hereof (whether or not this
Junior Subordinated Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Securities
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Securities
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Junior Subordinated Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Junior Subordinated Debentures are issuable only in registered
form without coupons in denominations of $10 and any integral multiple thereof.
This Global Subordinated Debenture is exchangeable for Junior Subordinated
Debentures in definitive form only under certain limited circumstances set
forth in the Indenture. Junior Subordinated Debentures so issued are issuable
only in registered form without coupons in denominations of $10 and any
integral multiple thereof.
All terms used in this Junior Subordinated Debenture that are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
A-6
<PAGE> 1
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
FW CAPITAL I
This Certificate of Trust of FW Capital I (the "Trust"), dated November
6th, 1998, is being duly executed and filed by Wilmington Trust Company, a
Delaware banking corporation, as trustee, to form a business trust under the
Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is FW Capital I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust
Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon its
filing.
IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Donald G. Mackelcan
-------------------------------
Name: Donald G. Mackelcan
Title: Assistant Vice President
<PAGE> 1
TRUST AGREEMENT EXHIBIT 4.4
TRUST AGREEMENT, dated as of November 6, 1998, by and between First
Western Corporation, a Nebraska corporation, as "Depositor," and Wilmington
Trust Company, a Delaware banking corporation, as "Trustee."
Section 1. The Trust. The trust created hereby shall be known as FW
Capital I (the "Trust"), in which name the Trustee, or the Depositor to the
extent provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
Section 2. The Trust Estate. The Depositor hereby assigns,
transfers, conveys and sets over to the Trustee the sum of $10.00. The Trustee
hereby acknowledges receipt of such amount in trust from the Depositor, which
amount shall constitute the initial trust estate. The Trustee hereby declares
that it will hold the trust estate in trust for the Depositor. It is the
intention of the parties hereto that the Trust created hereby constitute a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Section 3801, et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustee is hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in accordance with the provisions of the Business
Trust Act.
Section 3. Amended and Restated Trust Agreement. The Depositor, the
Trustee and certain other parties will enter into an amended and restated Trust
Agreement, satisfactory to each such party and substantially in the form to be
included as an exhibit to the 1933 Act Registration Statement (as defined
below), to provide for the contemplated operation of the Trust created hereby
and the issuance of the Preferred Securities (as defined below) and common
securities of the Trust to be referred to therein. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustee shall not
have any duty or obligation hereunder or with respect to the trust estate,
except as otherwise required by applicable law or as may be necessary to obtain
prior to such execution and delivery any licenses, consents or approvals
required by applicable law or otherwise.
Section 4. Certain Authorizations. The Depositor and the Trustee
hereby authorize and direct the Depositor, as the sponsor of the Trust, (i) to
file with the Securities and Exchange Commission (the "Commission") and
execute, in each case on behalf of the Trust, (a) the Registration Statement on
Form SB-2 (the "1933 Act Registration Statement"), including any pre-effective
or post-effective amendments to such 1933 Act Registration Statement (including
the prospectus and exhibits contained therein), relating to the registration
under the Securities Act of 1933, as amended, of the preferred securities of
the Trust (the "Preferred Securities") and certain other securities of the
Depositor and (b) a Registration Statement on Form 8-A (including all
pre-effective and post-effective amendments thereto) relating to the
registration of the Preferred Securities of the Trust under the Securities
Exchange Act of 1934, as amended; (ii) to file with the American Stock
Exchange, Inc. and execute on behalf of the Trust a listing application or
applications and all other applications, statements, certificates, agreements
and other instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the American Stock Exchange; (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents as the Depositor, on behalf of the Trust, may deem
necessary or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws; and (iv) to execute on behalf of the Trust such
Underwriting Agreements with one or more underwriters relating to the offering
of the Preferred Securities as the Depositor, on behalf of the Trust, may deem
necessary or desirable. In the event that any filing referred to in clauses
(i), (ii) and (iii)
<PAGE> 2
above is required by the rules and regulations of the Commission, the American
Stock Exchange or state securities or "Blue Sky" laws to be executed on behalf
of the Trust by a Trustee, the Depositor and any Trustee appointed pursuant to
Section 6 hereof are hereby authorized to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing.
Section 5. Counterparts. This Trust Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Section 6. Trustee. The number of Trustees initially shall be one
and thereafter the number of Trustees shall be such number as shall be fixed
from time to time by a written instrument signed by the Depositor, which may
increase or decrease the number of Trustees; provided, however, that to the
extent required by the Business Trust Act, one Trustee shall be either a
natural person who is a resident of the State of Delaware or, if not a natural
person, an entity which has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable Delaware law.
Subject to the foregoing, the Depositor is entitled to appoint or remove
without cause any Trustee at any time. The Trustee may resign upon thirty
days' prior notice to the Depositor.
Section 7. Governing Law. This Trust Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware (without
regard to conflicts of law of principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
FIRST WESTERN CORPORATION
as Depositor
By: /s/ Timothy D. Wiens
---------------------------------
Timothy D. Wiens
Vice-Chairman
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Donald G. Mackelcan
---------------------------------
Name: Donald G. Mackelcan
Title: Assistant Vice President
-2-
<PAGE> 1
FW CAPITAL I EXHIBIT 4.5
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
FIRST WESTERN CORPORATION, AS DEPOSITOR
WILMINGTON TRUST COMPANY, AS PROPERTY TRUSTEE
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF DECEMBER __, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I.
DEFINED TERMS 1
SECTION 101. DEFINITIONS 1
ARTICLE II.
ESTABLISHMENT OF THE TRUST 8
SECTION 201. NAME 8
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS 8
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES 8
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES 8
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF JUNIOR SUBORDINATED DEBENTURES 8
SECTION 206. DECLARATION OF TRUST 8
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS 9
SECTION 208. ASSETS OF TRUST 11
SECTION 209. TITLE TO TRUST PROPERTY 11
ARTICLE III.
PAYMENT ACCOUNT 12
SECTION 301. PAYMENT ACCOUNT 12
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION 12
SECTION 401. DISTRIBUTIONS 12
SECTION 402. REDEMPTION 13
SECTION 403. SUBORDINATION OF COMMON SECURITIES 14
SECTION 404. PAYMENT PROCEDURES 15
SECTION 405. TAX RETURNS AND REPORTS 15
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST 15
SECTION 407. PAYMENTS UNDER INDENTURE 15
ARTICLE V.
TRUST SECURITIES CERTIFICATES 15
SECTION 501. INITIAL OWNERSHIP 15
SECTION 502. THE TRUST SECURITIES CERTIFICATES 15
SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES 15
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF CAPITAL
SECURITIES CERTIFICATES 16
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES 16
SECTION 506. PERSONS DEEMED SECURITYHOLDERS 17
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES 17
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY 17
SECTION 509. APPOINTMENT OF PAYING AGENT 17
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR 18
SECTION 511. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE 18
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 512. NOTICES TO CLEARING AGENCY 18
SECTION 513. DEFINITIVE PREFERRED SECURITIES CERTIFICATES 19
SECTION 514. RIGHTS OF SECURITY HOLDERS 19
ARTICLE VI.
ACTS OF SECURITY HOLDERS; MEETINGS; VOTING 20
SECTION 601. LIMITATIONS ON VOTING RIGHTS 20
SECTION 602. NOTICE OF MEETINGS 20
SECTION 603. MEETINGS OF HOLDERS OF PREFERRED SECURITIES 21
SECTION 604. VOTING RIGHTS 21
SECTION 605. PROXIES, ETC. 21
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT 21
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES 21
SECTION 608. ACTS OF SECURITY HOLDERS 21
SECTION 609. INSPECTION OF RECORDS 22
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES 22
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE
PROPERTY TRUSTEE 22
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK
AND THE DELAWARE TRUSTEE 23
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR 24
ARTICLE VIII.
THE TRUSTEES 24
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES 24
SECTION 802. CERTAIN NOTICES 25
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE 26
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES 27
SECTION 805. MAY HOLD SECURITIES 27
SECTION 806. COMPENSATION; INDEMNITY; FEES 27
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES 28
SECTION 808. CONFLICTING INTERESTS 28
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE 28
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR 29
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR 31
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS 31
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST 31
SECTION 814. REPORTS BY PROPERTY TRUSTEE 31
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE 32
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT 32
SECTION 817. NUMBER OF TRUSTEES 32
SECTION 818. DELEGATION OF POWER 32
SECTION 819. VOTING 32
ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER 33
SECTION 901. TERMINATION UPON EXPIRATION DATE 33
SECTION 902. EARLY TERMINATION 33
SECTION 903. TERMINATION 33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
SECTION 904. LIQUIDATION 33
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST 34
ARTICLE X.
MISCELLANEOUS PROVISIONS 35
SECTION 1001. LIMITATION OF RIGHTS OF SECURITY HOLDERS 35
SECTION 1002. AMENDMENT 35
SECTION 1003. SEPARABILITY 36
SECTION 1004. GOVERNING LAW 36
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY 36
SECTION 1006. SUCCESSORS 36
SECTION 1007. HEADINGS 36
SECTION 1008. REPORTS, NOTICES AND DEMANDS 37
SECTION 1009. AGREEMENT NOT TO PETITION 37
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT 37
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE
AND INDENTURE 38
</TABLE>
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities Certificate
-iii-
<PAGE> 5
AMENDED AND RESTATED TRUST AGREEMENT, dated as of December __, 1998,
among (i) First Western Corporation, a Nebraska corporation (including any
successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee (the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) Wilmington Trust Company, a Delaware banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (the "Delaware Trustee," and, in its separate corporate capacity and
not in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) Lynn M.
Anthony, an individual, Timothy D. Wiens, an individual, and Ronald B. James,
an individual, each of whose address is c/o First Western Corporation (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees") and (v) the several Holders, as hereinafter
defined.
WITNESSETH:
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established FW Capital I, a business trust (the "Trust"), pursuant
to the Delaware Business Trust Act by the entering into of that certain Trust
Agreement, dated as of __________ __, 1998 (the "Original Trust Agreement"),
and by the execution and filing by the Delaware Trustee with the Secretary of
State of the State of Delaware of the Certificate of Trust, filed on __________
__, 1998, the form of which is attached as EXHIBIT A; and
WHEREAS, the Depositor, as provided by the Original Trust Agreement,
has appointed each of the above-named Administrative Trustees to be an
Administrative Trustee of the Trust; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities (as
defined below) by the Trust to the Depositor, (ii) the issuance and sale of the
Preferred Securities (as defined below) by the Trust pursuant to the
Underwriting Agreement (as defined below), (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Junior
Subordinated Debentures (as defined below), (iv) the appointment of the
Property Trustee, and (v) making the Administrative Trustees parties hereto;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Security holders (as defined below), hereby amends
and restates the Original Trust Agreement in its entirety and agrees as
follows:
ARTICLE I.
DEFINED TERMS
SECTION 101. DEFINITIONS. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
-1-
<PAGE> 6
"Accelerated Maturity Date" has the meaning set forth in Section 2.2
of the Indenture.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Junior Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in Section 2.5 of the
Indenture.
"Administrative Trustee" means each of Lynn M. Anthony, Timothy D.
Wiens and Ronald B. James, solely in such person's capacity as Administrative
Trustee of the Trust formed and continued hereunder and not in such person's
individual capacity, or such Administrative Trustee's successor in interest in
such capacity, or any successor Administrative Trustee appointed as herein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction
in the premises adjudging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking liquidation or reorganization of or in
respect of such Person under the Federal Bankruptcy Code or any other similar
applicable federal or state law, and the continuance of any such decree or
order unvacated and unstayed for a period of 90 days; or the commencement of an
involuntary case under the Federal Bankruptcy Code in respect of such Person,
which shall continue undismissed for a period of 90 days or entry of an order
for relief in such case; or the entry of a decree or order of a court having
jurisdiction in the premises for the appointment on the ground of insolvency or
bankruptcy of a receiver, custodian, liquidator, trustee or assignee in
bankruptcy or insolvency of such Person or of its property, or for the winding
up or liquidation of its affairs, and such decree or order shall have remained
in force unvacated and unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be
adjudicated a voluntary bankrupt, or the consent by such Person to the filing
of a bankruptcy proceeding against it, or the filing by such Person of a
petition or answer or consent seeking liquidation or reorganization under the
Federal Bankruptcy Code or other similar applicable federal or state law, or
the consent by such Person to the filing of any such petition or to the
appointment on the ground of insolvency or bankruptcy of a receiver or
custodian or liquidator or trustee or assignee in bankruptcy or insolvency of
such Person or of its property, or such Person shall make a general assignment
for the benefit of creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to
the Clearing Agency as described in Section 511.
-2-
<PAGE> 7
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Colorado are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates, substantially in the form attached as EXHIBIT B, as the same may
be amended and supplemented from time to time.
"Certificate of Trust" means, as stated in the recitals to this Trust
Agreement, the certificate of trust filed with the Secretary of State of the
State of Delaware with respect to the Trust, in the form attached as EXHIBIT A,
as the same may be amended or restated from time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depositary Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this Trust Agreement such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Security" means a common undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount of $10 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as EXHIBIT C.
"Corporate Trust Office" means the principal corporate trust office of
the Property Trustee located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware, 19890-0001, Attn: Corporate Trust Administration.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Junior
Subordinated Debentures to be redeemed under the Indenture, the date fixed for
redemption under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
"Definitive Preferred Securities Certificates" means either or both
(as the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 511(a), and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 513.
"Delaware Bank" has the meaning specified in the preamble to this
Trust Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code Sections 3801 et. seq. as it may be amended
from time to time.
-3-
<PAGE> 8
"Delaware Trustee" means the commercial bank or trust company
identified as the "Delaware Trustee" in the preamble to this Trust Agreement
solely in its capacity as Delaware Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor Delaware Trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 401.
"Event of Default" means any one of the following events that shall
have occurred and be continuing (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Trust in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Property Trustee in this Trust
Agreement (other than a covenant or warranty, a default in the performance of
which or the breach of which is dealt with in clause (b) or (c), above) and
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the defaulting Property Trustee
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" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
EXHIBIT D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extension Period" means the "Extended Interest Payment Period" as
defined in the Indenture.
"Global Subordinated Debenture" has the meaning specified in the
Indenture.
"Guarantee" means the Preferred Securities Guarantee Agreement
executed and delivered by the Depositor and Wilmington Trust Company as
trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.
-4-
<PAGE> 9
"Holder" means a Securityholder.
"Indenture" means the Subordinated Indenture, dated as of __________
__, 1998, between the Depositor and the Debenture Trustee, as trustee, as
amended or supplemented from time to time.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Junior Subordinated Debentures" means the $20,618,560, and a possible
additional amount of up to $711,350 related to the Underwriters' Over-Allotment
Option with respect to the Preferred Securities, for a total of up to
$23,711,350 aggregate principal amount of the Depositor's _____% Junior
Subordinated Debentures due 2028, issued pursuant to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture and the proceeds of which will be used to pay the
Redemption Price of such Trust Securities and (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Trust Securities
in connection with a termination or liquidation of the Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures are to be distributed to Holders of Trust Securities in connection
with a termination and liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section
904(d).
"Maturity Date" has the meaning set forth in Section 2.2 of the
Indenture.
"Officers' Certificate" means a certificate signed by the Vice
Chairman, the President or a Vice President and by the Chief Accounting Officer
or the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the appropriate Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 816
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
-5-
<PAGE> 10
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.
"Outstanding," when used with respect to Preferred Securities, means,
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Preferred Securities; provided
that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for
or in lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 504, 505, 511 and 513; provided, however, that in
determining whether the Holders of the requisite Liquidation Amount of the
Outstanding Preferred Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Preferred Securities owned by
the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee
shall be disregarded and deemed not to be Outstanding, except that (i) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded and (ii) the foregoing shall not apply at any time when all of the
Outstanding Preferred Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Preferred Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee's
right as to such Preferred Securities so owned.
"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Security holders in which all amounts paid in
respect of the Junior Subordinated Debentures will be held and from which the
Property Trustee shall make payments to the Security holders in accordance with
Sections 401 and 402.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
assets of the Trust, designated "_____% Cumulative Preferred Securities,"
having a Liquidation Amount of $10 and having the rights provided therefor in
this Trust Agreement, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
EXHIBIT E.
-6-
<PAGE> 11
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor Property Trustee appointed as
herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the Maturity Date
of the Junior Subordinated Debentures shall be a Redemption Date for a Like
Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security to be
redeemed, the Liquidation Amount of such Trust Security, plus accumulated and
unpaid Distributions to the Redemption Date allocated on a pro rata basis
(based on Liquidation Amounts) among the Trust Securities to be redeemed.
"Relevant Trustee" shall have the meaning specified in Section 810.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 504.
"Securityholder" means a Person in whose name a Trust Security or
Securities is registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means FW Capital I, the Delaware business trust continued
hereby and which was created as stated in the recitals to this Trust
Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this Trust Agreement was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) the
rights of the Property Trustee under the Guarantee, (c) any cash on deposit in,
or owing to, the Payment Account and (d) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustee" or "Trustees" means, individually or collectively, any of
the Property Trustee, the Delaware Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement dated as of
__________ __, 1998, among the Trust, the Depositor and the underwriter named
therein.
"Underwriters' Over-Allotment Option" means the option, exercisable
within 30 days after the date of the prospectus, granted to the underwriters in
the offering to the public of Preferred Securities, to purchase up to
$3,000,000 in Liquidation Amount of additional Preferred Securities at the same
price per Preferred Security as paid for the other Preferred Securities issued
pursuant to the prospectus.
-7-
<PAGE> 12
ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION 201. NAME. The Trust created pursuant to the Certificate of
Trust and continued hereby shall continue to be known as "FW Capital I," as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on behalf
of the Trust and sue and be sued.
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS. The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, or such other address in the State
of Delaware as the Delaware Trustee may designate by written notice to the
Security holders and the Depositor. The principal executive office of the
Trust is c/o First Western Corporation, 11210 Huron Street, Northglenn,
Colorado 80234.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES. The Trustees acknowledge receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Trustee,
promptly reimburse such Trustee for any such expenses paid by such Trustee.
The Depositor shall make no claim upon the Trust Property for the payment of
such expenses.
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES. On December ___,
1998, the Depositor and an Administrative Trustee, on behalf of the Trust and
pursuant to the Original Trust Agreement, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver, in accordance with the
Underwriting Agreement, a Preferred Securities Certificate, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
Preferred Securities having an aggregate Liquidation Amount of $20,000,000
against receipt of the aggregate purchase price of such Preferred Securities of
$20,000,000, which amount such Administrative Trustee shall promptly deliver
to the Property Trustee.
Contemporaneously with the exercise of the Underwriter's
Over-Allotment Option, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver, in accordance with the
Underwriting Agreement, a Preferred Securities Certificate, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
Preferred Securities having an aggregate Liquidation Amount of $10 for each
Preferred Security as to which the option is being exercised, up to $3,000,000,
against receipt of the aggregate purchase price of such Preferred Securities in
such Liquidation Amount, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee.
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF JUNIOR SUBORDINATED DEBENTURES. Contemporaneously with the
execution and delivery of this Trust Agreement, an Administrative Trustee, on
behalf of the Trust, shall execute in accordance with Section 502 and deliver
to the Depositor a Common Securities Certificate, registered in the name of the
Depositor, in an aggregate amount of Common Securities having an aggregate
Liquidation Amount of $618,560 against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Depositor Junior Subordinated
Debentures, registered in the name of the Property Trustee on behalf of the
Trust and having an aggregate principal amount equal to $20,618,560, and, in
satisfaction of the purchase price for such Junior Subordinated Debentures, the
Property Trustee, on behalf of the Trust, shall deliver to the Depositor the
sum of $20,618,560.
-8-
<PAGE> 13
Contemporaneously with the exercise of the Underwriter's
Over-Allotment Option, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver to the Depositor a Common
Securities Certificate, registered in the name of the Depositor, in an
aggregate amount of Common Securities having an aggregate Liquidation Amount
equal to quotient of the Liquidation Amount of Preferred Securities purchased
upon exercise of the option divided by 32.33, rounded up to the nearest $10, up
to $92,790 in such Liquidation Amount, against payment by the Depositor of such
amount. Contemporaneously therewith, an Administrative Trustee, on behalf of
the Trust, shall subscribe to and purchase from the Depositor Junior
Subordinated Debentures, registered in the name of the Property Trustee on
behalf of the Trust and having an aggregate principal amount equal to the sum
of the Liquidation Amount of the Common Securities determined in accordance
with the foregoing sentence and the Liquidation Amount of the Preferred
Securities purchased upon exercise of the Underwriters' Over-Allotment Option,
and, in satisfaction of the purchase price for such Junior Subordinated
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor such sum.
SECTION 206. DECLARATION OF TRUST. The exclusive purposes and
functions of the Trust are (a) to issue and sell Trust Securities and use the
proceeds from such sale to acquire the Junior Subordinated Debentures, and (b)
to engage in those activities necessary, convenient or incidental thereto. The
Depositor hereby appoints the Trustees as trustees of the Trust, to have all
the rights, powers and duties to the extent set forth herein, and the Trustees
hereby accept such appointment. The Property Trustee hereby declares that it
will hold the Trust Property in trust upon and subject to the conditions set
forth herein for the benefit of the Security holders. The Administrative
Trustees shall have all rights, powers and duties set forth herein and in
accordance with applicable law with respect to accomplishing the purposes of
the Trust. The Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities, of
the Property Trustee or the Administrative Trustees set forth herein. The
Delaware Trustee shall be one of the Trustees of the Trust for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section and Article VIII, and in accordance
with the following provisions (i) and (ii), the Administrative Trustees shall
have the authority to enter into all transactions and agreements determined by
the Administrative Trustees to be appropriate in exercising the authority,
express or implied, otherwise granted to the Administrative Trustees under this
Trust Agreement, and to perform all acts in furtherance thereof, including
without limitation, the following:
(i) As among the Trustees, each Administrative Trustee,
acting singly or jointly, shall have the power and authority to act on
behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust
Securities;
(B) to cause the Trust to enter into, and to
execute, deliver and perform on behalf of the Trust, the
Expense Agreement and the Certificate Depository Agreement and
such other agreements or documents as may be necessary or
desirable in connection with the purposes and function of the
Trust;
(C) assisting in the registration of the
Preferred Securities under the Securities Act of 1933, as
amended, and under state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(D) assisting in the listing of the Preferred
Securities upon the American Stock Exchange or such securities
exchange, or exchanges or quotation systems as shall be
determined by the
-9-
<PAGE> 14
Depositor and, if required, the registration of the Preferred
Securities under the Securities Exchange Act of 1934, as
amended, and the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities
and the Junior Subordinated Debentures to the Security holders
in accordance with this Trust Agreement;
(F) the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance
with this Trust Agreement;
(G) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of State of the
State of Delaware;
(H) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as
a statutory business trust under the laws of the State of
Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the
Holders of the Preferred Securities or to enable the Trust to
effect the purposes for which the Trust was created; and
(I) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement for the benefit of the Security
holders (without consideration of the effect of any such
action on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall
have the power, duty and authority to act on behalf of the Trust with
respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated
Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Junior Subordinated
Debentures in the Payment Account;
(D) the distribution of amounts owed to the
Security holders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Junior Subordinated Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Junior
Subordinated Debentures to the Security holders in accordance
with this Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Trust;
-10-
<PAGE> 15
(I) after an Event of Default the taking of any
action incidental to the foregoing as the Property Trustee may
from time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the Security
holders (without consideration of the effect of any such
action on any particular Securityholder);
(J) so long as the Property Trustee is the
Securities Registrar, registering transfers of the Trust
Securities in accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section
207(a)(ii), the Property Trustee shall have none of the
duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust
(or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to
Security holders, except as expressly provided herein, (iii) take any action
that would cause the Trust to fail or cease to qualify as a "grantor trust" for
United States federal income tax purposes, (iv) incur any indebtedness for
borrowed money or issue any other debt or (v) take or consent to any action
that would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Security holders in their capacity as Security holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the
date of this Trust Agreement are hereby ratified and confirmed in all
respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on the appropriate form in relation to the Preferred
Securities and the Junior Subordinated Debentures, including any
amendments thereto;
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and advise
the Trustees of actions they must take on behalf of the Trust, and
prepare for execution and filing any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of
any such states;
(iii) the preparation for filing by the Trust and execution
on behalf of the Trust of an application to the American Stock
Exchange or other national stock exchange or other organizations for
listing upon notice of issuance of any Preferred Securities and to
file or cause an Administrative Trustee to file thereafter with such
exchange or organization such notifications and documents as may be
necessary from time to time;
(iv) if required, the preparation for filing by the Trust
with the Commission and the execution on behalf of the Trust of a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution
and delivery of, the Underwriting Agreement providing for the sale of
the Preferred Securities; and
-11-
<PAGE> 16
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act, will be classified as a "grantor trust" and not as an association taxable
as a corporation for United States federal income tax purposes and so that the
Junior Subordinated Debentures will be treated as indebtedness of the Depositor
for United States federal income tax purposes. In this connection, subject to
Section 1002, the Depositor and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law or this Trust Agreement,
that each of the Depositor and the Administrative Trustees determines in their
discretion to be necessary or desirable for such purposes.
SECTION 208. ASSETS OF TRUST. The assets of the Trust shall consist
of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY. Legal title to all Trust
Property shall be vested at all times in the Property Trustee (in its capacity
as such) and shall be held and administered by the Property Trustee for the
benefit of the Security holders in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 301. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the
Payment Account shall be held by the Property Trustee in the Payment Account
for the exclusive benefit of the Security holders and for distribution as
herein provided, including (and subject to) any priority of payments provided
for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 401. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for the
payment of Distributions. Distributions shall accumulate from _________ __,
1998, and, except during any Extension Period with respect to the Junior
Subordinated Debentures, shall be payable quarterly in arrears on the 15th day
of January, April, July, and October in each year, commencing April 15, 1999.
The amount of each Distribution due with respect to the Trust Securities will
include amounts accrued through the date the Distribution payment is due. If
any date on which a Distribution is otherwise payable on the Trust Securities
is not a Business Day, then the payment of such Distribution shall be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with this Section 401(a) is a "Distribution Date").
-12-
<PAGE> 17
(b) The Trust Securities represent undivided beneficial interests
in the Trust Property, and, as a practical matter, the Distributions on the
Trust Securities shall be payable at a rate of _____% per annum of the
Liquidation Amount of the Trust Securities. The amount of Distributions
payable for any full period shall be computed on the basis of a 360-day year of
twelve 30-day months. The amount of Distributions for any partial period shall
be computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. During any Extension Period with respect to the Junior
Subordinated Debentures, Distributions on the Preferred Securities will be
deferred for a period equal to the Extension Period. The amount of
Distributions payable for any period shall include the Additional Amounts, if
any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
immediately available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be one Business Day prior to such Distribution Date; provided, however,
that in the event that the Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the 1st day of the
month in which the relevant Distribution Date occurs.
SECTION 402. REDEMPTION.
(a) On each Debenture Redemption Date and on the Maturity Date of
the Junior Subordinated Debentures, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Securities Register. The
Property Trustee shall have no responsibility for the accuracy of any CUSIP
number contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed; and
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and after
said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has immediately available
funds then on hand and available in the Payment Account for the payment of such
Redemption Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, Denver time, on the
Redemption Date, subject to Section 402(c), the Property Trustee will, so long
as
-13-
<PAGE> 18
the Preferred Securities are in book-entry-only form, deposit with the Clearing
Agency for the Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give such Clearing Agency irrevocable instructions
and authority to pay the Redemption Price to the Holders thereof. If the
Preferred Securities are no longer in book-entry-only form, the Property
Trustee, subject to Section 402(c), will deposit with the Paying Agent funds
sufficient to pay the applicable Redemption Price and will give the Paying
Agent irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Securities
Register for the Trust Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of
Security holders holding Trust Securities so called for redemption will cease,
except the right of such Security holders to receive the Redemption Price, but
without interest on such Redemption Price, and such Securities will cease to be
Outstanding. In the event that any date on which any Redemption Price is
payable is not a Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case, with the same
force and effect as if made on such date. In the event that payment of the
Redemption Price in respect of any Trust Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by the
Depositor pursuant to the Guarantee, Distributions on such Trust Securities
will continue to accumulate, at the then applicable rate, from the Redemption
Date originally established by the Trust for such Trust Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall
be made to the record Holders thereof as they appear on the Securities Register
for the Trust Securities on the relevant record date, which shall be one
Business Day prior to the relevant Redemption Date; provided, however, that in
the event that the Preferred Securities do not remain in book-entry-only form,
the relevant record date shall be the date fifteen days prior to the relevant
Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Preferred Securities not previously
called for redemption, by such method (including, without limitation, by lot)
as the Property Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to $10 or an integral
multiple of $10 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $10. The Property Trustee shall
promptly notify the Securities Registrar 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 this Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the Liquidation Amount of Preferred Securities which has been
or is to be redeemed.
SECTION 403. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 402(f), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
(including Additional Amounts, if applicable) on, or Redemption Price of, any
Common Security, and no other payment on account of the redemption, liquidation
or other acquisition of Common Securities, shall be made unless payment in full
in cash of all
-14-
<PAGE> 19
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of, Preferred
Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common Securities
will be deemed to have waived any right to act with respect to any such Event
of Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities shall have been cured, waived
or otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities shall have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the Holders of the Preferred Securities and not the Holder of the Common
Securities, and only the Holders of the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
SECTION 404. PAYMENT PROCEDURES. Payments of Distributions
(including Additional Amounts, if applicable) in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency in immediately available funds, which shall credit
the relevant Persons' accounts at such Clearing Agency on the applicable
Distribution Dates. Payments in respect of the Common Securities shall be made
in such manner as shall be mutually agreed between the Property Trustee and the
Holder of the Common Securities.
SECTION 405. TAX RETURNS AND REPORTS. The Administrative Trustees
shall prepare (or cause to be prepared), at the Depositor's expense, and file
all United States federal, state and local tax and information returns and
reports required to be filed by or in respect of the Trust. In this regard,
the Administrative Trustees shall (a) prepare and file (or cause to be prepared
and filed) the appropriate Internal Revenue Service Form required to be filed
in respect of the Trust in each taxable year of the Trust and (b) prepare and
furnish (or cause to be prepared and furnished) to each Securityholder the
appropriate Internal Revenue Service form required to be furnished to such
Securityholder or the information required to be provided on such form. The
Administrative Trustees shall provide the Depositor with a copy of all such
returns and reports promptly after such filing or furnishing. The Property
Trustee shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Security holders under the Trust Securities.
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. Upon
receipt under the Junior Subordinated Debentures of Additional Sums, the
Property Trustee, at the direction of an Administrative Trustee or the
Depositor, shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
SECTION 407. PAYMENTS UNDER INDENTURE. Any amount payable hereunder
to any Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder has directly received under the Indenture
pursuant to Section 514(b) or (c) hereof.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 501. INITIAL OWNERSHIP. Upon the creation of the Trust and
the contribution by the Depositor pursuant to Section 203 and until the
issuance of the Trust Securities, and at any time during which no Trust
Securities are outstanding, the Depositor shall be the sole beneficial owner of
the Trust.
-15-
<PAGE> 20
SECTION 502. THE TRUST SECURITIES CERTIFICATES. The Preferred
Securities Certificates shall be issued in minimum denominations of $10
Liquidation Amount and integral multiples of $10 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $10
Liquidation Amount and integral multiples of $10 in excess thereof. The Trust
Securities Certificates shall be executed on behalf of the Trust by manual
signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504, 511
and 513.
SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.
On the Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 204
and 205, to be executed on behalf of the Trust by at least one of the
Administrative Trustees and delivered to or upon the written order of the
Depositor, signed by its Vice Chairman, its President, or any Vice President
without further corporate action by the Depositor, in authorized denominations.
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES CERTIFICATES. The Depositor shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 508, a register or registers
for the purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (herein referred to as the
"Securities Register") in which the registrar designated by the Depositor (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 510 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided. The
Property Trustee shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
508, the Administrative Trustees or any one of them shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such Administrative
Trustee or Trustees. The Securities Registrar shall not be required to
register the transfer of any Preferred Securities that have been called for
redemption. At the option of a Holder, Preferred Securities Certificates may
be exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be exchanged at the
office or agency maintained pursuant to Section 508.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
The Trust shall not be required to (i) issue, register the transfer of, or
exchange any Preferred Securities during a period beginning at the opening of
business 15 calendar days before the date of mailing of a notice of redemption
of any Preferred Securities called for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or
exchange any Preferred Securities so selected for redemption, in whole or in
part, except the unredeemed portion of any such Preferred Securities being
redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
-16-
<PAGE> 21
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for delivery, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Trust Securities Certificate,
a new Trust Securities Certificate of like class, tenor and denomination. In
connection with the issuance of any new Trust Securities Certificate under this
Section, the Administrative Trustees or the Securities Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an undivided beneficial interest in the assets of the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
SECTION 506. PERSONS DEEMED SECURITY HOLDERS. The Trustees, the
Paying Agent and the Securities Registrar shall treat the Person in whose name
any Trust Securities Certificate shall be registered in the Securities Register
as the owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Trustees
nor the Securities Registrar shall be bound by any notice to the contrary.
SECTION 507. ACCESS TO LIST OF SECURITY HOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) semi-annually on or before January
15 and July 15 in each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Security holders as of
the most recent regular record date (as provided in Section 401(d)) and (b)
promptly after receipt by any Administrative Trustee or the Depositor of a
request therefor from the Property Trustee, such other information as the
Property Trustee may reasonably require in order to enable the Property Trustee
to discharge its obligations under this Trust Agreement, in each case to the
extent such information is in the possession or control of the Administrative
Trustees or the Depositor and is not identical to a previously supplied list or
has not otherwise been received by the Property Trustee in its capacity as
Securities Registrar. The rights of Security holders to communicate with other
Security holders with respect to their rights under this Trust Agreement or
under the Trust Securities, and the corresponding rights of the Trustee shall
be as provided in the Trust Indenture Act. Each Holder, by receiving and
holding a Trust Securities Certificate, and each Owner shall be deemed to have
agreed not to hold the Depositor, the Property Trustee or the Administrative
Trustees accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY. The Administrative
Trustees shall maintain an office or offices or agency or agencies where
Preferred Securities Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustees in
respect of the Trust Securities Certificates may be served. The Administrative
Trustees initially designate the principal corporate trust office of the
Property Trustee, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attn: Corporate Trust Administration, as the principal
corporate trust office for such purposes. The Administrative Trustees shall
give prompt written notice to the Depositor and to the Security holders of any
change in the location of the Securities Register or any such office or agency.
SECTION 509. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make Distributions to Security holders from the Payment Account and shall
report the amounts of such Distributions to the Property Trustee and the
Administrative Trustees. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account for the purpose of making the
Distributions referred to above. The Administrative Trustees may revoke such
power and remove the Paying Agent if such Trustees determine in their sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Trust Agreement in any material respect. The Paying
-17-
<PAGE> 22
Agent shall initially be the Property Trustee, and any co-paying agent chosen
by the Property Trustee, and acceptable to the Administrative Trustees and the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act
as Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment
to the Security holders in trust for the benefit of the Security holders
entitled thereto until such sums shall be paid to such Security holders. The
Paying Agent shall return all unclaimed funds to the Property Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Property Trustee. The provisions of Sections 801, 803 and
806 shall apply to the Property Trustee also in its role as Paying Agent, for
so long as the Property Trustee shall act as Paying Agent and, to the extent
applicable, to any other Paying Agent appointed hereunder. Any reference in
this Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. On the
Closing Date, the Depositor shall acquire and retain beneficial and record
ownership of the Common Securities. To the fullest extent permitted by law,
any attempted transfer of the Common Securities (other than a transfer in
connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 511. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE.
(a) The Preferred Securities Certificates, upon original issuance,
will be issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to or held on behalf of The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Book-Entry Preferred
Securities Certificate or Certificates shall initially be registered on the
Securities Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in such
Preferred Securities, except as provided in Section 513. Unless and until
Definitive Preferred Securities Certificates have been issued to beneficial
owners pursuant to Section 513:
(i) the provisions of this Section 511(a) shall be in
full force and effect;
(ii) the Securities Registrar, the Paying Agent and the
Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Trust Agreement relating to the Book-Entry Preferred
Securities Certificates (including the payment of the Liquidation
Amount of and Distributions on the Book-Entry Preferred Securities) as
the sole Holder of Book-Entry Preferred Securities and shall have no
obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section 511
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 511 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
-18-
<PAGE> 23
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement,
unless and until Definitive Preferred Securities Certificates are
issued pursuant to Section 513, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and will
receive and transmit payments on the Preferred Securities to such
Clearing Agency Participants. Any Clearing Agency designated pursuant
hereto will not be deemed an agent of the Trustees for any purpose.
(b) Upon the execution and delivery of this Trust Agreement, a
single Common Securities Certificate representing the Common Securities shall
be issued to the Depositor in the form of a definitive Common Securities
Certificate. Upon exercise of the Underwriters' Over-Allotment Option, an
additional, single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 512. NOTICES TO CLEARING AGENCY. To the extent that a notice
or other communication to the Owners is required under this Trust Agreement,
unless and until Definitive Preferred Securities Certificates shall have been
issued to Owners pursuant to Section 513, the Trustees shall give all such
notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to the Owners.
SECTION 513. DEFINITIVE PREFERRED SECURITIES CERTIFICATES. If (a)
the Depositor advises the Trustees in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the Preferred Securities Certificates, and the Depositor is unable to locate
a qualified successor, (b) the Depositor at its option advises the Trustees in
writing that it elects to terminate the book-entry system through the Clearing
Agency, or (c) after the occurrence of a Debenture Event of Default, Owners of
Preferred Securities Certificates representing beneficial interests aggregating
at least a majority of the Liquidation Amount advise the Property Trustee in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Owners of Preferred Securities
Certificates, then the Property Trustee shall notify the Clearing Agency, and
the Clearing Agency shall notify all Owners of Preferred Securities
Certificates, of the occurrence of any such event and of the availability of
the Definitive Preferred Securities Certificates to Owners of such class or
classes, as applicable, requesting the same. Upon surrender to the Property
Trustee of the typewritten Preferred Securities Certificate or Certificates
representing the Book-Entry Preferred Securities Certificates by the Clearing
Agency, accompanied by registration instructions, the Administrative Trustees,
or any one of them, shall execute the Definitive Preferred Securities
Certificates in accordance with the instructions of the Clearing Agency.
Neither the Securities Registrar nor the Trustees shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders of
the Definitive Preferred Securities Certificates as Security holders. The
Definitive Preferred Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
SECTION 514. RIGHTS OF SECURITY HOLDERS.
(a) The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section 209,
and the Security holders shall not have any right or title therein other than
the undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights. When issued and
delivered to Holders of the Preferred Securities against payment of the
purchase price therefor, the Preferred Securities will be fully paid and
nonassessable interests in the Trust. The Holders of the Preferred Securities,
in their capacities as such, shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
-19-
<PAGE> 24
(b) For so long as any Preferred Securities remain Outstanding,
if, upon a Debenture Event of Default, the Debenture Trustee fails or the
holders of not less than 25% in principal amount of the outstanding Junior
Subordinated Debentures fail to declare the principal of all of the Junior
Subordinated Debentures to be immediately due and payable, the Holders of at
least 25% in Liquidation Amount of the Preferred Securities then Outstanding
shall have such right by a notice in writing to the Depositor and the Debenture
Trustee; and upon any such declaration such principal amount of and the accrued
interest on all of the Junior Subordinated Debentures shall become immediately
due and payable, provided that the payment of principal and interest on such
Junior Subordinated Debentures shall remain subordinated to the extent provided
in the Indenture. If, as a result of a Debenture Event of Default, the
Debenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures have declared the Junior
Subordinated Debentures due and payable and if such default has been cured and
a sum sufficient to pay all matured installments due (otherwise than by
acceleration) under the Junior Subordinated Debentures has been deposited with
the Debenture Trustee, then (if the holders of not less than a majority in
aggregate outstanding principal amount of Junior Subordinated Debentures have
not annulled such declaration and waived such default) the Holders of a
majority in aggregate Liquidation Amount of the Preferred Securities may annul
such declaration and waive such default.
(c) For so long as any Preferred Securities remain outstanding,
upon a Debenture Event of Default arising from the failure to pay interest or
principal on the Junior Subordinated Debentures, the Holders of any Preferred
Securities then Outstanding shall, to the fullest extent permitted by law, have
the right to directly institute proceedings for enforcement of payment to such
Holders of principal of or interest on the Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Preferred
Securities of such Holders.
ARTICLE VI.
ACTS OF SECURITY HOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section, in Sections 514, 810 and
1002 and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Trust or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Trust Securities Certificates, be construed so as
to constitute the Security holders from time to time as partners or members of
an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or executing any trust or power conferred on the Debenture Trustee with respect
to such Junior Subordinated Debentures, (ii) waive any past default which is
waivable under Article Seven of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of outstanding Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior written
consent of each Holder of Preferred Securities. The Trustees shall not revoke
any action previously authorized or approved by a vote of the Holders of the
Outstanding Preferred Securities, except by a subsequent vote of the Holders of
the Outstanding Preferred Securities. The Property Trustee shall notify each
Holder of the Outstanding Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the Holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will continue to be
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
-20-
<PAGE> 25
(c) If any proposed amendment to the Trust Agreement provides for,
or the Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred Securities as a class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a majority in
Liquidation Amount of the Outstanding Preferred Securities. No amendment to
this Trust Agreement may be made if, as a result of such amendment, the Trust
would cease to be classified as a grantor trust or would be classified as an
association taxable as a corporation for United States federal income tax
purposes.
SECTION 602. NOTICE OF MEETINGS. Notice of all meetings of the
Holders of Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Property Trustee pursuant to Section 1008 to
each Holder of Preferred Securities of record, at such Securityholder's
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
SECTION 603. MEETINGS OF HOLDERS OF PREFERRED SECURITIES. No annual
meeting of Security holders is required to be held. The Administrative
Trustees, however, shall call a meeting of Security holders to vote on any
matter upon the written request of the Holders of 25% of the Outstanding
Preferred Securities (based upon their aggregate Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Holders of the Preferred Securities to vote on
any matters as to which the Holders of the Preferred Securities are entitled to
vote.
Holders of at least 50% of the Outstanding Preferred Securities (based
upon their aggregate Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of such Security holders.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record present, in person or by proxy, holding more than a majority
of the Preferred Securities (based upon their aggregate Liquidation Amount)
held by the Holders of Preferred Securities of record present, either in person
or by proxy, at such meeting shall constitute the action of the Holders of the
Preferred Securities, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. VOTING RIGHTS. Security holders shall be entitled to
one vote for each $10 of Liquidation Amount represented by their Trust
Securities in respect of any matter as to which such Security holders are
entitled to vote.
SECTION 605. PROXIES, ETC. At any meeting of Security holders, any
Securityholder entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. When Trust Securities are held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Trust Securities, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners or
their proxies so present disagree as to any vote to be cast, such vote shall
not be received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and, the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
-21-
<PAGE> 26
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any action
which may be taken by Security holders at a meeting may be taken without a
meeting if Security holders holding more than a majority of all Outstanding
Trust Securities (based upon their aggregate Liquidation Amount) entitled to
vote in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to the
action in writing (based upon their aggregate Liquidation Amount).
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES. For the
purposes of determining the Security holders who are entitled to notice of and
to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Security holders or the
payment of any distribution or other action, as the case may be, as a record
date for the determination of the identity of the Security holders of record
for such purposes.
SECTION 608. ACTS OF SECURITY HOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Security
holders or Owners may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Security holders or Owners in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Security holders
or Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Trust Agreement and (subject to Section 801) conclusive
in favor of the Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of
the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which any Trustee
receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder of
every Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do
so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such Liquidation
Amount.
A Holder of Preferred Securities may institute a legal proceeding
directly against the Depositor under the Guarantee to enforce its rights under
the Guarantee without first instituting a legal proceeding against the
Guarantee Trustee (as defined in the Guarantee), the Trust or any Person.
SECTION 609. INSPECTION OF RECORDS. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust
shall be open to inspection by Security holders during normal business hours
for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
-22-
<PAGE> 27
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE
PROPERTY TRUSTEE. The Bank, in its separate corporate capacity and as Property
Trustee, as of the date hereof, and each successor Property Trustee at the time
of the successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (the term "Bank" being used hereafter in this Article VII to
refer to such successor Property Trustee in its separate corporate capacity and
as Property Trustee), hereby represents and warrants (as applicable) for the
benefit of the Depositor and the Security holders that:
(a) the Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) the Bank has full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid and legally binding agreement
of the Bank enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(d) the execution, delivery and performance by the Bank of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Bank and does not require any approval of the
stockholders of the Bank and such execution, delivery and performance will not
(i) violate the Bank's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of, any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Bank is a
party or by which it is bound, or (iii) violate any law, governmental rule or
regulation of the United States or the State of Delaware, as the case may be,
governing the banking or trust powers of the Bank, or any order, judgment or
decree applicable to the Bank;
(e) neither the authorization, execution or delivery by the Bank
of this Trust Agreement nor the consummation of any of the transactions by the
Bank contemplated herein or therein requires the consent or approval of, the
giving of notice to, the registration with or the taking of any other action
with respect to, any governmental authority or agency under any existing law of
the State of Delaware governing the banking or trust powers of the Bank; and
(f) there are no proceedings pending or, to the best of the Bank's
knowledge, threatened against or affecting the Bank in any court or before any
governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Bank to enter
into or perform its obligations as one of the Trustees under this Trust
Agreement.
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND
THE DELAWARE TRUSTEE.. The Delaware Bank in its corporate capacity and as
Delaware Trustee, as of the date hereof, and each successor Delaware Trustee at
the time of the successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee hereunder (the term "Delaware Bank" being used hereafter in
this Article VIII to refer to such successor Delaware Trustee in its separate
corporate capacity and as Delaware Trustee), hereby represents and warrants (as
applicable) for the benefit of the Depositor and the Security holders that:
(a) the Delaware Bank is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware;
-23-
<PAGE> 28
(b) the Delaware Bank has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Delaware Bank and constitutes the valid and legally binding
agreement of the Delaware Bank enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware Bank
of this Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Delaware Bank and does not require any approval
of the stockholders of the Delaware Bank and such execution, delivery and
performance will not (i) violate the Delaware Bank's charter or by-laws, (ii)
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of, any Lien on
any properties included in the Trust Property pursuant to the provisions of,
any indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Delaware Bank is a party or by which it is bound, or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust
powers of the Delaware Bank, or any order, judgment or decree applicable to the
Delaware Bank;
(e) neither the authorization, execution or delivery by the
Delaware Bank of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Bank contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to, any governmental authority or
agency under any existing law of the State of Delaware governing the banking or
trust powers of the Delaware Bank; and
(f) there are no proceedings pending or, to the best of the
Delaware Bank's knowledge, threatened against or affecting the Delaware Bank in
any court or before any governmental authority, agency or arbitration board or
tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Delaware Bank to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. The
Depositor hereby represents and warrants for the benefit of the Security
holders that:
(a) the Trust Securities Certificates issued on the Closing Date
on behalf of the Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Administrative Trustees pursuant
to the terms and provisions of, and in accordance with the requirements of,
this Trust Agreement and the Security holders will be, as of such date,
entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of the
State of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Bank, the Property Trustee, the
Delaware Bank or the Delaware Trustee, as the case may be, of this Trust
Agreement.
-24-
<PAGE> 29
ARTICLE VIII.
THE TRUSTEES
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for
such Trustee's acts or omissions hereunder except as a result of such Trustee's
own gross negligence or willful misconduct. The Property Trustee's liability
shall be determined under the Trust Indenture Act. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section. To the extent that, at law
or in equity, the Delaware Trustee or an Administrative Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or
to the Security holders, the Delaware Trustee or such Administrative Trustee
shall not be liable to the Trust or to any Securityholder for such Trustee's
good faith reliance on the provisions of this Trust Agreement. The provisions
of this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Delaware Trustee or the Administrative Trustees otherwise
existing at law or in equity, are agreed by the Depositor and the Security
holders to replace such other duties and liabilities of the Delaware Trustee
and the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
Each Securityholder, by such Securityholder's acceptance of a Trust Security,
agrees that such Securityholder will look solely to the revenue and proceeds
from the Trust Property to the extent legally available for distribution to
such Securityholder as herein provided and that the Trustees are not personally
liable to such Securityholder for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security.
This Section 801(b) does not limit the liability of the Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property
Trustee, in the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in Liquidation Amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment Account shall be to deal with
such Property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Trust Agreement and the Trust Indenture Act;
-25-
<PAGE> 30
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Depositor and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
301 and except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the negligence, default or
misconduct of the Administrative Trustees or the Depositor.
SECTION 802. CERTAIN NOTICES.
(a) Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
such Event of Default to the Security holders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or waived.
For purposes of this Section the term "Event of Default" means any event that
is, or after notice or lapse of time or both would become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the Security
holders in the manner and to the extent provided in Section 1008, notice of the
Depositor's election to begin or further extend an Extension Period on the
Junior Subordinated Debentures (unless such election shall have been revoked)
within the time specified for transmitting such notice to the holders of the
Junior Subordinated Debentures pursuant to the Indenture as originally
executed.
(c) In the event the Depositor elects to accelerate the Maturity
Date in accordance with Section 2.2 of the Indenture, the Property Trustee
shall give notice to each Holder of Trust Securities of the acceleration of the
Maturity Date and the Accelerated Maturity Date not later than five Business
Days after the Property Trustee receives the notice provided in Section 2.2(c)
of the Indenture.
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the
provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in acting
or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with other provisions
contained herein or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to
which the Holders of the Preferred Securities are entitled to vote under the
terms of this Trust Agreement, the Property Trustee shall deliver a notice to
the Depositor requesting written instructions of the Depositor as to the course
of action to be taken and the Property Trustee shall take such action, or
refrain from taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided,
however, that if the Property Trustee does not receive such instructions of the
Depositor within 10 Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice (which to the extent
practicable shall not be less than two Business Days), it may, but shall be
under no duty to, take or refrain from taking such action not inconsistent with
this Trust Agreement as it shall deem advisable and in the best interests of
the Security holders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful misconduct;
-26-
<PAGE> 31
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced
by an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and in accordance with such advice (such
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees); the Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust Agreement at the request
or direction of any of the Security holders pursuant to this Trust Agreement,
unless such Security holders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other
paper or document, unless requested in writing to do so by one or more Security
holders, but the Property Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible
for its own negligence or recklessness with respect to selection of any agent
or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the Trust
Securities which instructions may only be given by the Holders of the same
proportion in Liquidation Amount of the Trust Securities as would be entitled
to direct the Property Trustee under the terms of the Trust Securities in
respect of such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in acting in accordance with such
instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement. No
provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
-27-
<PAGE> 32
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Trust Securities Certificates shall be
taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees (as such) shall not be
accountable for the use or application by the Depositor of the proceeds of the
Junior Subordinated Debentures.
SECTION 805. MAY HOLD SECURITIES. Any Trustee or any other agent of
any Trustee or the Trust, in its individual or any other capacity, may become
the owner or pledgee of Trust Securities and, subject to Sections 808 and 813
and except as provided in the definition of the term "Outstanding" in Article
I, may otherwise deal with the Trust with the same rights it would have if it
were not a Trustee or such other agent.
SECTION 806. COMPENSATION; INDEMNITY; FEES. The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Trust Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to such Trustee's negligence,
bad faith or willful misconduct (or, in the case of the Administrative Trustees
or the Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee
for, and to hold the Trustees harmless against, any loss, damage, claim,
liability, penalty or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Trust Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder, except any such cost or expense as
may be attributable to such Trustee's negligence, bad faith or willful
misconduct (or, in the case of the Administrative Trustees or the Delaware
Trustee, any such cost or expense as may be attributable to its, his or her
gross negligence, bad faith or willful misconduct).
No Trustee may claim any Lien on any Trust Property as a result of any
amount due pursuant to this Section 806.
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that
is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Property Trustee with
respect to the Trust Securities shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each Administrative
Trustee shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to
the Trust Securities. The Delaware Trustee shall either be (i) a natural
person who is at least 21 years of age and a resident of the State of Delaware
or (ii) a legal entity with its principal place of business in the State of
Delaware and that otherwise meets the requirements of applicable Delaware law
that shall act through one or more persons authorized to bind such entity.
-28-
<PAGE> 33
SECTION 808. CONFLICTING INTERESTS. If the Property Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE. Unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the time be
located, the Depositor and the Administrative Trustees shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor
and the Administrative Trustees shall for such purpose join with the Property
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to the extent required
by law to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other provisions of this
Section. If the Depositor and the Administrative Trustees do not join in such
appointment within 15 days after the receipt by them of a request so to do, or
in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or (ii) a legal entity with its principal place of business in
the United States that shall act through one or more persons authorized to bind
such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed and delivered and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee or separate
trustee.
(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section
809.
-29-
<PAGE> 34
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act
of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 811.
Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Security holders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of resignation,
the Relevant Trustee may petition, at the expense of the Depositor, any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Trust Securities.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Holder of the
Common Securities. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to such Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Holder of the Common Securities at any time. In no event
will the Holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees.
If the Relevant Trustee shall resign, be removed or become incapable
of acting as Trustee, or if a vacancy shall occur in the office of such
Relevant Trustee for any cause, at a time when no Debenture Event of Default
shall have occurred and be continuing, the Holder of the Common Securities, by
Act of the Holder of the Common Securities delivered to the retiring Relevant
Trustee, shall promptly appoint a successor Trustee or Trustees with respect to
the Trust Securities and the Trust, and the successor Trustee shall comply with
the applicable requirements of Section 811. If the Property Trustee or the
Delaware Trustee shall resign, be removed or become incapable of continuing to
act as the Property Trustee or the Delaware Trustee, as the case may be, at a
time when a Debenture Event of Default shall have occurred and is continuing,
the Holders of the Preferred Securities by Act of the Holders of a majority in
Liquidation Amount of the Preferred Securities then Outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and such successor
Trustee shall comply with the applicable requirements of Section 811. If an
Administrative Trustee shall resign, be removed or become incapable of acting
as Administrative Trustee, at a time when a Debenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act of
the Holder of the Common Securities delivered to an Administrative Trustee,
shall promptly appoint a successor Administrative Trustee or Administrative
Trustees with respect to the Trust Securities and the Trust, and such successor
Administrative Trustee or Administrative Trustees shall comply with the
applicable requirements of Section 811. If no successor Trustee with respect
to the Trust Securities shall have been so appointed by the Holder of the
Common Securities or the Holders of the Preferred Securities and accepted
appointment in the manner required by Section 811, any Securityholder who has
been a Securityholder for at least six months may, on behalf of such
Securityholder and all others similarly situated, petition a court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Trust Securities.
The Property Trustee shall give notice of each resignation and each
removal of a Relevant Trustee and each appointment of a successor Trustee to
all Security holders in the manner provided in Section 1008 and shall give
notice to the Depositor. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust office if it is the Property
Trustee.
-30-
<PAGE> 35
Subject to the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or the Delaware Trustee, as the case may be, set
forth in Section 807).
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the
appointment hereunder of a successor Trustee with respect to the Trust
Securities and the Trust, the retiring Relevant Trustee and each successor
Trustee with respect to the Trust Securities shall execute and deliver an
instrument hereto wherein each successor Trustee shall accept such appointment
and which shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust, and upon the execution and delivery of such
instrument, the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust; but, on request of the Trust or
any successor Trustee such retiring Relevant Trustee shall duly assign,
transfer and deliver to such successor Trustee all Trust Property, all proceeds
thereof and money held by such retiring Relevant Trustee hereunder with respect
to the Trust Securities and the Trust.
Upon request of any such successor Trustee, the Trust shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
immediately preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. 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 Relevant Trustee shall be
a party, or any corporation succeeding to all or substantially all the
corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST. If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Junior Subordinated Debentures or the Trust Securities), the Property Trustee
or the Delaware Trustee, as the case may be, shall be subject to and shall take
all actions necessary in order to comply with the provisions of the Trust
Indenture Act regarding the collection of claims against the Depositor or Trust
(or any such other obligor).
SECTION 814. REPORTS BY PROPERTY TRUSTEE.
(a) Not later than January 31 of each year commencing with January
31, 1999, the Property Trustee shall transmit to all Security holders in
accordance with Section 1008, and to the Depositor, a brief report dated as of
the preceding December 31 with respect to:
(i) its eligibility under Section 807 or, in lieu
thereof, if to the best of its knowledge it has continued to be
eligible under said Section, a written statement to such effect; and
-31-
<PAGE> 36
(ii) any change in the property and funds in its
possession as Property Trustee since the date of its last report and
any action taken by the Property Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Security
holders such reports concerning the Property Trustee and its actions under this
Trust Agreement as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
securities exchange or other organization upon which the Trust Securities may
be listed, with the Commission and with the Depositor.
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 816 . EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each
of the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with the conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
SECTION 817. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that the Holder
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 817(a), or
if the number of Trustees is increased pursuant to Section 817(a), a vacancy
shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 810, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
SECTION 818. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 207(a)(i); and
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
-32-
<PAGE> 37
SECTION 819. VOTING. Except as otherwise provided in this Trust
Agreement, the consent or approval of the Administrative Trustees shall require
consent or approval by not less than a majority of the Administrative Trustees,
unless there are only two, in which case both must consent.
ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER
SECTION 901. TERMINATION UPON EXPIRATION DATE. Unless earlier
dissolved, the Trust shall automatically dissolve on __________ __, 2029 (the
"Expiration Date") subject to distribution of the Trust Property in accordance
with Section 904.
SECTION 902. EARLY TERMINATION. The first to occur of any of the
following events is an "Early Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the
Depositor at any time (which direction is wholly optional and within the
discretion of the Depositor) to dissolve the Trust and distribute the Junior
Subordinated Debentures to Security holders in exchange for the Preferred
Securities in accordance with Section 904;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Junior Subordinated Debentures;
and
(d) an order for dissolution of the Trust shall have been entered
by a court of competent jurisdiction.
SECTION 903. TERMINATION. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Security holders upon the liquidation of the Trust
pursuant to Section 904, or upon the redemption of all of the Trust Securities
pursuant to Section 402, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of any expenses
owed by the Trust; (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Security holders, and (d) the
filing of a certificate of cancellation by the Administrative Trustee under the
Delaware Business Trust Act.
SECTION 904. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or
(d) of Section 902 occurs or upon the Expiration Date, the Trust shall be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to each Securityholder a Like Amount of
Junior Subordinated Debentures, subject to Section 904(d). Notice of
liquidation shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange will be
deemed to represent a Like Amount of Junior Subordinated Debentures;
and
-33-
<PAGE> 38
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities certificates
for Junior Subordinated Debentures, or if Section 904(d) applies
receive a Liquidation Distribution, as the Administrative Trustees or
the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to
effect the liquidation of the Trust and distribution of the Junior Subordinated
Debentures to Security holders, the Property Trustee shall establish a record
date for such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish such procedures as it
shall deem appropriate to effect the distribution of Junior Subordinated
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates (or, at the election of the Depositor a Global
Subordinated Debenture, subject to the provisions of the Indenture)
representing a Like Amount of Junior Subordinated Debentures will be issued to
Holders of Trust Securities Certificates upon surrender of such certificates to
the Administrative Trustees or their agent for exchange, (iii) the Depositor
shall use its reasonable efforts to have the Junior Subordinated Debentures
listed on the American Stock Exchange or on such other securities exchange,
quotation system or other organization as the Preferred Securities may then be
listed or traded, (iv) any Trust Securities Certificates not so surrendered
for exchange will be deemed to represent a Like Amount of Junior Subordinated
Debentures, accruing interest at the rate provided for in the Junior
Subordinated Debentures from the last Distribution Date on which a Distribution
was made on such Trust Securities Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal will be made to Holders of Trust Securities Certificates
with respect to such Junior Subordinated Debentures) and (v) all rights of
Security holders holding Trust Securities will cease, except the right of such
Security holders to receive Junior Subordinated Debentures upon surrender of
Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of
this Section 904, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the Junior
Subordinated Debentures in the manner provided herein is determined by the
Property Trustee not to be practical, the Trust Property shall be liquidated,
and the Trust shall be dissolved, wound-up or terminated, by the Property
Trustee in such manner as the Property Trustee determines. In such event, on
the date of the dissolution, winding-up or other termination of the Trust,
Security holders will be entitled to receive out of the assets of the Trust
available for distribution to Security holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the Liquidation Amount per Trust Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, winding-up or
termination, the Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro
rata basis (based upon Liquidation Amounts). The Holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST. The Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except
pursuant to this Section 905. At the request of the Depositor, 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, the
Trust may merge with or into, consolidate, amalgamate, be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any state; provided,
that (i) such successor entity either (a) expressly assumes all of the
obligations of the Trust with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the
-34-
<PAGE> 39
"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 Depositor
expressly appoints a trustee of such successor entity possessing substantially
the same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Debentures, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the Preferred Securities
(including any Successor Securities) in any material respect, (iv) such
successor entity has a purpose identical to that of the Trust, (v) the
Successor Securities will be listed or traded on any national securities
exchange or other organization on which the Preferred Securities may then be
listed, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of Counsel
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, and
(b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an "investment company" under the Investment Company
Act and (vii) the Depositor owns all of the Common Securities of such successor
entity and guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
Holders of 100% in Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other Person or
permit any other Person to consolidate, amalgamate, merge with or into, or
replace it, if such consolidation, amalgamation, merger or replacement would
cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF SECURITY HOLDERS. The death or
incapacity of any Person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor entitle the
legal representatives or heirs of such Person, to claim an accounting, take any
action or bring any proceeding in any court for a partition or winding-up of
the arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
SECTION 1002. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the
Trustees and the Depositor, without the consent of any Security holders, (i) as
provided in Section 811 with respect to acceptance of appointment by a
successor Trustee, (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other provision
herein or therein, or to make any other provisions with respect to matters or
questions arising under this Trust Agreement, that shall not be inconsistent
with the other provisions of this Trust Agreement, or (iii) to modify,
eliminate or add to any provisions of this Trust Agreement to such extent as
shall be necessary to ensure that the Trust will be classified for United
States federal income tax purposes as a grantor trust at all times that any
Trust Securities are Outstanding or to ensure that the Trust 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 shall not
adversely affect in any material respect the interests of any Securityholder,
and any amendments of this Trust Agreement shall become effective when notice
thereof is given to the Security holders.
(b) Except as provided in Section 601(c) or Section 1002(c)
hereof, any provision of this Trust Agreement may be amended by the Trustees
and the Depositor (i) with the consent of Security holders representing not
less than a majority (based upon Liquidation Amounts) of the Trust Securities
then Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel
to the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the Trust's
exemption from status of an "investment company" under the Investment Company
Act.
-35-
<PAGE> 40
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 603 or 606 hereof), this
Trust Agreement may not be amended to (i) change the amount or timing of any
distribution on the Trust Securities or otherwise adversely affect the amount
of any distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a Securityholder to institute
suit for the enforcement of any such payment on or after such date;
notwithstanding any other provision herein, without the unanimous consent of
the Security holders (such consent being obtained in accordance with Section
603 or 606 hereof), this paragraph (c) of this Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement,
no Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail
or cease to be classified as a grantor trust for United States federal income
tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may not be
amended in a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 1003. SEPARABILITY. In case any provision in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1004. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITY HOLDERS, THE TRUST AND THE TRUSTEES WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES).
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY. If the date fixed
for any payment on any Trust Security shall be a day that is not a Business
Day, then such payment need not be made on such date but may be made on the
next succeeding day which is a Business Day (except as otherwise provided in
Sections 401(a) and 402(d)), with the same force and effect as though made on
the date fixed for such payment, and no Distribution shall accumulate thereon
for the period after such date.
SECTION 1006. SUCCESSORS. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to the Depositor, the Trust or
the Relevant Trustee(s), including any successor by operation of law. Except
in connection with a consolidation, merger or sale involving the Depositor that
is permitted under Article Twelve of the Indenture and pursuant to which the
assignee agrees in writing to perform the Depositor's obligations hereunder,
the Depositor shall not assign its obligations hereunder.
SECTION 1007. HEADINGS. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
-36-
<PAGE> 41
SECTION 1008. REPORTS, NOTICES AND DEMANDS. Any report, notice,
demand or other communication which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Securityholder or
the Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Holder of Preferred
Securities, to such Securityholder as such Securityholder's name and address
may appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to First Western Corporation, 11210 Huron
Street, Northglenn, Colorado 80234, Attention: Vice Chairman; Facsimile No.:
(303) 450-5046. Any notice to the Holders of the Preferred Securities shall
also be given to such Owners as have, within two years preceding the giving of
such notice, filed their names and addresses with the Property Trustee for that
purpose. Such notice, demand or other communication to or upon a
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given
in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration; (b) with respect to the Delaware
Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; and (c) with respect to the Administrative Trustees, to them at
the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of FW Capital I Trust." Such notice, demand or other
communication to or upon the Trust or the Property Trustee shall be deemed to
have been sufficiently given or made only upon actual receipt of the writing by
the Trust or the Property Trustee.
SECTION 1009. AGREEMENT NOT TO PETITION. Each of the Trustees and
the Depositor agree for the benefit of the Security holders that, until at
least one year and one day after the Trust has been terminated in accordance
with Article IX, they shall not file, or join in the filing of, a petition
against the Trust under any bankruptcy, insolvency, reorganization or other
similar law (including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 1009, the Property Trustee
agrees, for the benefit of Security holders, that at the expense of the
Depositor (which expense shall be paid prior to the filing), it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor against the Trust or the commencement of such
action and raise the defense that the Depositor has agreed in writing not to
take such action and should be stopped and precluded therefrom. The provisions
of this Section 1009 shall survive the termination of this Trust Agreement.
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required
provision shall control. If any provision of this Trust Agreement modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust Agreement
as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
-37-
<PAGE> 42
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF
THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE
TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
FIRST WESTERN CORPORATION,
as Depositor
By:
------------------------------------------
Timothy D. Wiens, Vice Chairman
WILMINGTON TRUST COMPANY,
as Property Trustee
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:
------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
---------------------------------------------
Lynn M. Anthony, as Administrative Trustee
---------------------------------------------
Timothy D. Wiens, as Administrative Trustee
---------------------------------------------
Ronald B. James, as Administrative Trustee
-38-
<PAGE> 43
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER NUMBER OF SECURITIES
**1** 61,856
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
FW CAPITAL I
_____% Common Securities
(liquidation amount $10 per Common Security)
FW CAPITAL I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that First Western
Corporation (the "Holder") is the registered owner of Sixty-One Thousand Eight
Hundred Fifty-Six (61,856) securities of the Trust representing undivided
beneficial interests in the assets of the Trust and designated the _____%
Common Securities (liquidation amount $10 per Common Security) (the "Common
Securities"). In accordance with Section 510 of the Trust Agreement (as
defined below), the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences, and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of __________ __, 1998, as the same may be amended from time to time (the
"Trust Agreement"), including the designation of the terms of Common Securities
as set forth therein. The Trust will furnish a copy of the Trust Agreement to
the Holder without charge upon written request to the Trust at its principal
place of business or registered office. Upon receipt of this certificate, the
Holder is bound by the Trust Agreement and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this ____ day of __________, 1998.
FW CAPITAL I
By:
---------------------------------
Timothy D. Wiens
Administrative Trustee
C-1
<PAGE> 44
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of __________ __, 1998, between First Western
Corporation, a Nebraska corporation (the "Company"), and FW Capital I, a
Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to, and receive _____% Junior Subordinated Debentures due 2028
(the "Junior Subordinated Debentures") from, the Company and to issue and sell
_____% Cumulative Preferred Securities (the "Preferred Securities") with such
powers, preferences and special rights and restrictions as are set forth in the
Amended and Restated Trust Agreement of the Trust dated as of __________ __,
1998, as the same may be amended from time to time (the "Trust Agreement"); and
WHEREAS, the Company will directly or indirectly own all of the Common
Securities of the Trust and will issue the Junior Subordinated Debentures.
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit
the Company and which purchase the Company acknowledges will be made in
reliance upon the execution and delivery of this Agreement, the Company,
including in its capacity as holder of the Common Securities, and the Trust
hereby agree as follows:
ARTICLE I
SECTION 1.1. GUARANTEE BY THE COMPANY. Subject to the terms and
conditions hereof, the Company, including in its capacity as holder of the
Common Securities, hereby irrevocably and unconditionally guarantees to each
person or entity to whom the Trust is now or hereafter becomes indebted or
liable (the "Beneficiaries") the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any costs, expenses or liabilities of the Trust other than
obligations of the Trust to pay to holders of any Preferred Securities or other
similar interests in the Trust the amounts due such holders pursuant to the
terms of the Preferred Securities or such other similar interests, as the case
may be. This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
SECTION 1.2. TERM OF AGREEMENT. This Agreement shall terminate and be
of no further force and effect upon the later of (a) the date on which full
payment has been made of all amounts payable to all holders of all the
Preferred Securities (whether upon redemption, liquidation, exchange or
otherwise) and (b) the date on which there are no Beneficiaries remaining;
provided, however, that this Agreement shall continue to be effective or shall
be reinstated, as the case may be, if at any time any holder of Preferred
Securities or any Beneficiary must restore payment of any sums paid under the
Preferred Securities, under any Obligation, under the Preferred Securities
Guarantee Agreement dated the date hereof by the Company and Wilmington Trust
Company as guarantee trustee or under this Agreement, for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
SECTION 1.3. WAIVER OF NOTICE. The Company hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Company hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 1.4. NO IMPAIRMENT. The obligations, covenants, agreements
and duties of the Company under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or
any portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
D-1
<PAGE> 45
(b) any failure, omission, delay or lack of diligence on the part
of the Beneficiaries to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind;
or
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust.
The Beneficiaries shall not be obligated to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
SECTION 1.5. ENFORCEMENT. A Beneficiary may enforce this Agreement
directly against the Company, and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
ARTICLE II
SECTION 2.1. BINDING EFFECT. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
SECTION 2.2. AMENDMENT. So long as there remains any Beneficiary or
any Preferred Securities are outstanding, this Agreement shall not be modified
or amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
SECTION 2.3. NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same by facsimile transmission (confirmed by mail), telex, or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer back, if sent by telex):
FW Capital I
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Facsimile No.: (302) 651-1576
Attention: Corporate Trust Administration
First Western Corporation
11210 Huron Street
Northglenn, Colorado 80234
Facsimile No.: (303) 450-5046
Attention: Vice Chairman
SECTION 2.4. GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Colorado
(without regard to conflict of laws principles).
D-2
<PAGE> 46
THIS AGREEMENT is executed as of the day and year first above written.
FIRST WESTERN CORPORATION,
By:
------------------------------------------
Timothy D. Wiens, Vice Chairman
FW CAPITAL I
By:
------------------------------------------
Ronald B. James, Administrative Trustee
D-3
<PAGE> 47
EXHIBIT E
This Preferred Security is a Book-Entry Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of The Depository Trust Company, a New York
corporation (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement (as defined below) and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of the Depositary to FW Capital I or its agent for registration
of transfer, exchange or payment, and any Preferred Security issued is
registered in the name of Cede & Co., or such other name as requested by an
authorized representative of the Depositary (and any payment hereon is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of the Depositary), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co. has an interest herein.
Certificate Number Number of Preferred Securities
**1** 2,000,000
CUSIP NO. __________
Certificate Evidencing Preferred Securities
of
FW Capital I
_____% Cumulative Preferred Securities
(liquidation amount $10 per Preferred Security)
FW CAPITAL I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of Two Million(2,000,000) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the _____% Cumulative Preferred Securities
(liquidation amount $10 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer as provided in
Section 504 of the Trust Agreement (as defined below). The designations,
rights, privileges, restrictions, preferences, and other terms and provisions
of the Preferred Securities are set forth in, and this certificate and the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Trust
Agreement of the Trust dated as of ___________ __, 1998, as the same may be
amended from time to time (the "Trust Agreement"), including the designation of
the terms of Preferred Securities as set forth therein. The Holder is entitled
to the benefits of the Preferred Securities Guarantee Agreement entered into by
First Western Corporation, a Colorado corporation, and Wilmington Trust
Company, as guarantee trustee, dated as of __________ __, 1998 (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this ___ day of __________, 1998.
FW CAPITAL I
By:
-------------------------------------------
Timothy D. Wiens, Administrative Trustee
E-1
<PAGE> 1
EXHIBIT 4.7
PREFERRED SECURITIES GUARANTEE AGREEMENT
FIRST WESTERN CORPORATION
AND
WILMINGTON TRUST COMPANY
DATED: DECEMBER _____, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - DEFINITIONS AND INTERPRETATION 1
SECTION 1.1 Definitions and Interpretation 1
ARTICLE II - TRUST INDENTURE ACT 4
SECTION 2.1 Trust Indenture Act; Application 4
SECTION 2.2 Lists of Holders of Securities 4
SECTION 2.3 Reports by the Preferred Guarantee Trustee 4
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee 4
SECTION 2.5 Evidence of Compliance with Conditions Precedent 4
SECTION 2.6 Events of Default; Waiver 5
SECTION 2.7 Event of Default; Notice 5
SECTION 2.8 Conflicting Interests 5
ARTICLE III - POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE 5
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee 5
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee 6
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee 8
ARTICLE IV - PREFERRED GUARANTEE TRUSTEE 8
SECTION 4.1 Preferred Guarantee Trustee; Eligibility 8
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees 9
ARTICLE V - Guarantee 9
SECTION 5.1 Guarantee 9
SECTION 5.2 Waiver of Notice and Demand 9
SECTION 5.3 Obligations Not Affected 9
SECTION 5.4 Rights of Holders =10
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.5 Guarantee of Payment 10
SECTION 5.6 Subrogation 10
SECTION 5.7 Independent Obligations 11
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION 11
SECTION 6.1 Limitation of Transactions 11
SECTION 6.2 Ranking 11
ARTICLE VII - TERMINATION 11
SECTION 7.1 Termination 11
ARTICLE VIII - INDEMNIFICATION 11
SECTION 8.1 Exculpation 11
SECTION 8.2 Indemnification 12
ARTICLE IX - MISCELLANEOUS 12
SECTION 9.1 Successors and Assigns 12
SECTION 9.2 Amendments 12
SECTION 9.3 Notices 12
SECTION 9.4 Benefit 13
SECTION 9.5 Governing Law 13
</TABLE>
-ii-
<PAGE> 4
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of Guarantee
1939, as Amended Agreement
- ---------------- ---------
<S> <C>
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1
315(d) 3.1(d)
316(a) 1.1, 3.6, 5.4
316(b) 5.3
316(c) 8.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(b)
318(b) 2.1
318(c) 2.1(a)
</TABLE>
-iii-
<PAGE> 5
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of December _____, 1998, is executed and delivered by First Western
Corporation, a Nebraska corporation (the "Guarantor"), and Wilmington Trust
Company, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities (as
defined herein) of FW Capital I, a Delaware statutory business trust ("FW
Capital").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement") dated as of December _____, 1998 among the trustees of FW
Capital named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of FW Capital, FW Capital
is issuing on the date hereof 2,000,000 preferred securities, and within 30
days after the date of the prospectus relating to the public offering of the
preferred securities, a possible additional amount of up to 300,000 preferred
securities pursuant to an underwriters' over-allotment option, having an
aggregate liquidation amount of $20,000,000 to $23,000,000, designated the
_____% Cumulative Preferred Securities (the "Preferred Securities"); and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION. In this Preferred
Securities Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless otherwise defined in
this Preferred Securities Guarantee or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
-1-
<PAGE> 6
"Business Day" means any day other than (a) a Saturday or Sunday, (b)
a day on which banking institutions in the State of Colorado are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Preferred Guarantee Trustee's Corporate Trust Office is closed for business.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"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) 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 for which such person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by FW Capital: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) that are required to be paid on such Preferred
Securities to the extent FW Capital shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent FW Capital has funds
available therefor, with respect to any Preferred Securities called for
redemption by FW Capital, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of FW Capital (other than in connection
with the distribution of Junior Subordinated Debentures to the Holders in
exchange for Preferred Securities as provided in the Trust Agreement), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Preferred Securities to the date of payment, to the
extent FW Capital shall have funds available therefor, and (b) the amount of
assets of FW Capital remaining available for distribution to Holders in
liquidation of FW Capital (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of FW Capital of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Subordinated Indenture dated as of December
_____, 1998, among the Guarantor (the "Debenture Issuer") and Wilmington Trust
Company, as trustee, and any indenture supplemental thereto pursuant to which
the Junior Subordinated Debentures are to be issued to the Property Trustee (as
defined in the Trust Agreement) of FW Capital.
-2-
<PAGE> 7
"Junior Subordinated Debentures" means the series of junior
subordinated deferrable interest debt securities of the Guarantor designated
the _____% Junior Subordinated Debentures due 2028 held by the Property Trustee
of FW Capital.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holders of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Senior and Subordinated Debt" means 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 Guarantor
whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt of the Guarantor, 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
Preferred Securities Guarantee or to other Debt which is pari passu with, or
subordinated to, the Preferred Securities Guarantee; provided, however, that
Senior and Subordinated Debt shall not be deemed to include
-3-
<PAGE> 8
(i) any Debt of the Guarantor 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 Guarantor, (ii) any Debt of the Guarantor
to any of its subsidiaries, (iii) any Debt to any employee of the Guarantor,
(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 Junior
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 the subordination provisions to which such Debt is
subject, (v) the Junior Subordinated Debentures, and (vi) any other debt
securities issued pursuant to the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") (i) on or before January 15 and July 15 of each year, and
(ii) at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders, as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before
July 15 of each year, the Preferred Guarantee Trustee shall provide to the
Holders of the Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE. The
Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 of the Trust Indenture Act,
if any, and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
-4-
<PAGE> 9
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with the conditions precedent, if any, provided for in this
Preferred Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the
form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received a properly addressed written notice, or of which a Responsible
Officer of the Preferred Guarantee Trustee charged with the administration of
the Trust Agreement shall have obtained actual knowledge.
SECTION 2.8 CONFLICTING INTERESTS. The Trust Agreement shall be
deemed to be specifically described in this Preferred Securities Guarantee for
the purposes of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising such Holder's rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee
-5-
<PAGE> 10
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Preferred Securities
Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less than
a Majority in liquidation amount of the Preferred Securities relating
to the time, method and place of conducting any proceeding for any
remedy available to the Preferred Guarantee Trustee, or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under
this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
-6-
<PAGE> 11
(i) The Preferred Guarantee Trustee may conclusively rely
upon, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court
of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
-7-
<PAGE> 12
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Preferred Securities Guarantee shall be taken as
the statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, and subject to
supervision or examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for
the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED
GUARANTEE TRUSTEES.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
-8-
<PAGE> 13
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by FW Capital), as and when due,
regardless of any defense, right of set-off or counterclaim that FW Capital may
have or assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing FW Capital to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of this Preferred Securities Guarantee and of any
liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against FW Capital or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities
Guarantee shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by FW Capital of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by FW Capital;
(b) the extension of time for the payment by FW Capital of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
-9-
<PAGE> 14
Distribution or other sum payable that results from the extension of any
interest payment period on the Junior Subordinated Debentures or any extension
of the maturity date of the Junior Subordinated Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of FW Capital granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, FW Capital or any of the
assets of FW Capital;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guarantied
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee, without first instituting a legal proceeding
against FW Capital, the Preferred Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT. This Preferred Securities
Guarantee creates a Guarantee of payment and not of collection.
SECTION 5.6 SUBROGATION. The Guarantor shall be subrogated to all
(if any) rights of the Holders of Preferred Securities against FW Capital in
respect of any amounts paid to such Holders by the Guarantor under this
Preferred Securities Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Preferred Securities Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Preferred Securities
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of FW Capital with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section
5.3.
-10-
<PAGE> 15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS. So long as any Preferred
Securities remain outstanding, if there shall have occurred and be continuing
an Event of Default or an event of default under the Trust Agreement, then (a)
the Guarantor shall not declare or pay any dividend or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of its capital stock, (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor (including other Junior Subordinated
Debentures) which rank pari passu with or junior in interest to the Junior
Subordinated Debentures or (c) the Guarantor shall not make any guarantee
payments with respect to any guarantee by the guarantor of the debt securities
of any subsidiary of the Guarantor if such guarantee ranks pari passu or junior
in interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock, (b) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of
stock under any such plan in the future or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under this Preferred Securities
Guarantee and (d) purchases of common stock related to the issuances of common
stock or rights under any of the Guarantor's benefit plans for its directors,
officers or employees).
SECTION 6.2 RANKING. This Preferred Securities Guarantee will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior and Subordinated Debt of the
Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Preferred Securities Guarantee shall
terminate upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) upon full payment of the amounts payable in accordance with
the Trust Agreement upon liquidation of FW Capital or (iii) upon distribution
of the Junior Subordinated Debentures to the Holders of the Preferred
Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any Holder of Preferred Securities must restore payment of any sums
paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
-11-
<PAGE> 16
SECTION 8.2 INDEMNIFICATION. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS. All guaranties and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding.
SECTION 9.2 AMENDMENTS. Except with respect to any changes that do
not materially adversely affect the rights of Holders (in which case no consent
of Holders will be required), this Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
liquidation amount of the Preferred Securities. The provisions of Article VI
of the Trust Agreement with respect to meetings of Holders of the Securities
apply to the giving of such approval.
SECTION 9.3 NOTICES. All notices provided for in this Preferred
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
First Western Corporation
11210 Huron Street
Northglenn, Colorado 80234
Attention: Vice Chairman
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of FW Capital.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
-12-
<PAGE> 17
SECTION 9.4 BENEFIT. This Preferred Securities Guarantee is solely
for the benefit of the Holders of the Preferred Securities and, subject to
Section 3.1(a), is not separately transferable from the Preferred Securities.
SECTION 9.5. GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF COLORADO; PROVIDED THAT THE IMMUNITIES AND THE STANDARD OF
CARE OF THE TRUSTEE SHALL BE GOVERNED BY DELAWARE LAW.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
FIRST WESTERN CORPORATION,
as Guarantor
By
----------------------------------
Timothy D. Wiens, Vice Chairman
WILMINGTON TRUST COMPANY,
As Preferred Guarantee Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-13-
<PAGE> 1
EXHIBIT 5.1
[JONES & KELLER LETTERHEAD]
November ___, 1998
First Western Corp.
11210 Huron Street
Northglenn, Colorado 80234
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
In connection with the Registration Statement on Form SB-2 filed by
First Western Corp. (the "Company") and FW Capital I ("FW Capital") with the
Securities and Exchange Commission on or about November ___, 1998 relating to a
public offering by FW Capital of up to 2,300,000 % Cumulative Preferred
Securities (the "Preferred Securities"), please be advised that as counsel to
the Company, upon examination of such corporate documents and records as we have
deemed necessary or advisable for the purposes of this opinion, it is our
opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nebraska.
2. The Guarantee, when executed and delivered as contemplated by the
Registration Statement, and the Junior Subordinated Debentures, when issued and
paid for as contemplated by the Registration Statement, will be validly issued
obligations of the Company enforceable in accordance with their terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
Capitalized terms used herein shall have the definitions given to such
terms in the Registration Statement. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement, and to the reference to our
firm under the headings "Certain Federal Income Tax Consequences" and "Legal
Matters" in the Prospectus comprising a part of the Registration Statement.
Very truly yours,
JONES & KELLER, P.C.
<PAGE> 1
EXHIBIT 5.2
[RICHARDS, LAYTON & FINGER LETTERHEAD]
November ___, 1998
FW Capital I
c/o First Western Corp.
11210 Huron Street
Northglenn, Colorado 80234
Re: First Western Corp. and FW Capital I - offering of trust preferred
securities
Ladies and Gentlemen:
We have acted as special Delaware counsel for First Western Corp., a
Nebraska corporation (the "Company"), and FW Capital I, a Delaware business
trust (the "Trust"), in connection with the matters set forth herein. At your
request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated November 6, 1998, as filed
with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on November 6, 1998;
(b) The Trust Agreement of the Trust, dated as of November 6, 1998 between
the Company and the trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form SB-2,
including a preliminary prospectus with respect to the Trust (the "Prospectus"),
relating to the Preferred Securities of the Trust representing preferred
undivided beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), filed by the Company
and the Trust with the Securities and Exchange Commission on or about November
___, 1998;
(d) A form of Amended and Restated Trust Agreement, to be entered into
among the Company, the trustees of the Trust named therein, and the holders,
from time to time, of the undivided beneficial interests in the assets of the
Trust (including Exhibits C and E thereto) (the "Trust Agreement"), attached as
an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated November ___, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed in paragraphs (a) through (e) above. In particular, we have
not reviewed any document (other than the documents listed in paragraphs (a)
through (e) above) that is referred to in or incorporated by reference into the
documents reviewed by us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
<PAGE> 2
FW Capital I
First Western Corp.
Page 2
November ___, 1998
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust Agreement
and the Certificate of Trust are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Securities Certificate for such Preferred
Security and the payment for the Preferred Security, in accordance with the
Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration Statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware, and we have
not considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good standing
as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. We hereby consent to the
use of our name under the heading "Legal Matters" in the Prospectus. In giving
the foregoing consents, we do not thereby admit that we come within the category
of Persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
Richards, Layton & Finger
<PAGE> 1
EXHIBIT 8.1
[JONES & KELLER, P.C. LETTERHEAD]
November ___, 1998
First Western Corp. FW Capital I
11210 Huron Street c/o First Western Corp.
Northglenn, Colorado 802334 11210 Huron Street
Northglenn, Colorado 80234
Re: Opinion of Counsel Related to the Material Federal Income Tax
Consequences of the Purchase and Ownership of Preferred Securities
Issued by FW Capital I
Ladies and Gentlemen:
We have acted as special counsel to First Western Corp. (the ?Company@)
in connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), of a Form
SB-2 Registration Statement, dated on or about November ___, 1998 (the
"Registration Statement"). The Registration Statement relates to the offer for
sale of up to 2,300,000 % Cumulative Preferred Securities (the "Preferred
Securities") of FW Capital I ("FW Capital"), a statutory business trust formed
by the Company under the laws of the State of Delaware, and the Junior
Subordinated Debentures to be issued by the Company to FW Capital in connection
with the sale of the Preferred Securities.
This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the ?Accord@) of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this letter
should be read in conjunction therewith.
This opinion letter relates to the material federal income tax
consequences of the purchase and ownership of the Preferred Securities by
investors. All capitalized terms used in this opinion letter and not otherwise
defined herein are used as described in the Registration Statement. The
consequences described herein are not applicable to investors who may be subject
to special tax treatment, such as banks, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, non-United States Persons or persons that will
hold the Preferred Securities as part of a position in a ?straddle@ or as part
of a ?hedging@ or other integrated transaction. In addition, this opinion does
not include any description of any alternative minimum tax consequences or the
tax laws of any state, local or foreign government that may be applicable to an
investor.
We have examined the Registration Statement and such other documents as
we have deemed necessary to render our opinion expressed below. In our
examination of such material, we have relied upon the current and continued
accuracy of the factual matters we have considered, and we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all copies of documents
submitted to us. In addition, we also have assumed that the transactions related
to the issuance of the Junior Subordinated Debentures and the Preferred
Securities will be consummated in accordance with the terms and forms of the
documents. As to any facts material to the opinions expressed herein which were
not independently established or verified, we have relied upon oral or written
statements and representations of officers, trustees, and other representatives
of the Company, FW Capital and others. Should any of the above facts,
circumstances, or assumptions be subsequently determined incorrect or
inaccurate, our conclusions may vary from those set forth below and such
variance could be material.
Based on the foregoing, and assuming that FW Capital was formed and
will be maintained in compliance with the terms of the Trust Agreement it is our
opinion that:
<PAGE> 2
First Western Corp.
FW Capital I
November ___, 1998
(1) FW Capital will be classified for United States federal income
tax purposes as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes, and as a result, each
beneficial owner of Preferred Securities will be treated as owning an undivided
beneficial interest in the Junior Subordinated Debentures.
(2) Stated interest on the Junior Subordinated Debentures generally
will be included in income by a Securityholder at the time such interest income
is paid or accrued in accordance with the Securityholder's regular method of tax
accounting.
(3) Gain or loss generally will be recognized by a Securityholder on
a sale of Preferred Securities (including a redemption for cash) in an amount
equal to the difference between the amount realized (which for this purpose,
will exclude amounts attributable to accrued interest or original issue discount
not previously included in income) and the Securityholder's adjusted tax basis
in the Preferred Securities sold or so redeemed. Gain or loss recognized by the
Securityholder on Preferred Securities will generally be taxable as capital gain
or loss. Amounts attributable to accrued interest will be taxable as ordinary
income. However, there is conflicting authority regarding the need for inclusion
of interest income (and the corresponding exclusion of such interest from the
amount realized) for a cash basis Securityholder if the Preferred Securities are
sold for less than their principal amount.
(4) The summary contained in the portion of the Registration
Statement titled "Certain Federal Income Tax Consequences" accurately describes
the material United States federal income tax consequences that may be relevant
to the purchase and ownership of the Preferred Securities.
This opinion is based upon the Internal Revenue Code of 1986, as
amended, the Treasury regulations promulgated thereunder and other relevant
authorities and law, all as in effect on the date hereof. All of the above are
subject to change or modification by subsequent legislative, regulatory,
administrative or judicial decisions which could adversely affect our opinions.
Consequently, future changes in the law, or administrative or judicial
interpretations thereof, may cause the tax treatment of the transactions
referred to herein to be materially different from that described above.
Other than the specific tax opinions set forth in this letter, no other
opinion has been rendered with respect to the tax treatment of the proposed
issuance and sale of the Junior Subordinated Debentures or the Preferred
Securities, including, but not limited to, the tax treatment of the proposed
transactions under other provisions of the Code and the regulations, the tax
treatment of any conditions existing at the time of, or effects resulting from,
the proposed transactions that are not specifically covered by the above
opinions, or the tax treatment of the proposed transactions under state, local,
foreign or any other tax laws.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and the use of our name in the Registration Statement
under the captions "Certain Federal Income Tax Consequences" and "Legal
Matters."
Very truly yours,
JONES & KELLER, P.C.
<PAGE> 1
Exhibit 10.1
[NBC NATIONAL BANK OF COMMERCE LETTERHEAD]
February 19, 1998
Mr. Joel Wiens, President
First Western Corp.
P. 0. Box 730
Kimball, NE 69145-0730
RE: LINE OF CREDIT MODIFICATION
Dear Joel:
This letter shall constitute the agreement ("Agreement") by and among First
Western Corp., ("Borrower") and National Bank of Commerce Trust and Savings
Association, Lincoln, Nebraska ("NBC"), concerning a modification in the
existing bank stock loan, in the form of a $5,000,000-00 increase in the
existing revolving line of credit, to Borrower by NBC ("the Loan").
BORROWER First Western Corp., a Nebraska bank holding company.
GUARANTEE The principal shareholder, Joel H. Wiens, shall provide
NBC with a personal guarantee in the amount of
$10,000,000.00.
AMOUNT OF LOAN Not to exceed $10,000,000.00 (Ten Million Dollars).
PRICING The Loan shall be priced at 250 basis points over the like
"CMT" treasury, and shall be repriced accordingly,
Further, there shall be a 10 basis point annual nonusage
fee or minimum annual accrued interest of $10,000.00 with
this Loan.
REPAYMENT
SCHEDULE Interest semi-annual, principal at maturity. Borrower
shall have the right to prepay on the Loan, in whole or
In part, without penalty.
COMMITMENT FEE None.
TERM OF LOAN Maturity shall be June 30, 2002.
PURPOSE OF LOAN Advances on this Loan are for capital injections to
Subsidiary Banks or other investment purposes.
COLLATERAL The Loan shall be secured by 9 1 % of the outstanding
common stock of First State Bank, Kimball, Nebraska and
81 % of the
<PAGE> 2
Exhibit 10.1
Mr. Joel H. Wiens
Page - 2
outstanding stock of Firstate Bank, Northglenn,
Colorado (less any directors qualifying shares).
Covenants While any Indebtedness of Borrower remains
outstanding and owing to NBC, or immediately prior
to any advances hereunder, Borrower agrees that,
unless NBC shall otherwise consent in writing:
A. FURNISH FINANCIAL INFORMATION. Borrower will furnish NBC:
(i) A copy of quarterly Call Reports of Subsidiary Banks with
all Schedules as filed with Subsidiary Banks' regulator,
annual copies of the FRY-9 and FRY-6 reports supplied by
Borrower to the Federal Reserve, annual Guarantor's
financial statement and other items mutually agreed upon by
Borrower and NBC.
(ii) Other such reports and information as NBC shall reasonably
request, such as a report on watchlist assets and LLR
adequacy of the subsidiary banks.
B. CAPITAL. Borrower will maintain or cause each of its bank subsidiaries
to maintain:
(i) for Borrower, not less than a 6.5% tangible equity
capital-to-assets ratio, and
(ii) for each of its subsidiary banks, not less than a 6.0%
tangible equity capital-to-assets ratio. For these purposes,
tangible equity capital shall include common stock, surplus
and undivided profits, less the cost of treasury stock, If
any, and less any intangible assets. Total assets shall
similarly be adjusted for any intangible assets.
C. LIMITATION ON INDEBTEDNESS. Borrower will not incur, create or permit
any of its subsidiary banks to incur or create any indebtedness nor
encumber any assets other than indebtedness and pledging incurred in
the ordinary and usual course of Borrower's business and indebtedness
incurred by its subsidiary banks in the ordinary and usual course of
the business of banking.
D. COMPLIANCE WITH BANKING REGULATIONS. Borrower and its subsidiary banks
will comply with all applicable banking laws and regulations.
E. CHANGE IN CONTROL/MERGER/CHANGE IN MANAGEMENT. Borrower and its
subsidiaries shall agree not to issue additional shares of common
stock, or other classes of stock, nor sell or transfer or suffer the
transfer of any of the outstanding stock of Borrower or its
subsidiaries. Provided, however, that with respect to Borrower stock,
Borrower shareholder's shall be allowed to Shift, transfer of donate
shares of Borrower stock without prior NBC approval, so long as the
gift, transfer or donation does not result in a change in the control
of Borrower by the Wiens family. Neither Borrower or its subsidiaries
shall change its name, or merge or consolidate into or with any other
corporation, and Borrower shall agree to maintain the individuals
currently holding the positions of Chairman and President.
F. REVIEW. Borrower shall cause its subsidiary banks to permit NBC, by
any of its designated representatives, to perform an asset and loan
review of subsidiary banks at such time or times as NBC may reasonably
request and NBC shall
<PAGE> 3
Exhibit 10.1
Mr. Joel H. Wiens
Page - 3
have access to the same materials and Information which would be
available to federal and state examiners.
REPRESENTATIONS &
WARRANTIES Borrower represents and warrants to NBC that, both now
and on a continuing basis that:
A. CORPORATE EXISTENCE AND AUTHORITY. Borrower Is a corporation, duly
organized, validly existing and in good standing under the laws of the
State of Nebraska. Borrower is duly registered as a bank holding
company under the Bank Holding Company Act of 1956 as amended, and has
received all necessary approvals from and filed all necessary
applications and reports with the Board of Governors of the Federal
Reserve System. Each of its subsidiary banks is a state banking
corporation, duly organized, validly existing and in good standing
under the laws of the State of Nebraska, or Colorado, and each has all
requisite power and authority to engage in the business of banking.
The banking and performance by Borrower of this Agreement and the note
and security agreement which are Exhibits hereto have been duly
authorized by all necessary corporate action and will not violate any
provisions of law or of Borrower's charter and bylaws, or result in
the breach of any agreement to which Borrower is a party.
B. FINANCIAL CONDITION. The balance sheets and statements of income of
Borrower and its subsidiary banks heretofore furnished to NBC are
complete and correct and fairly represent the financial condition of
Borrower and its subsidiary banks as at the dates of said financial
statements and the results of their operations for the periods ending
on said dates. Such financial statements were prepared in accordance
with generally accepted accounting principles consistently applied.
Neither Borrower nor any of Its subsidiary banks has any material
liabilities or obligations not reflected by such balance sheets. Since
the date of the latest of such statements there has been no material
adverse change in the financial condition of Borrower and/or its
subsidiary banks.
C. LITIGATION. There are no suits or proceedings pending, or to the
knowledge of Borrower threatened, against or affecting Borrower or any
of its subsidiary banks that, if adversely determined, would have a
material adverse effect on the financial condition or business of
Borrower or its subsidiary banks, and there are no proceedings by or
before any bank regulatory or other governmental agency pending, or to
the knowledge of Borrower, threatened against Borrower or any of its
subsidiary banks,
EVENTS OF DEFAULT If any event of default as defined in the promissory note or
the security agreement shall occur, if any representation of
warranty made in this Agreement shall prove to be or to have
been Incorrect in any material respect, or if Borrower shall
default in the performance of any of the covenants contained
herein, then and in any such case NBC may exercise and
enforce any or al I of Its rights and remedies provided by
the terms of the promissory note, personal guaranty and
security agreement and by Nebraska law.
<PAGE> 4
Exhibit 10.1
Mr. Joel H. Wiens
Page - 4
If this letter agreement is satisfactory, please confirm your acceptance of
these terms and conditions by signing and returning one copy of this letter to
the attention of the undersigned at NBC.
Sincerely,
National Bank of Commerce
Trust and Savings Association
By: /s/ Mark D Brase
-----------------------------
Assistant Vice President
Correspondent Banking Center
The terms of the foregoing Letter Agreement are hereby agreed to and accepted.
Confirmed and accepted this 25th day of Feb, 1998.
First Western Corp.
BY: /s/ Joel H Wiens
-------------------
Joel Wiens, President
<PAGE> 5
Exhibit 10.1
MODIFICATION AGREEMENT
AGREEMENT made this 25th day of February, 1998, between National Bank of
Commerce Trust and Savings Association, Lincoln, Nebraska, herein referred to as
Lender and First Western Corp., herein referred to as borrower.
WHEREAS, Lender is the holder of a certain programmed lending note made by
Borrower dated June 24, 1997 and modified December 24, 1997 in the original
amount of $5,000,000.00 with a current balance of $2,400,000,00.
WHEREAS, Borrower has requested and desires a modification of the terms and
provisions of said programmed lending note dated June 24, 1997 as modified
December 24, 1997 and Lender is agreeable to the same upon the terms and
conditions hereinafter contained.
NOW THEREFORE, this Agreement:
I. The parties stipulate and agree that the terms and provisions of the
above-described programmed lending note are hereby modified as
follows:
a. The maximum principal balance outstanding shall increase
from $5,000,000.00 to $10,000,000.00..
b. The current interest rate index of 250 basis points above
the 90 day Constant Maturity Treasury ("CMT") shall be
changed to 250 basis points above the 1 Year Constant
Maturity Treasury ('CMT") and change annually.
2. As modified and/or extended by this Agreement, the programmed lending
not and security agreement and guaranty are confirmed, and if the
terms and provisions contained in said note in any way conflict with
the terms and provisions contained in this Agreement, the terms and
provisions herein contained shall prevail:
3. The Agreement shall be binding on the heirs, personal representatives,
successors and assigns of the respective parties.
NATIONAL BANK OF COMMERCE TRUST FIRST WESTERN CORP.
SAVINGS ASSOCIATION, LINCOLN, NE,
BY: /s/ Mark D Brase BY: /s/ Joel H Wiens
------------------------------- ------------------------------
Joel Wiens, President
Title Assistant Vice President
-------------------------------
<PAGE> 1
[Federal Home Loan Bank of Topeka Letterhead] EXHIBIT 10.2
Advance, Pledge and Security Agreement
(Blanket Pledge)
This Advance, Pledge and Security Agreement (Agreement) is made as of October
21, 1997, between: The Federal Home Loan Bank of Topeka (Bank) and First State
Bank (Institution), which has its principal office at 115 South Walnut,
Kimball, Nebraska 69145.
WHEREAS, from time to time the Institution desires to apply for extensions of
credit from the Bank in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Bank requires that all existing indebtedness of the Institution to
the Bank and all extensions of credit by the Bank to the Institution pursuant
to this Agreement be secured pursuant to this Agreement, and the Institution is
willing to provide such security;
NOW, THEREFORE, the Institution and the Bank agree as follows:
ARTICLE I
Definitions
Section 1.1 Defined Terms
The following terms shall have the following meanings:
(A) "Act" means the Federal Home Loan Bank Act, as amended.
(B) "Advance" or "Advances" means any and all loans or other
extensions of credit, including all Commissions now or hereafter
granted by the Bank to, on behalf of or for the account of the
Institution, including all loans or extensions of credit by the Bank
to the Institution prior to the date hereof.
(C) "Capital Stock" means all of the capital stock of the Bank and
all payments that have been or hereafter are made on account of any
subscription for such capital stock and all unpaid dividends on such
capital stock.
(D) ""Collateral" means all property, including the proceeds
thereof previously assigned, transferred or pledged to the Bank by the
Institution as Collateral for Advances and all property assigned,
transferred or pledged to the Bank pursuant to Section 3.1 of the
Agreement or otherwise.
(E) "Commitment" or "Commitments" means any and all agreements
under which the Bank is obligated to make advances to the Institution
or payments on behalf of or for the account of the Institution,
including without limitation Swap Transactions, letters of credit,
firm commitments, guarantees or other arrangements intended to
facilitate transactions between the Institution and third parties (but
excluding any obligations that the Bank may now or hereafter have to
honor such as items or transfer orders under a depository or similar
agreement between the Institution and the Bank), and irrespective of
whether the Bank's obligation under such agreement is contingent upon
the occurrence or nonoccurrence of any condition.
<PAGE> 2
(F) "Confirmation of Advance" means a written or machine-readable
electronic transmission issued by the Bank from time to time
confirming an Advance.
(G) "Eligible Collateral" means Collateral, other than Capital
Stock, which (1) qualifies as security for Advances under the terms
and conditions of the Act and the Regulations and satisfies the
requirements that may be established by the Bank form time to time and
(2) is owned by the Institution free and clear of any liens,
encumbrances or other interests other than the Interest of the Bank
hereunder.
(H) "Indebtedness" means all indebtedness of the Institution to
the Bank, whether now outstanding or hereafter incurred, including all
Advances and any other sums owned by the Institution to the Bank
pursuant to any provision hereof, and all other obligations and
liabilities of the Institution, to the Bank.
(I) "Landing Value" means the value that the Bank shall from time
to time, in its sole discretion, ascribe to the various types of
Collateral.
(J) "Mortgage Collateral" means that part of Perfected Collateral
that is a mortgage or deed of trust on real property and any note,
bond or other instrument evidencing any loan secured thereby and any
endorsement or assignment thereof to the Institution and all ancillary
security agreements, policies and certificates of insurance or
guarantees, evidences of recordation, applications, underwriting
materials, appraisals, approvals, permits, notices, opinions of
counsel, loan servicing data and all other electronically stored and
written records or materials relating to such loans.
(K) "Perfected Collateral" means all Collateral, including without
limitation Eligible Collateral in which the Bank has attempted in good
faith to perfect its security interest by giving constructive notice
to third parties through taking possession of the Collateral, filing a
financing statement describing the Collateral, of otherwise, and all
deposit accounts maintained by the Institution with the Bank.
(L) "Regulations" means the regulations of the Federal Housing
Finance Board or its successor, as amended.
(M) "Required Collateral Amount" means the aggregate dollar amount
that he Bank may specify from time to time with respect to each
Advance and any other obligation or liability of the Institution to
the Bank. The Bank may increase or decrease the Required Collateral
Amount at any time.
(N) "Swap Transaction" or "Swap Transactions" means any and all
interest rate swaps, interest rate caps, floors or cellars, currency
exchange transactions or similar transactions entered into between the
Bank and the Institution.
2
<PAGE> 3
ARTICLE II
Advances
Section 2.1 Applications and Procedures for Obtaining Advances
Periodically, the Institution may apply to the Bank for Advances in accordance
with the procedures established by the Bank from time to time. Each Advance
shall be evidenced by a Confirmation of Advance or other writing issued by the
Bank. Unless otherwise agreed to in writing by the Bank, each Advance shall be
made by crediting a demand deposit account of the Institution with the Bank.
Section 2.2 Estoppel
Failure of the Institution to deliver written notice to the Bank specifying any
disputed term or condition of an Advance within seven (7) business days after
the Bank mails by first-class a Confirmation of Advance to the Institution
shall constitute the agreement and acknowledgment by the Institution that the
terms and conditions of the Advance are valid and are those that the
Institution requested and by which the Institution agreed to be bound. The
Institution shall thereafter be estopped from asserting any claim or defense
with respect to the repayment of such Advance and all interest, fees and other
charges thereon or in connection therewith.
Section 2.3 Right of Bank to Make Advances with Respect to Outstanding
Commitments
(A) In the event that one or more Commitments are outstanding at
the time of an Event of Default, as such term is defined in Section
4.1, the Bank may at its option make an Advance by crediting a special
account of the Institution with the Bank in an amount equal to the
outstanding Commitments. The Bank shall have a first priority
perfected security interest in any such special account, and amounts
credited to such special account may not be withdrawn by the
Institution for so long as there shall be outstanding Commitments.
The funds in such special account shall be utilized by the Bank for
the purpose of satisfying the Bank's obligations under the
Commitments. When all such obligations have expired or been
satisfied, the Bank shall disburse the balance, if any, in such
account first to the satisfaction of any amounts then due and owing by
the Institution to the Bank and then to the Institution or its
successors in interest. Advances made pursuant to this section shall
be payable on demand and shall bear interest from the date the same
shall be made until paid at the rate in effect and being charged by
the Bank from time to time on the Line of Credit program then being
offered by the Bank.
(B) The Bank reserves the right to cancel any unfunded portion of
a Commitment at any time an Event of Default shall have occurred or
exist. In the event of cancellation, all or part of the commitment
fee will be refunded. The amount refunded shall be in equal
proportion to the number of days remaining in the commitment period on
the date of such cancellation.
Section 2.4 Interest
The Institution agrees to pay interest on each Advance at the rate per annum
provided in the Confirmation and Advance pertaining thereto in the Bank's
Credit Policy for such type of Advance and as otherwise specified herein.
Accrued interest on such Advance shall be due and payable at the time specified
in the Bank's Credit Policy, Confirmation of Advance or as otherwise specified
3
<PAGE> 4
in writing by the Bank. Such payment shall be made in the form of immediately
available funds at the office of the Bank in Topeka, Kansas, or at such other
place as the Bank or its successor or permitted assignee may from time to time
appoint in writing.
ARTICLE III
Security Agreement
Section 3.1 Blanket Pledge; Required Collateral Amount
(A) As security for all present and future Indebtedness, the
Institution hereby assigns, transfers and pledges to the Bank, and
grants to the Bank a security interest in, all property now or
thereafter owned by the Institution including without limitation the
following types of property: (1) Capital Stock; (2) instruments
(including without limitation any note or other instrument evidencing
a debt and any mortgage, deed of trust, title or document securing
it); (3) securities including without limitation mortgage-backed
securities, share certificates or other participation interests in any
securities trust and mortgage loan participation certificates; (4)
chattel paper; (5) choices in action; (6) general intangibles; (7)
certificates of deposit; (8) deposit accounts maintained by the
Institution with the Bank; (9) the proceeds of any of the foregoing.
(B) The Institution shall at all times maintain an amount of
Eligible Collateral that has a Lending Value at least equal to the
Required Collateral Amount applicable to the Institution.
(C) While the Institution may, except as provided below, retain
the documents evidencing any Collateral it has assigned to the Bank,
it is specifically understood and agreed that the holding of such
documents is for the benefit and subject to the direction and control
of the Bank.
(D) The Bank grants to the Institution the right to use, commingle
and dispose of the Collateral and to collect, compromise and dispose
of the proceeds of the Collateral without being required to account
for the proceeds or account for the replacement of the Collateral, and
any transfer of such Collateral shall take free and clear of any
security or other interest granted to the Bank in Section 3.1 hereof,
subject only to the Institution's obligation to maintain the
Collateral as provided in Section 3.1(B); provided, however, that this
section shall not apply in Perfected Collateral.
Section 3.2 Perfection of Security Interest
(A) Immediately upon the Bank's written request, or immediately at
any time that the Institution becomes subject to any mandatory
Collateral perfection requirements that may be established in writing
by the Bank, and in other case from time to time thereafter, the
Institution shall take all actions as the Bank shall deem necessary or
appropriate to perfect the Bank's security interest in the Eligible
Collateral selected by the Institution. At a minimum, the Institution
shall provide the Bank as perfected security interest in an amount of
Eligible Collateral that has a Lending Value at all times at least
equal to the Required Collateral Amount applicable to the Institution.
4
<PAGE> 5
(B) The Institution shall not assign, pledge, transfer, create any
security interest in, sell or otherwise dispose of any Perfected
Collateral without the written consent of the Bank.
(C) The Institution agrees to pay to the Bank upon demand such
fees and charges as may be assessed by the Bank to cover overhead and
other costs relating to the perfection of the Bank's security interest
in the Perfected Collateral (including without limitation the receipt,
holding and redelivery of Collateral and to reimburse the Bank upon
request for all recording fees) and other reasonable expenses,
disbursements and advances incurred or made by the Bank in connection
therewith (including the reasonable compensation and the expense and
disbursements of any bailee that may be appointed by the Bank
hereunder and the agents and legal counsel of the Bank and of such
bailee). Any sums owed to the Bank under this section may be
collected by the Bank, at its option, by debting a demand deposit
account of the Institution with the Bank.
(D) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(E) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(F) The Bank may take such steps as it deems necessary to protect
its security position with respect to outstanding Advances, including
requiring the pledging and/or perfection of additional collateral
whether or not such additional collateral is Eligible Collateral.
Section 3.3 Institution's Representations and Warranties Concerning
Perfected Collateral
(A) The Institution owns and has title to the Perfected Collateral
and has the right and authority to grant a security interest to the
Bank in the Perfected Collateral and to subject all of the Perfected
Collateral to this Agreement.
(B) The information given from time to time by the Institution to
the Bank as to each item of Perfected Collateral is true, accurate and
complete in all material respects.
(C) All the Perfected Collateral that the Institution represents
to be Eligible Collateral meets the standards and requirements with
respect thereto from time to time established by the Bank, the Act and
the Regulations.
5
<PAGE> 6
(D) The Institution has not conveyed or otherwise created, and
there does not otherwise exist, any participation Interest or other
direct, indirect, legal or beneficial interest in any Perfected
Collateral in favor of anyone or any entity other than the Bank and
the Institution except as specifically communicated in writing to the
Bank.
(E) All signatories to any and all documents that constitute any
Perfected Collateral are and will be bound as they appear to be by
their signatures and have the requisite authority and capacity
(corporate or other) to execute such documents.
(F) Except as may be approved in writing by the Bank, no account
debtor or other obligor owing any obligation to the Institution with
respect to any item of Perfected Collateral has or will have any
defense, offering claims or other conditions affecting the right of
the Institution or the Bank to enforce the documents constituting any
such Perfected Collateral in accordance with the express terms of such
documents, and no defaults (or conditions that, with the passage of
time or the giving of notice or both, would constitute a default)
exist or will exist under any such documents.
(G) The real property (including any interest therein) that is the
subject of and/or included in the Perfected Collateral contains no
toxic or hazardous wastes or other toxic or hazardous substance the
presence of which would subject the Bank to any liability under
applicable state or federal law or local ordinance. The Institution
hereby agrees to indemnify and hold the Bank harmless against all
costs, claims, expenses, damages and liabilities resulting in any way
from the presence of toxic or hazardous wastes or substances on any
real property (including any interest therein) that is subject to or
included in any Perfected Collateral.
Section 3.4 Release of Collateral
Upon receipt by the Bank of a written request from the Institution asking for
the release of any Perfected Collateral, the Bank shall promptly release to the
Institution, at the Institution's expense, the Perfected Collateral, specified
in said written request. Notwithstanding anything to the contrary herein,
while an Event of Default hereunder shall have occurred and be continuing, or
at any time that the Bank's records indicate that such redelivery would reduce
the Lending Value of the Institution's Perfected Collateral below the Required
Collateral Amount, or at any time that the Bank reasonably and in good faith
deems itself insecure, the Bank may release a request for release.
Section 3.5 Reports, Collateral, Audits and Access
(A) The Institution shall provide the Bank with written periodic
reports containing such information on the Collateral as the Bank
shall require from time to time, including listings of mortgages and
securities, unpaid principal balances thereof and certificates
concerning the status of payments of mortgages and of taxes and
insurance on property securing mortgages. The Institution shall give
the Bank access at all reasonable times to Collateral in the
possession of the Institution and to the books and records of account
of the Institution relating to the Collateral for the purpose of
permitting the Bank to examine, verify or reconcile the Collateral and
the reports of the Institution to the Bank thereon.
6
<PAGE> 7
(B) All Collateral and the satisfaction by the Institution of the
Required Collateral Amount shall be subject to audit and verification
by or on behalf of the Bank. Such audits and verifications may occur
without notice during the Institution's normal business hours or upon
reasonable notice at such other time as the bank may reasonably
request. The Institution shall provide access to, and shall make
adequate working facilities available to, the representative or agents
of the Bank for purposes of such audits and verifications. The
Institution agrees to pay to the Bank such reasonable fees and charges
as may be accrued by the Bank to cover overhead and other costs
relating to such audit and verifications.
(C) If the Lending Value of the Eligible Collateral owed by the
Institution shall at any time fall below the Required Collateral
Amount, the Institution shall immediately notify the Bank.
(D) The Institution shall furnish to the Bank, as often a the Bank
deems necessary, an audit report prepared by an external independent
auditor of the Institution in accordance with generally accepted
auditing standards and in such form as the Bank may require certifying
the accuracy or any or all information required to be given to the
Bank by the Institution under or with respect to this Agreement.
(E) The Institution shall also furnish to the Bank, on an annual
basis, copies of its audited financial statement and management
letters.
Section 3.6 Additional Documentation
The Institution shall make execute and deliver to the Bank such assignments,
listings, powers, financing statement or other instruments and documents with
respect to the Collateral and the Bank's security interest therein as the Bank
may require.
Section 3.7 Bank's Responsibility as to Collateral
In the event that the Bank shall take possession of my Collateral hereunder,
the Bank's duty as to such Collateral shall be solely to sue reasonable care in
the custody and preservation of the Collateral in its possession. This duty
shall not require the Bank to take any steps necessary to preserve rights
against prior parties or the duty to send notices, perform services or take any
action in connection with the management of the Collateral. The Bank shall not
have any responsibility or liability for the form, sufficiency, correctness,
genuineness or legal effect of any instrument or document constituting a part
of the Collateral, or any signature thereon or the description or
misdescription, or value of property represented or purported to be represented
by any such document or instrument. The Institution shall make and maintain
copies or microfilm of all Collateral delivered to the Bank. The Institution
agrees that any and all Collateral may be removed by the Bank from the state or
location where situated and may thereafter be dealt with by the Bank as
provided in this Agreement.
3.8 Bank's Rights as to Collateral Power of Attorney
At any time and at the expense of the Institution, the Bank may in its
discretion, before or after the occurrence of any Event of Default, in its own
name or in the name of its nominee or of the Institution, do any or all things
and take any and all actions that are pertinent to the protection of the Bank's
interest hereunder and, if such actions are subject to the laws of a state, are
lawful under the laws of the State of Kansas, including the following:
7
<PAGE> 8
(A) Terminate any consent given hereunder;
(B) Notify obligors on any Collateral to make payment thereof
directly to the Bank;
(C) Endorse any Collateral that is in the Institution's name or
that has been endorsed by others to the Institution's name;
(D) Enter into any extensions, compromise, settlement or other
agreement relating to or affecting any Collateral;
(E) Take any action the Institution is required to take or that is
otherwise necessary to: (1) sign and record a financing statement or
otherwise perfect a security interest in any or all of the Collateral;
or (2) to obtain, preserve, protect, enforce or collect the
Collateral;
(F) Take control of any funds or other proceeds generated by or
arising from the Collateral and use the same to reduce Indebtedness as
it becomes due; and
(G) Cause the Collateral to be transferred to the Bank's name or
the name of its nominee.
The Institution hereby appoints the Bank as its true and lawful attorney, for
and on behalf of the Institution and in its name, place and stead, to prepare,
execute and record endorsements and assignments to the Bank of all or any Item
of Collateral (including the Indemnification and listing by exhibit prepared by
the Bank or otherwise, of mortgage loans constituting such Collateral) giving
or granting to the Bank as such attorney, full power and authority to do or
perform every lawful act necessary or proper in connection therewith as fully
as the Institution could or might do. The Institution hereby ratifies and
confirms all that the Bank shall lawfully do or cause to be done by virtue of
this special power of attorney. This special power of attorney is granted for
a period commencing on the date hereof and continuing until the discharge of
all Indebtedness and all obligations of the Institution hereunder regardless of
any default by the Institution, is coupled with ain interest and is irrevocable
for the period granted. As of the Institution's true and lawful
attorney-in-fact, the Bank shall have no responsibility to take any steps
necessary to preserve rights against prior parties or the duty to send notices,
perform services or take any action in connection with the management of the
Collateral. The Bank shall not have any responsibility or liability for the
form, sufficiency, correctness, genuineness or legal effect of any instrument
or document constituting a part of the Collateral, or any signature thereon or
the description or misdescription or value of property represented or purported
to be represented, by any such document or instrument.
Section 3.9 Subordination of Other Loans or Collateral
The Institution hereby agrees that all mortgage notes that are part of the
Mortgage Collateral and any notes secured by personal property (personalty
notes) that become part of the Perfected Collateral shall have priority in
right and remedy over any claims, however evidenced, for other loans owed to
the Institution, whether made before or after the date of such mortgage notes
or personalty notes, that are secured by the mortgages or security agreements
accruing such mortgage notes or personalty notes but are not part of the
Collateral, and shall be satisfied out of the property covered by such mortgage
or security agreements before recourse to such property may be obtained for the
repayment of such other loans. To this end, the Institution hereby
subordinates the lien of such mortgage and security agreements with respect to
such other loans
8
<PAGE> 9
to the lien of such mortgages and security agreements with respect to such
mortgage and personalty notes. he Institution further agrees to retain
possession of any promissory notes evidencing such other loans and not to
pledge, assign or transfer the same, or any interest therein, except that the
same may be pledged to the Bank as part of the Collateral.
Section 3.10 Application of Payments
The Bank may, in its sole discretion, apply any payments by or recovery from
the Institution, which are received by the Bank without any designation from
the Institution (at the time of such payment or recovery) as to the intended
application thereof, at such time and in such manner and order of priority as
the Bank shall deem fit.
Section 3.11 Covenants as to Mortgage Collateral
The Institution covenants and agrees as to any Mortgage Collateral:
(A) The Institution shall cause its borrowers to pay when due (or
shall pay if such borrowers are unable or cannot be made to pay) all
taxes and assignments on the real property and improvements that are
subject to the lien of the Mortgage Collateral. Unless otherwise
agreed by the Institution and the Bank, the Institution shall perform
its obligations as lender, secured party or otherwise under all loan
or other agreements pertaining to the Mortgage Collateral.
(B) In the event that the Institution discovers, through audit or
otherwise, exceptions to statements or representations previously made
to the Bank with respect to any of the Mortgage Collateral or any real
property or improvements covered by the lien thereof or any other
matter covered by this Agreement, the Institution shall immediately
notify the Bank thereof in writing. The Institution shall also
immediately notify the Bank in writing of any legal process levied
against any such Mortgage Collateral or any other event that affects
the value of such Mortgage Collateral or any of the rights, interests
or remedies of the Bank in relation thereto.
(C) The Institution agrees to take any action necessary to
preserve rights against any prior or other parties (including without
limitation endorsers) on and any guarantors or sureties with respect
to any and all of the chattel paper, documents or instruments
constituting all or any part of the Mortgage Collateral and to
preserve redemption, conversion, warrant, preemptive or other rights
concerning all or any part of such Mortgage Collateral. The Bank may
take any action that in his reasonable judgment will assist in the
preservation of such rights. The Bank's failure to act hereunder
shall not relieve the Institution of the Institution's duties under
this section or in any way impair or discharge any Indebtedness or
result in any liability to the Institution on the part of the Bank.
The Bank shall have no duty to take any septs necessary to preserve
the rights of the Institution against prior or other parties or to
initiate any action to protect against the possibility of a decline in
the market value or other impairment of such Mortgage Collateral.
Furthermore, the Bank shall not be obligated to take any action with
respect to such Mortgage Collateral requested by the Institution
unless such request is made in writing, and the Bank determines, in
its reasonable discretion, that the requested action would not
jeopardize the value of such Mortgage Collateral as security for
Indebtedness or otherwise adversely affect any right or interest of
the Bank.
9
<PAGE> 10
(D) The Institution, if directed to do so by the Bank, shall
update and provide to the Bank schedules showing, with respect to any
Mortgage Collateral specified by the Bank, the results of any
reappraisal, any significant changes in leasing (affecting more than
20 percent of the rentable area), and such other information as the
Bank may prescribe. The Institution shall also immediately identify
to the Bank any Mortgage Collateral classified as nonperforming,
nonaccrual, scheduled or criticized, substandard, loss or doubtful and
the value thereof. Unless otherwise requested by the Bank, the
Institution may make the foregoing classifications according to its
own loan criteria.
(E) The Institution hereby agrees to save, hold harmless,
indemnify and defend the Bank against any and all damages,
liabilities, loans, claims, causes of action and expenses (including
attorneys' fees and expenses of the Bank's counsel) that the Bank may
directly or indirectly suffer or incur as a result of consequences of
any claim by any person arising out of or connected with the use or
creation of any Mortgage Collateral or any real properties subject to
the lien thereof. The aforesaid claims include any arising with
respect to any loan transaction involving the Institution or any
default or wrongdoing by the Institution with respect to any third
party, including any nonperformance by the Institution of any of its
obligations as a lender or otherwise in connection with any such
Mortgage Collateral. Under no circumstances shall the Bank be
obligated to assume, perform or fulfill any obligation of the
Institution as a lender or otherwise.
Section 3.12 Right to Cure Defaults
In the event that the Institution fails to (1) procure or maintain insurance,
or to maintain or cause the maintenance of any real property or improvements
covered by the lien of any Mortgage Collateral, or to pay or procure the
payment of any fees, assessments, charges or taxes arising with respect to any
real property or improvements covered by the lien of such Mortgage Collateral,
or to perform any other obligation to the Bank, all as herein specified, or (2)
make any other advances or take any other actions necessary or advisable to
preserve or protect any of such Mortgage Collateral, the value thereof, or the
Bank's security interest therein, the Bank shall have the right to effect such
issuance, or cause such real property or improvements to be maintained, or to
pay such fees, assessments, charges or taxes, or perform such obligations, or
make such advances or take such actions, as the case may be. In any such
event, the Institution agrees to pay the cost thereof immediately upon demand
by the Bank. All liabilities owing by the Institution to the Bank under this
section shall bear interest from the date when first paid by the Bank at the
rate in effect and being charged by the Bank from time to time on the Line of
Credit program then being offered by the Bank.
ARTICLE IV
Default; Remedies
Section 4.1 Events of Default; Acceleration
Upon the occurrence of and during the continuation of any of the following
events or conditions of default (Event of Default), the Bank may as its option
and notwithstanding any other provision hereof, by a notice to the Institution,
declare all Indebtedness including, but not limited to, any accrued interest
and any prepayment charges that are provided for payment of an Advance before
the date(s) scheduled for repayment, to be immediately due and payable, without
presentment, demand, protest or any further notices:
10
<PAGE> 11
(A) Failure of the Institution to pay any interest, principal or
other amounts owed with respect to any Advance when due; or
(B) Failure of the Institution to perform any promise or
obligation or to satisfy any condition or liability contained herein,
in any Confirmation of Advance, or in any other agreement to which the
Institution and the Bank are parties; or
(C) Credible evidence coming to the attention of the Bank that any
representations, statements or warranties made or furnished in any
manner to the Bank by or on behalf of the Institution in connection
with any Advance, and Commitment, and specification of Eligible
Collateral or any certification of Lending Value is false, misleading
or incomplete in any material respect; or
(D) Failure of the Institution to maintain adequate Eligible
Collateral as required by the Bank from time to time; or
(E) The issuance of any tax, levy, seizure, attachment,
garnishment, levy of execution of other process with respect to the
Collateral; or
(F) Any suspension of payment by the Institution to any creditor
of sums due or the occurrence of any event that results (or which with
the giving of notice or passage of time or both will result) in
acceleration of the maturity of any indebtedness of the Institution to
others under any security agreement, indenture, loan agreement or
other undertaking; or
(G) Appointment of a trustee, conservator, receiver, liquidator,
custodian or similar official for the Institution of any subsidiary
(direct or indirect) of the Institution or the Institution's property,
notice of a judgment, decree or administrative decision adjudicating
the Institution or any subsidiary of the Institution insolvent or
bankrupt or an assignment by the Institution or any subsidiary of the
Institution for the benefit of creditors or the appointment of a
trustee, conservator, receiver, liquidator, custodian or similar
official for any parent (direct or indirect) of the Institution or the
filing of a petition or application by any person for the appointment
of any such official for any such parent of the Institution or the
transfer of any of the Institution's assets or liabilities (whether by
purchase and assumption by any third party, merger or otherwise) in
connection with or as a result of any event heretofore described in
this section; or
(H) Sale by the Institution of all or a material part of the
Institution's assets or the taking of any other action by the
Institution to liquidate or dissolve; or
(I) Termination of the Institution's membership in the Bank or the
Institution's ceasing to be a type of financial institution that is
eligible under the Act to become a member of the Bank; or
(J) Merger, consolidation or other combination of the Institution
with an entity that is not a member of the Bank if the nonmember
entity is the surviving entity in such transaction; or
11
<PAGE> 12
(K) If an Advance is made pursuant to Section 11(g)(4) of the Act,
and if the creditor liabilities of the Institution, excepting
liabilities to the Bank, exceed or are incurred in any manner to an
amount exceeding five (5) percent of the Institution's net assets; or
(L) The Bank reasonably and in good faith determines that a
material change has occurred in the financial condition of the
Institution or is the Collateral from that disclosed previously to the
Bank; or
(M) The Bank reasonably and in good faith deems itself insecure
even though the Institution is not otherwise in default.
Section 4.2 Remedies
Upon the occurrence of any Event of Default, the Bank shall have all of the
rights and remedies provided by application law, which shall include, but not
be limited to, all of the remedies of a secured party under the Uniform
Commercial Code as in effect in the State of Kansas. In addition, the Bank may
take immediate possession of any of the Collateral or any part thereof wherever
the same may be found. The Bank may sell, assign and deliver the Collateral
or any party thereof to the public or private sale for such price as the Bank
deems appropriate without liability for any loss due to decrease in the market
value of the Collateral during the period held. The Bank shall have the right
to purchase all or part of the Collateral at such sale. If the Collateral
includes instruments or securities that will be redeemed by the issuer upon
surrender, or any accounts or deposits in the possession of the Bank, the Bank
may realize upon such Collateral without notice to the Institution. If any
notification of intended disposition of any of the Collateral is required by
applicable law, such notification shall be deemed reasonable and properly given
if mailed, postage prepaid, at least five (5) days before any such disposition
to the address of the Institution appearing on the records of the Bank. Upon
the occurrence of any Event of Default, the Bank may, in its sole discretion,
apply any payment by or recovery from the Institution or any sum realized from
the Collateral, at such time and in such manner and order of priority as the
Bank shall deem fit, irrespective of any manifestation of any contrary
intention or desire on the part of the Institution or the provisions of any
other agreement between the Bank and the Institution. The Institution agrees
that the Bank may exercise its right of setoff upon the occurrence of an Event
of Default in the same manner as if the Advances and Commitments were
unsecured. Notwithstanding any other provision hereof, upon the occurrence of
any Event of Default at any time when all or part of the obligations of the
Institution to the Bank hereunder shall be the subject of any guarantee by a
third party for the Bank's benefit and there shall be other outstanding
obligations of the Institution to the Bank that are not so guaranteed but that
are secured by the Collateral, then any sums realized from the Collateral, or
from any other Collateral pledged or furnished to the Bank by the Institution
under any other agreement, shall be applied first to the satisfaction of such
other nonguaranteed obligations and then to the Institution's guaranteed
obligations hereunder. The Institution agrees to pay all of the costs and
expenses of the Bank in the collection of the Indebtedness and enforcement and
preservation of the Bank's rights and remedies in case of default, including
without limitation, reasonably attorneys' fees. The Bank at its discretion may
apply any surplus after payment of Indebtedness, provisions for repayment to
the Bank of any amounts to be paid under outstanding Commitments and all costs
of collection and enforcement to third parties claiming a secondary security
interest in the Collateral, with any remaining surplus paid to the Institution.
The Institution shall be liable to the Bank for any deficiency remaining.
12
<PAGE> 13
Section 4.3 Payment of Prepayment Charges
Any prepayment fees or charges for which provision is made, whether under the
Confirmation of Advance or otherwise, with respect to any Advance shall be
payable at the time of any voluntary or involuntary payment of the principal of
such Advance prior to the originally scheduled maturity thereof. This shall
include, without limitation, payments that are made in connection with the
liquidation if the Institution or that become due as a result of an
acceleration by the Bank pursuant to Section 4.1; whether such payment is made
by the Institution, by a trustee, conservator, receiver, liquidator, custodian
or similar official, of or for the Institution, or by any successor to or any
assignee of the Institution. The Institution acknowledges and agrees that the
damages incurred by the Bank due to a prepayment of any Advance will be
difficult to ascertain at the time of such prepayment and, in lieu thereof, the
Institution and the Bank agree that the following constitutes a fair,
reasonable and good faith estimate of the damages suffered by the Bank in the
event of such prepayment and is therefore payable as a prepayment fee or
charge; the greater of (1) $100 or (2) the present value (using the current
Advance rate as the discount rate) of the difference between the scheduled
interest payments to be paid on an Advance through maturity and the interest
payments that would be collected on an Advance of the same principal amount and
remaining maturity as the Advance prepaid issued at the current rate on the day
of the prepayment.
Section 4.4 Default Rate
Any payment of principal or interest or any other sum due hereunder if not made
when due (whether at stated maturity, by acceleration or otherwise) shall bear
interest, to the maximum extent permitted by applicable law, at a rate per
annum for each day during the period commencing on the due date thereof until
such amount shall be paid in full equal to three percentage points above the
rate in effect and being charged by the Bank from time to time under the Line
of Credit program then being offered by the Bank.
Section 4.5 Curtain Provisions as to Sale of Collateral
In view of the possibility that federal and state securities and other laws may
impose certain restrictions on the method by which sale of the Collateral may
be effected, the Bank and the Institution agree that any sale of the Collateral
as a result of an Event of Default shall be deemed "commercially reasonable"
irrespective of whether the notice or manner of such sale contains provisions
or imposes, or is subject to, conditions or restrictions deemed appropriate to
comply with the Securities Act of 1933 or any other applicable federal or state
securities or other law. It is further agreed that from time to time the Bank
may attempt to sell the Collateral by means of private placement. In so doing,
the Bank may restrict the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for
distribution or otherwise impose restrictions deemed appropriate by the Bank
for the purpose of complying with the requirements of applicable securities
laws. The Bank may solicit offers to buy such Collateral, for cash or
otherwise, from a limited number of investors deemed by the Bank to be
responsible parties who might be interested in purchasing such Collateral. If
the Bank solicits offers from at least three such investors, then the
acceptance by the Bank of the highest offer obtained therefrom (whether or not
these offers are obtained) shall be deemed to be a commercially reasonable
method of disposing of the Collateral.
13
<PAGE> 14
ARTICLE V
Miscellaneous
Section 5.1 General Representations and Warranties by Institution
The Institution hereby represents and warrants that as of the date hereof and
as of each date on which there shall be an outstanding Advance of Commitment:
(A) The Institution is not now, and neither the execution of nor
the performance of any of the transactions or obligations of
the Institution under this Agreement shall, with the passage
of time, the giving of notice, or otherwise, cause the
Institution to be: (1) in violation of its charter or articles
of incorporation, by-laws, the Act or the Regulations any
other law or administrative regulation, any court decree or
any order of a regulatory authority or (2) in default under or
in breach of any indenture, contract or other instrument or
agreement to which the Institution is a party or by which the
Institution or any of its property may be bound.
(B) The Institution has full corporate power and authority and has
received all corporate and governmental authorizations and
approvals as may be required to enter into and perform its
obligations under this Agreement and to borrow each Advance.
(C) The information given by the Institution in any document
provided, or in any oral statement made, in connection with an
application or request for an Advance or a Commitment, a
pledge, specification or delivery of Collateral, is true,
accurate and complete in all material respects.
Section 5.2 Good Faith; Liability of Bank
The Institution and the Bank shall have an obligation of good faith in the
performance and enforcement of every duty or right imposed or granted by this
Agreement, and any other actions or inactions taken or not taken with respect
to this Agreement. "Good Faith" shall mean honesty in fact (i.e., a subjective
standard rather than an objective standard). The Bank shall not be liable for
any costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by the Institution, except those costs, expenses,
damages, liabilities or claims arising out of the gross negligence or willful
misconduct of the Bank or any of its employees or duly appointed agents. In no
event shall the Bank be liable to the Institution or any third party for
special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action.
Section 5.3 Assignment of Indebtedness
The Institution hereby gives the Bank the full right, power and authority to
pledge or assign to any party all or part of the Indebtedness, together with
all or any part of the Collateral, as security of Consolidated Federal Home
Loan Bank Obligations issued pursuant to the provisions of the Act or for any
other purpose authorized by the Act, the Regulations or the Federal Housing
Finance Board. In the case of any such pledge or assignment, the Bank shall
have no further responsibility with respect to Collateral transferred to the
pledgee or assignee, and all references herein to "the
14
<PAGE> 15
Bank" shall be read to refer instead to the pledgee or assignee with respect to
such Collateral. The Institution may not voluntarily or involuntarily or by
operation of law or otherwise assign or transfer any of its rights or
obligations hereunder or with respect to any Advances or Commitments without
the express prior written consent of the Bank.
Section 5.4 Discretion of Bank to Grant or Deny Advances
Nothing contained herein or in any documents describing or setting forth the
Bank's Credit Policy or other policies shall be construed as an agreement or
commitment on the part of the Bank to grant Advances hereunder, or to enter
into any other transaction, the right and power of the Bank in its discretion
to either grant (with or without conditions) or deny any Advance or other
transaction requested hereunder being expressly reserved.
Section 5.5 Access to Bank Records
The Bank shall grant to all governmental regulatory agencies having
jurisdiction over the Institution, to the Institution's independent public
accounts (to be named by written notice delivered to the Bank) and to the
Institution's internal auditors the right at any reasonable time to examine and
audit the Institution's records in the Bank's possession, the right to request
directly from the Bank any reports, summaries or information of the Bank
relating to the Institution and the right to observe the processing of reports
or examine the Institution's documents at the Bank; provided, however, the
Bank's obligations hereunder shall not apply to the extent that the records,
reports, summaries, information or documents sought or requested are contained
in or derived from data not provided by the Bank to the Institution or the
Institution to the Bank pursuant to this Agreement.
Section 5.6 Amendment; Waivers
No modification, amendment or waiver of any provision of this Agreement or
consent to any departure therefrom shall be effective unless executed by the
party against whom such change is asserted and shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on the Institution in any case shall entitle the Institution to any other or
further notice or demand in the same, or similar or other circumstance. Any
forbearance, failure or delay by the Bank in exercising any right, power or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by the Bank of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of the
Bank shall continue in full force and effect until specifically waived by the
Bank in writing.
Section 5.7 Jurisdiction; Legal Fees
In any action or proceeding brought by the Bank or the Institution in order to
enforce any right or remedy under this Agreement, the Parties hereby consent
to, and agree that they will submit to, the jurisdiction of the United States
District Court for the District of Kansas, or if such action or proceeding may
not be brought in federal court, the jurisdiction of the District Court of the
County of Shawnee, State of Kansas, to the exclusion of all other courts. The
Institution agrees that if any action or proceeding is brought by the
Institution seeking to obtain any legal or equitable relief against the Bank
under or arising out of this Agreement or any transaction contemplated hereby,
and such relief is not granted by the final decision after any and all appeals
of a court of competent jurisdiction, the Institution will pay all attorneys'
fees and other costs incurred by the Bank in connection therewith. The
Institution agrees to reimburse the Bank for all costs and expenses
15
<PAGE> 16
(including reasonable fees and out-of-pocket expenses of counsel for the Bank)
incurred by the Bank in connection with the enforcement or preservation of the
Bank's rights under this Agreement including, but not limited to, its rights in
respect of any Collateral and the audit or possession thereof.
Section 5.8 Applicable Law; Severability
This Agreement and all Advances granted under this Agreement shall be governed
by the statutory and common law of the United States and, to the extent federal
law incorporates or defers to state law, the laws (exclusive of choice of law
provisions) of the State of Kansas. Notwithstanding the foregoing, the Uniform
Commercial Code as in effect in the State of Kansas shall be deemed applicable
to this Agreement and to any Advance hereunder. In the event that any portion
of this Agreement conflicts with applicable law, such conflict shall not affect
other provisions of this Agreement that can be given effect without the
conflicting provisions, and to this end the provisions of the Agreement are
declared to be severable.
Section 5.9 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the successors
and permitted assignees of the Institution and the Bank.
Section 5.10 Notices
Any notice, advice, request, consent or direction given, made or withdrawn
pursuant to this Agreement shall be in writing or by machine-readable
electronic transmission, and shall be deemed to have been duly given to and
received by a party hereto when it shall have been mailed to such party at its
addresses given below, if delivered by first-class mail or if delivered by hand
or by machine-readable electronic transmission, when actually received by such
party at its principal office.
Section 5.11 Entire Agreement
This Agreement embodies the entire agreement and understanding between the
parties hereto relating to the subject matter hereof and supersedes all prior
agreements between such parties that relate to such subject matter.
Notwithstanding the above, Advances made by the Bank to the Institution prior
to the execution of this Agreement shall continue to be governed by the terms
of the Confirmation of Advance pursuant to which such Advances were made, and
otherwise by the terms and conditions of this Agreement.
Section 5.12 Counterparts
This Agreement may be executed in one or more counterparts, all of which shall
constitute but one Agreement.
16
<PAGE> 17
IN WITNESS WHEREOF, the Institution and the Bank have caused this Agreement to
be signed in their names by their duly authorized officers as of the dates
listed below.
Institution:
Date: October 21, 1997 First State Bank
-----------------------------------
Name of Institution
P.O. Box 730
Kimball, Ne. 69145
-----------------------------------
Address
By: /s/ Michael J. Nelson
-----------------------------------
Authorized Signature
/s/ Michael J. Nelson, President
-----------------------------------
Typed Name and Title
Attest: /s/ Max W. Revell
Secretary
Federal Home Loan Bank of Topeka
2 Townsite Plaza
P.O. Box 176
Topeka, KS 66601-0176
Date: November 13, 1997 By: /s/ Robert L. Mackey
-------------------------------
Authorized Signature
/s/ Robert L. Mackey, SVP-Operations
------------------------------------
Typed Named and Title
Attest: /s/ Corporate Secretary
17
<PAGE> 18
Institution Acknowledgment and Notarization
State of Nebraska )
) ss:
County of Kimball )
On this 21st day of October, 1997, before me personally Michael J. Nelson came
to me known, who being by me duly sworn, did depose and state that he/she is
the President of said Institution; the Institution described in and which
executed the above instrument; that he/she knows the seal of said corporate
seal; that the seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the board of directors or other governing body of
said Institution and that said Board of Directors acknowledged the execution of
said instrument to be the voluntary act and deed of said Institution.
(Corporate Seal) /s/ Winifred Peterson
----------------------------------
Notary Public Signature
Nebraska
------------------------------------
Notary Public in and for the State of
My commission expires 2-25-2000
18
<PAGE> 1
[Federal Home Loan Bank of Topeka Letterhead] EXHIBIT 10.3
Advance, Pledge and Security Agreement
(Blanket Pledge)
This Advance, Pledge and Security Agreement (Agreement) is made as of March 31,
1997, between: The Federal Home Loan Bank of Topeka (Bank) and FirState Bank
(Institution), which has its principal office at 11210 Huron, Northglenn,
Colorado 80234.
WHEREAS, from time to time the Institution desires to apply for extensions of
credit from the Bank in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Bank requires that all existing indebtedness of the Institution to
the Bank and all extensions of credit by the Bank to the Institution pursuant
to this Agreement be secured pursuant to this Agreement, and the Institution is
willing to provide such security;
NOW, THEREFORE, the Institution and the Bank agree as follows:
ARTICLE I
Definitions
Section 1.1 Defined Terms
The following terms shall have the following meanings:
(A) "Act" means the Federal Home Loan Bank Act, as amended.
(B) "Advance" or "Advances" means any and all loans or other
extensions of credit, including all Commissions now or hereafter
granted by the Bank to, on behalf of or for the account of the
Institution, including all loans or extensions of credit by the Bank
to the Institution prior to the date hereof.
(C) "Capital Stock" means all of the capital stock of the Bank and
all payments that have been or hereafter are made on account of any
subscription for such capital stock and all unpaid dividends on such
capital stock.
(D) ""Collateral" means all property, including the proceeds
thereof previously assigned, transferred or pledged to the Bank by the
Institution as Collateral for Advances and all property assigned,
transferred or pledged to the Bank pursuant to Section 3.1 of the
Agreement or otherwise.
(E) "Commitment" or "Commitments" means any and all agreements
under which the Bank is obligated to make advances to the Institution
or payments on behalf of or for the account of the Institution,
including without limitation Swap Transactions, letters of credit,
firm commitments, guarantees or other arrangements intended to
facilitate transactions between the Institution and third parties (but
excluding any obligations that the Bank may now or hereafter have to
honor such as items or transfer orders under a depository or similar
agreement between the Institution and the Bank), and irrespective of
whether the Bank's obligation under such agreement is contingent upon
the occurrence or nonoccurrence of any condition.
<PAGE> 2
(F) "Confirmation of Advance" means a written or machine-readable
electronic transmission issued by the Bank from time to time
confirming an Advance.
(G) "Eligible Collateral" means Collateral, other than Capital
Stock, which (1) qualifies as security for Advances under the terms
and conditions of the Act and the Regulations and satisfies the
requirements that may be established by the Bank form time to time and
(2) is owned by the Institution free and clear of any liens,
encumbrances or other interests other than the Interest of the Bank
hereunder.
(H) "Indebtedness" means all indebtedness of the Institution to
the Bank, whether now outstanding or hereafter incurred, including all
Advances and any other sums owned by the Institution to the Bank
pursuant to any provision hereof, and all other obligations and
liabilities of the Institution, to the Bank.
(I) "Landing Value" means the value that the Bank shall from time
to time, in its sole discretion, ascribe to the various types of
Collateral.
(J) "Mortgage Collateral" means that part of Perfected Collateral
that is a mortgage or deed of trust on real property and any note,
bond or other instrument evidencing any loan secured thereby and any
endorsement or assignment thereof to the Institution and all ancillary
security agreements, policies and certificates of insurance or
guarantees, evidences of recordation, applications, underwriting
materials, appraisals, approvals, permits, notices, opinions of
counsel, loan servicing data and all other electronically stored and
written records or materials relating to such loans.
(K) "Perfected Collateral" means all Collateral, including without
limitation Eligible Collateral in which the Bank has attempted in good
faith to perfect its security interest by giving constructive notice
to third parties through taking possession of the Collateral, filing a
financing statement describing the Collateral, of otherwise, and all
deposit accounts maintained by the Institution with the Bank.
(L) "Regulations" means the regulations of the Federal Housing
Finance Board or its successor, as amended.
(M) "Required Collateral Amount" means the aggregate dollar amount
that he Bank may specify from time to time with respect to each
Advance and any other obligation or liability of the Institution to
the Bank. The Bank may increase or decrease the Required Collateral
Amount at any time.
(N) "Swap Transaction" or "Swap Transactions" means any and all
interest rate swaps, interest rate caps, floors or cellars, currency
exchange transactions or similar transactions entered into between the
Bank and the Institution.
2
<PAGE> 3
ARTICLE II
Advances
Section 2.1 Applications and Procedures for Obtaining Advances
Periodically, the Institution may apply to the Bank for Advances in accordance
with the procedures established by the Bank from time to time. Each Advance
shall be evidenced by a Confirmation of Advance or other writing issued by the
Bank. Unless otherwise agreed to in writing by the Bank, each Advance shall be
made by crediting a demand deposit account of the Institution with the Bank.
Section 2.2 Estoppel
Failure of the Institution to deliver written notice to the Bank specifying any
disputed term or condition of an Advance within seven (7) business days after
the Bank mails by first-class a Confirmation of Advance to the Institution
shall constitute the agreement and acknowledgment by the Institution that the
terms and conditions of the Advance are valid and are those that the
Institution requested and by which the Institution agreed to be bound. The
Institution shall thereafter be estopped from asserting any claim or defense
with respect to the repayment of such Advance and all interest, fees and other
charges thereon or in connection therewith.
Section 2.3 Right of Bank to Make Advances with Respect to Outstanding
Commitments
(A) In the event that one or more Commitments are outstanding at
the time of an Event of Default, as such term is defined in Section
4.1, the Bank may at its option make an Advance by crediting a special
account of the Institution with the Bank in an amount equal to the
outstanding Commitments. The Bank shall have a first priority
perfected security interest in any such special account, and amounts
credited to such special account may not be withdrawn by the
Institution for so long as there shall be outstanding Commitments.
The funds in such special account shall be utilized by the Bank for
the purpose of satisfying the Bank's obligations under the
Commitments. When all such obligations have expired or been
satisfied, the Bank shall disburse the balance, if any, in such
account first to the satisfaction of any amounts then due and owing by
the Institution to the Bank and then to the Institution or its
successors in interest. Advances made pursuant to this section shall
be payable on demand and shall bear interest from the date the same
shall be made until paid at the rate in effect and being charged by
the Bank from time to time on the Line of Credit program then being
offered by the Bank.
(B) The Bank reserves the right to cancel any unfunded portion of
a Commitment at any time an Event of Default shall have occurred or
exist. In the event of cancellation, all or part of the commitment
fee will be refunded. The amount refunded shall be in equal
proportion to the number of days remaining in the commitment period on
the date of such cancellation.
Section 2.4 Interest
The Institution agrees to pay interest on each Advance at the rate per annum
provided in the Confirmation and Advance pertaining thereto in the Bank's
Credit Policy for such type of Advance and as otherwise specified herein.
Accrued interest on such Advance shall be due and payable at the time specified
in the Bank's Credit Policy, Confirmation of Advance or as otherwise specified
3
<PAGE> 4
in writing by the Bank. Such payment shall be made in the form of immediately
available funds at the office of the Bank in Topeka, Kansas, or at such other
place as the Bank or its successor or permitted assignee may from time to time
appoint in writing.
ARTICLE III
Security Agreement
Section 3.1 Blanket Pledge; Required Collateral Amount
(A) As security for all present and future Indebtedness, the
Institution hereby assigns, transfers and pledges to the Bank, and
grants to the Bank a security interest in, all property now or
thereafter owned by the Institution including without limitation the
following types of property: (1) Capital Stock; (2) instruments
(including without limitation any note or other instrument evidencing
a debt and any mortgage, deed of trust, title or document securing
it); (3) securities including without limitation mortgage-backed
securities, share certificates or other participation interests in any
securities trust and mortgage loan participation certificates; (4)
chattel paper; (5) choices in action; (6) general intangibles; (7)
certificates of deposit; (8) deposit accounts maintained by the
Institution with the Bank; (9) the proceeds of any of the foregoing.
(B) The Institution shall at all times maintain an amount of
Eligible Collateral that has a Lending Value at least equal to the
Required Collateral Amount applicable to the Institution.
(C) While the Institution may, except as provided below, retain
the documents evidencing any Collateral it has assigned to the Bank,
it is specifically understood and agreed that the holding of such
documents is for the benefit and subject to the direction and control
of the Bank.
(D) The Bank grants to the Institution the right to use, commingle
and dispose of the Collateral and to collect, compromise and dispose
of the proceeds of the Collateral without being required to account
for the proceeds or account for the replacement of the Collateral, and
any transfer of such Collateral shall take free and clear of any
security or other interest granted to the Bank in Section 3.1 hereof,
subject only to the Institution's obligation to maintain the
Collateral as provided in Section 3.1(B); provided, however, that this
section shall not apply in Perfected Collateral.
Section 3.2 Perfection of Security Interest
(A) Immediately upon the Bank's written request, or immediately at
any time that the Institution becomes subject to any mandatory
Collateral perfection requirements that may be established in writing
by the Bank, and in other case from time to time thereafter, the
Institution shall take all actions as the Bank shall deem necessary or
appropriate to perfect the Bank's security interest in the Eligible
Collateral selected by the Institution. At a minimum, the Institution
shall provide the Bank as perfected security interest in an amount of
Eligible Collateral that has a Lending Value at all times at least
equal to the Required Collateral Amount applicable to the Institution.
4
<PAGE> 5
(B) The Institution shall not assign, pledge, transfer, create any
security interest in, sell or otherwise dispose of any Perfected
Collateral without the written consent of the Bank.
(C) The Institution agrees to pay to the Bank upon demand such
fees and charges as may be assessed by the Bank to cover overhead and
other costs relating to the perfection of the Bank's security interest
in the Perfected Collateral (including without limitation the receipt,
holding and redelivery of Collateral and to reimburse the Bank upon
request for all recording fees) and other reasonable expenses,
disbursements and advances incurred or made by the Bank in connection
therewith (including the reasonable compensation and the expense and
disbursements of any bailee that may be appointed by the Bank
hereunder and the agents and legal counsel of the Bank and of such
bailee). Any sums owed to the Bank under this section may be
collected by the Bank, at its option, by debting a demand deposit
account of the Institution with the Bank.
(D) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(E) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(F) The Bank may take such steps as it deems necessary to protect
its security position with respect to outstanding Advances, including
requiring the pledging and/or perfection of additional collateral
whether or not such additional collateral is Eligible Collateral.
Section 3.3 Institution's Representations and Warranties Concerning
Perfected Collateral
(A) The Institution owns and has title to the Perfected Collateral
and has the right and authority to grant a security interest to the
Bank in the Perfected Collateral and to subject all of the Perfected
Collateral to this Agreement.
(B) The information given from time to time by the Institution to
the Bank as to each item of Perfected Collateral is true, accurate and
complete in all material respects.
(C) All the Perfected Collateral that the Institution represents
to be Eligible Collateral meets the standards and requirements with
respect thereto from time to time established by the Bank, the Act and
the Regulations.
5
<PAGE> 6
(D) The Institution has not conveyed or otherwise created, and
there does not otherwise exist, any participation Interest or other
direct, indirect, legal or beneficial interest in any Perfected
Collateral in favor of anyone or any entity other than the Bank and
the Institution except as specifically communicated in writing to the
Bank.
(E) All signatories to any and all documents that constitute any
Perfected Collateral are and will be bound as they appear to be by
their signatures and have the requisite authority and capacity
(corporate or other) to execute such documents.
(F) Except as may be approved in writing by the Bank, no account
debtor or other obligor owing any obligation to the Institution with
respect to any item of Perfected Collateral has or will have any
defense, offering claims or other conditions affecting the right of
the Institution or the Bank to enforce the documents constituting any
such Perfected Collateral in accordance with the express terms of such
documents, and no defaults (or conditions that, with the passage of
time or the giving of notice or both, would constitute a default)
exist or will exist under any such documents.
(G) The real property (including any interest therein) that is the
subject of and/or included in the Perfected Collateral contains no
toxic or hazardous wastes or other toxic or hazardous substance the
presence of which would subject the Bank to any liability under
applicable state or federal law or local ordinance. The Institution
hereby agrees to indemnify and hold the Bank harmless against all
costs, claims, expenses, damages and liabilities resulting in any way
from the presence of toxic or hazardous wastes or substances on any
real property (including any interest therein) that is subject to or
included in any Perfected Collateral.
Section 3.4 Release of Collateral
Upon receipt by the Bank of a written request from the Institution asking for
the release of any Perfected Collateral, the Bank shall promptly release to the
Institution, at the Institution's expense, the Perfected Collateral, specified
in said written request. Notwithstanding anything to the contrary herein,
while an Event of Default hereunder shall have occurred and be continuing, or
at any time that the Bank's records indicate that such redelivery would reduce
the Lending Value of the Institution's Perfected Collateral below the Required
Collateral Amount, or at any time that the Bank reasonably and in good faith
deems itself insecure, the Bank may release a request for release.
Section 3.5 Reports, Collateral, Audits and Access
(A) The Institution shall provide the Bank with written periodic
reports containing such information on the Collateral as the Bank
shall require from time to time, including listings of mortgages and
securities, unpaid principal balances thereof and certificates
concerning the status of payments of mortgages and of taxes and
insurance on property securing mortgages. The Institution shall give
the Bank access at all reasonable times to Collateral in the
possession of the Institution and to the books and records of account
of the Institution relating to the Collateral for the purpose of
permitting the Bank to examine, verify or reconcile the Collateral and
the reports of the Institution to the Bank thereon.
6
<PAGE> 7
(B) All Collateral and the satisfaction by the Institution of the
Required Collateral Amount shall be subject to audit and verification
by or on behalf of the Bank. Such audits and verifications may occur
without notice during the Institution's normal business hours or upon
reasonable notice at such other time as the bank may reasonably
request. The Institution shall provide access to, and shall make
adequate working facilities available to, the representative or agents
of the Bank for purposes of such audits and verifications. The
Institution agrees to pay to the Bank such reasonable fees and charges
as may be accrued by the Bank to cover overhead and other costs
relating to such audit and verifications.
(C) If the Lending Value of the Eligible Collateral owed by the
Institution shall at any time fall below the Required Collateral
Amount, the Institution shall immediately notify the Bank.
(D) The Institution shall furnish to the Bank, as often a the Bank
deems necessary, an audit report prepared by an external independent
auditor of the Institution in accordance with generally accepted
auditing standards and in such form as the Bank may require certifying
the accuracy or any or all information required to be given to the
Bank by the Institution under or with respect to this Agreement.
(E) The Institution shall also furnish to the Bank, on an annual
basis, copies of its audited financial statement and management
letters.
Section 3.6 Additional Documentation
The Institution shall make execute and deliver to the Bank such assignments,
listings, powers, financing statement or other instruments and documents with
respect to the Collateral and the Bank's security interest therein as the Bank
may require.
Section 3.7 Bank's Responsibility as to Collateral
In the event that the Bank shall take possession of my Collateral hereunder,
the Bank's duty as to such Collateral shall be solely to sue reasonable care in
the custody and preservation of the Collateral in its possession. This duty
shall not require the Bank to take any steps necessary to preserve rights
against prior parties or the duty to send notices, perform services or take any
action in connection with the management of the Collateral. The Bank shall not
have any responsibility or liability for the form, sufficiency, correctness,
genuineness or legal effect of any instrument or document constituting a part
of the Collateral, or any signature thereon or the description or
misdescription, or value of property represented or purported to be represented
by any such document or instrument. The Institution shall make and maintain
copies or microfilm of all Collateral delivered to the Bank. The Institution
agrees that any and all Collateral may be removed by the Bank from the state or
location where situated and may thereafter be dealt with by the Bank as
provided in this Agreement.
3.8 Bank's Rights as to Collateral Power of Attorney
At any time and at the expense of the Institution, the Bank may in its
discretion, before or after the occurrence of any Event of Default, in its own
name or in the name of its nominee or of the Institution, do any or all things
and take any and all actions that are pertinent to the protection of the Bank's
interest hereunder and, if such actions are subject to the laws of a state, are
lawful under the laws of the State of Kansas, including the following:
7
<PAGE> 8
(A) Terminate any consent given hereunder;
(B) Notify obligors on any Collateral to make payment thereof
directly to the Bank;
(C) Endorse any Collateral that is in the Institution's name or
that has been endorsed by others to the Institution's name;
(D) Enter into any extensions, compromise, settlement or other
agreement relating to or affecting any Collateral;
(E) Take any action the Institution is required to take or that is
otherwise necessary to: (1) sign and record a financing statement or
otherwise perfect a security interest in any or all of the Collateral;
or (2) to obtain, preserve, protect, enforce or collect the
Collateral;
(F) Take control of any funds or other proceeds generated by or
arising from the Collateral and use the same to reduce Indebtedness as
it becomes due; and
(G) Cause the Collateral to be transferred to the Bank's name or
the name of its nominee.
The Institution hereby appoints the Bank as its true and lawful attorney, for
and on behalf of the Institution and in its name, place and stead, to prepare,
execute and record endorsements and assignments to the Bank of all or any Item
of Collateral (including the Indemnification and listing by exhibit prepared by
the Bank or otherwise, of mortgage loans constituting such Collateral) giving
or granting to the Bank as such attorney, full power and authority to do or
perform every lawful act necessary or proper in connection therewith as fully
as the Institution could or might do. The Institution hereby ratifies and
confirms all that the Bank shall lawfully do or cause to be done by virtue of
this special power of attorney. This special power of attorney is granted for
a period commencing on the date hereof and continuing until the discharge of
all Indebtedness and all obligations of the Institution hereunder regardless of
any default by the Institution, is coupled with ain interest and is irrevocable
for the period granted. As of the Institution's true and lawful
attorney-in-fact, the Bank shall have no responsibility to take any steps
necessary to preserve rights against prior parties or the duty to send notices,
perform services or take any action in connection with the management of the
Collateral. The Bank shall not have any responsibility or liability for the
form, sufficiency, correctness, genuineness or legal effect of any instrument
or document constituting a part of the Collateral, or any signature thereon or
the description or misdescription or value of property represented or purported
to be represented, by any such document or instrument.
Section 3.9 Subordination of Other Loans or Collateral
The Institution hereby agrees that all mortgage notes that are part of the
Mortgage Collateral and any notes secured by personal property (personalty
notes) that become part of the Perfected Collateral shall have priority in
right and remedy over any claims, however evidenced, for other loans owed to
the Institution, whether made before or after the date of such mortgage notes
or personalty notes, that are secured by the mortgages or security agreements
accruing such mortgage notes or personalty notes but are not part of the
Collateral, and shall be satisfied out of the property covered by such mortgage
or security agreements before recourse to such property may be obtained for the
repayment of such other loans. To this end, the Institution hereby
subordinates the lien of such mortgage and security agreements with respect to
such other loans
8
<PAGE> 9
to the lien of such mortgages and security agreements with respect to such
mortgage and personalty notes. he Institution further agrees to retain
possession of any promissory notes evidencing such other loans and not to
pledge, assign or transfer the same, or any interest therein, except that the
same may be pledged to the Bank as part of the Collateral.
Section 3.10 Application of Payments
The Bank may, in its sole discretion, apply any payments by or recovery from
the Institution, which are received by the Bank without any designation from
the Institution (at the time of such payment or recovery) as to the intended
application thereof, at such time and in such manner and order of priority as
the Bank shall deem fit.
Section 3.11 Covenants as to Mortgage Collateral
The Institution covenants and agrees as to any Mortgage Collateral:
(A) The Institution shall cause its borrowers to pay when due (or
shall pay if such borrowers are unable or cannot be made to pay) all
taxes and assignments on the real property and improvements that are
subject to the lien of the Mortgage Collateral. Unless otherwise
agreed by the Institution and the Bank, the Institution shall perform
its obligations as lender, secured party or otherwise under all loan
or other agreements pertaining to the Mortgage Collateral.
(B) In the event that the Institution discovers, through audit or
otherwise, exceptions to statements or representations previously made
to the Bank with respect to any of the Mortgage Collateral or any real
property or improvements covered by the lien thereof or any other
matter covered by this Agreement, the Institution shall immediately
notify the Bank thereof in writing. The Institution shall also
immediately notify the Bank in writing of any legal process levied
against any such Mortgage Collateral or any other event that affects
the value of such Mortgage Collateral or any of the rights, interests
or remedies of the Bank in relation thereto.
(C) The Institution agrees to take any action necessary to
preserve rights against any prior or other parties (including without
limitation endorsers) on and any guarantors or sureties with respect
to any and all of the chattel paper, documents or instruments
constituting all or any part of the Mortgage Collateral and to
preserve redemption, conversion, warrant, preemptive or other rights
concerning all or any part of such Mortgage Collateral. The Bank may
take any action that in his reasonable judgment will assist in the
preservation of such rights. The Bank's failure to act hereunder
shall not relieve the Institution of the Institution's duties under
this section or in any way impair or discharge any Indebtedness or
result in any liability to the Institution on the part of the Bank.
The Bank shall have no duty to take any septs necessary to preserve
the rights of the Institution against prior or other parties or to
initiate any action to protect against the possibility of a decline in
the market value or other impairment of such Mortgage Collateral.
Furthermore, the Bank shall not be obligated to take any action with
respect to such Mortgage Collateral requested by the Institution
unless such request is made in writing, and the Bank determines, in
its reasonable discretion, that the requested action would not
jeopardize the value of such Mortgage Collateral as security for
Indebtedness or otherwise adversely affect any right or interest of
the Bank.
9
<PAGE> 10
(D) The Institution, if directed to do so by the Bank, shall
update and provide to the Bank schedules showing, with respect to any
Mortgage Collateral specified by the Bank, the results of any
reappraisal, any significant changes in leasing (affecting more than
20 percent of the rentable area), and such other information as the
Bank may prescribe. The Institution shall also immediately identify
to the Bank any Mortgage Collateral classified as nonperforming,
nonaccrual, scheduled or criticized, substandard, loss or doubtful and
the value thereof. Unless otherwise requested by the Bank, the
Institution may make the foregoing classifications according to its
own loan criteria.
(E) The Institution hereby agrees to save, hold harmless,
indemnify and defend the Bank against any and all damages,
liabilities, loans, claims, causes of action and expenses (including
attorneys' fees and expenses of the Bank's counsel) that the Bank may
directly or indirectly suffer or incur as a result of consequences of
any claim by any person arising out of or connected with the use or
creation of any Mortgage Collateral or any real properties subject to
the lien thereof. The aforesaid claims include any arising with
respect to any loan transaction involving the Institution or any
default or wrongdoing by the Institution with respect to any third
party, including any nonperformance by the Institution of any of its
obligations as a lender or otherwise in connection with any such
Mortgage Collateral. Under no circumstances shall the Bank be
obligated to assume, perform or fulfill any obligation of the
Institution as a lender or otherwise.
Section 3.12 Right to Cure Defaults
In the event that the Institution fails to (1) procure or maintain insurance,
or to maintain or cause the maintenance of any real property or improvements
covered by the lien of any Mortgage Collateral, or to pay or procure the
payment of any fees, assessments, charges or taxes arising with respect to any
real property or improvements covered by the lien of such Mortgage Collateral,
or to perform any other obligation to the Bank, all as herein specified, or (2)
make any other advances or take any other actions necessary or advisable to
preserve or protect any of such Mortgage Collateral, the value thereof, or the
Bank's security interest therein, the Bank shall have the right to effect such
issuance, or cause such real property or improvements to be maintained, or to
pay such fees, assessments, charges or taxes, or perform such obligations, or
make such advances or take such actions, as the case may be. In any such
event, the Institution agrees to pay the cost thereof immediately upon demand
by the Bank. All liabilities owing by the Institution to the Bank under this
section shall bear interest from the date when first paid by the Bank at the
rate in effect and being charged by the Bank from time to time on the Line of
Credit program then being offered by the Bank.
ARTICLE IV
Default; Remedies
Section 4.1 Events of Default; Acceleration
Upon the occurrence of and during the continuation of any of the following
events or conditions of default (Event of Default), the Bank may as its option
and notwithstanding any other provision hereof, by a notice to the Institution,
declare all Indebtedness including, but not limited to, any accrued interest
and any prepayment charges that are provided for payment of an Advance before
the date(s) scheduled for repayment, to be immediately due and payable, without
presentment, demand, protest or any further notices:
10
<PAGE> 11
(A) Failure of the Institution to pay any interest, principal or
other amounts owed with respect to any Advance when due; or
(B) Failure of the Institution to perform any promise or
obligation or to satisfy any condition or liability contained herein,
in any Confirmation of Advance, or in any other agreement to which the
Institution and the Bank are parties; or
(C) Credible evidence coming to the attention of the Bank that any
representations, statements or warranties made or furnished in any
manner to the Bank by or on behalf of the Institution in connection
with any Advance, and Commitment, and specification of Eligible
Collateral or any certification of Lending Value is false, misleading
or incomplete in any material respect; or
(D) Failure of the Institution to maintain adequate Eligible
Collateral as required by the Bank from time to time; or
(E) The issuance of any tax, levy, seizure, attachment,
garnishment, levy of execution of other process with respect to the
Collateral; or
(F) Any suspension of payment by the Institution to any creditor
of sums due or the occurrence of any event that results (or which with
the giving of notice or passage of time or both will result) in
acceleration of the maturity of any indebtedness of the Institution to
others under any security agreement, indenture, loan agreement or
other undertaking; or
(G) Appointment of a trustee, conservator, receiver, liquidator,
custodian or similar official for the Institution of any subsidiary
(direct or indirect) of the Institution or the Institution's property,
notice of a judgment, decree or administrative decision adjudicating
the Institution or any subsidiary of the Institution insolvent or
bankrupt or an assignment by the Institution or any subsidiary of the
Institution for the benefit of creditors or the appointment of a
trustee, conservator, receiver, liquidator, custodian or similar
official for any parent (direct or indirect) of the Institution or the
filing of a petition or application by any person for the appointment
of any such official for any such parent of the Institution or the
transfer of any of the Institution's assets or liabilities (whether by
purchase and assumption by any third party, merger or otherwise) in
connection with or as a result of any event heretofore described in
this section; or
(H) Sale by the Institution of all or a material part of the
Institution's assets or the taking of any other action by the
Institution to liquidate or dissolve; or
(I) Termination of the Institution's membership in the Bank or the
Institution's ceasing to be a type of financial institution that is
eligible under the Act to become a member of the Bank; or
(J) Merger, consolidation or other combination of the Institution
with an entity that is not a member of the Bank if the nonmember
entity is the surviving entity in such transaction; or
11
<PAGE> 12
(K) If an Advance is made pursuant to Section 11(g)(4) of the Act,
and if the creditor liabilities of the Institution, excepting
liabilities to the Bank, exceed or are incurred in any manner to an
amount exceeding five (5) percent of the Institution's net assets; or
(L) The Bank reasonably and in good faith determines that a
material change has occurred in the financial condition of the
Institution or is the Collateral from that disclosed previously to the
Bank; or
(M) The Bank reasonably and in good faith deems itself insecure
even though the Institution is not otherwise in default.
Section 4.2 Remedies
Upon the occurrence of any Event of Default, the Bank shall have all of the
rights and remedies provided by application law, which shall include, but not
be limited to, all of the remedies of a secured party under the Uniform
Commercial Code as in effect in the State of Kansas. In addition, the Bank may
take immediate possession of any of the Collateral or any part thereof wherever
the same may be found. The Bank may sell, assign and deliver the Collateral
or any party thereof to the public or private sale for such price as the Bank
deems appropriate without liability for any loss due to decrease in the market
value of the Collateral during the period held. The Bank shall have the right
to purchase all or part of the Collateral at such sale. If the Collateral
includes instruments or securities that will be redeemed by the issuer upon
surrender, or any accounts or deposits in the possession of the Bank, the Bank
may realize upon such Collateral without notice to the Institution. If any
notification of intended disposition of any of the Collateral is required by
applicable law, such notification shall be deemed reasonable and properly given
if mailed, postage prepaid, at least five (5) days before any such disposition
to the address of the Institution appearing on the records of the Bank. Upon
the occurrence of any Event of Default, the Bank may, in its sole discretion,
apply any payment by or recovery from the Institution or any sum realized from
the Collateral, at such time and in such manner and order of priority as the
Bank shall deem fit, irrespective of any manifestation of any contrary
intention or desire on the part of the Institution or the provisions of any
other agreement between the Bank and the Institution. The Institution agrees
that the Bank may exercise its right of setoff upon the occurrence of an Event
of Default in the same manner as if the Advances and Commitments were
unsecured. Notwithstanding any other provision hereof, upon the occurrence of
any Event of Default at any time when all or part of the obligations of the
Institution to the Bank hereunder shall be the subject of any guarantee by a
third party for the Bank's benefit and there shall be other outstanding
obligations of the Institution to the Bank that are not so guaranteed but that
are secured by the Collateral, then any sums realized from the Collateral, or
from any other Collateral pledged or furnished to the Bank by the Institution
under any other agreement, shall be applied first to the satisfaction of such
other nonguaranteed obligations and then to the Institution's guaranteed
obligations hereunder. The Institution agrees to pay all of the costs and
expenses of the Bank in the collection of the Indebtedness and enforcement and
preservation of the Bank's rights and remedies in case of default, including
without limitation, reasonably attorneys' fees. The Bank at its discretion may
apply any surplus after payment of Indebtedness, provisions for repayment to
the Bank of any amounts to be paid under outstanding Commitments and all costs
of collection and enforcement to third parties claiming a secondary security
interest in the Collateral, with any remaining surplus paid to the Institution.
The Institution shall be liable to the Bank for any deficiency remaining.
12
<PAGE> 13
Section 4.3 Payment of Prepayment Charges
Any prepayment fees or charges for which provision is made, whether under the
Confirmation of Advance or otherwise, with respect to any Advance shall be
payable at the time of any voluntary or involuntary payment of the principal of
such Advance prior to the originally scheduled maturity thereof. This shall
include, without limitation, payments that are made in connection with the
liquidation if the Institution or that become due as a result of an
acceleration by the Bank pursuant to Section 4.1; whether such payment is made
by the Institution, by a trustee, conservator, receiver, liquidator, custodian
or similar official, of or for the Institution, or by any successor to or any
assignee of the Institution. The Institution acknowledges and agrees that the
damages incurred by the Bank due to a prepayment of any Advance will be
difficult to ascertain at the time of such prepayment and, in lieu thereof, the
Institution and the Bank agree that the following constitutes a fair,
reasonable and good faith estimate of the damages suffered by the Bank in the
event of such prepayment and is therefore payable as a prepayment fee or
charge; the greater of (1) $100 or (2) the present value (using the current
Advance rate as the discount rate) of the difference between the scheduled
interest payments to be paid on an Advance through maturity and the interest
payments that would be collected on an Advance of the same principal amount and
remaining maturity as the Advance prepaid issued at the current rate on the day
of the prepayment.
Section 4.4 Default Rate
Any payment of principal or interest or any other sum due hereunder if not made
when due (whether at stated maturity, by acceleration or otherwise) shall bear
interest, to the maximum extent permitted by applicable law, at a rate per
annum for each day during the period commencing on the due date thereof until
such amount shall be paid in full equal to three percentage points above the
rate in effect and being charged by the Bank from time to time under the Line
of Credit program then being offered by the Bank.
Section 4.5 Curtain Provisions as to Sale of Collateral
In view of the possibility that federal and state securities and other laws may
impose certain restrictions on the method by which sale of the Collateral may
be effected, the Bank and the Institution agree that any sale of the Collateral
as a result of an Event of Default shall be deemed "commercially reasonable"
irrespective of whether the notice or manner of such sale contains provisions
or imposes, or is subject to, conditions or restrictions deemed appropriate to
comply with the Securities Act of 1933 or any other applicable federal or state
securities or other law. It is further agreed that from time to time the Bank
may attempt to sell the Collateral by means of private placement. In so doing,
the Bank may restrict the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for
distribution or otherwise impose restrictions deemed appropriate by the Bank
for the purpose of complying with the requirements of applicable securities
laws. The Bank may solicit offers to buy such Collateral, for cash or
otherwise, from a limited number of investors deemed by the Bank to be
responsible parties who might be interested in purchasing such Collateral. If
the Bank solicits offers from at least three such investors, then the
acceptance by the Bank of the highest offer obtained therefrom (whether or not
these offers are obtained) shall be deemed to be a commercially reasonable
method of disposing of the Collateral.
13
<PAGE> 14
ARTICLE V
Miscellaneous
Section 5.1 General Representations and Warranties by Institution
The Institution hereby represents and warrants that as of the date hereof and
as of each date on which there shall be an outstanding Advance of Commitment:
(A) The Institution is not now, and neither the execution of nor
the performance of any of the transactions or obligations of
the Institution under this Agreement shall, with the passage
of time, the giving of notice, or otherwise, cause the
Institution to be: (1) in violation of its charter or articles
of incorporation, by-laws, the Act or the Regulations any
other law or administrative regulation, any court decree or
any order of a regulatory authority or (2) in default under or
in breach of any indenture, contract or other instrument or
agreement to which the Institution is a party or by which the
Institution or any of its property may be bound.
(B) The Institution has full corporate power and authority and has
received all corporate and governmental authorizations and
approvals as may be required to enter into and perform its
obligations under this Agreement and to borrow each Advance.
(C) The information given by the Institution in any document
provided, or in any oral statement made, in connection with an
application or request for an Advance or a Commitment, a
pledge, specification or delivery of Collateral, is true,
accurate and complete in all material respects.
Section 5.2 Good Faith; Liability of Bank
The Institution and the Bank shall have an obligation of good faith in the
performance and enforcement of every duty or right imposed or granted by this
Agreement, and any other actions or inactions taken or not taken with respect
to this Agreement. "Good Faith" shall mean honesty in fact (i.e., a subjective
standard rather than an objective standard). The Bank shall not be liable for
any costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by the Institution, except those costs, expenses,
damages, liabilities or claims arising out of the gross negligence or willful
misconduct of the Bank or any of its employees or duly appointed agents. In no
event shall the Bank be liable to the Institution or any third party for
special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action.
Section 5.3 Assignment of Indebtedness
The Institution hereby gives the Bank the full right, power and authority to
pledge or assign to any party all or part of the Indebtedness, together with
all or any part of the Collateral, as security of Consolidated Federal Home
Loan Bank Obligations issued pursuant to the provisions of the Act or for any
other purpose authorized by the Act, the Regulations or the Federal Housing
Finance Board. In the case of any such pledge or assignment, the Bank shall
have no further responsibility with respect to Collateral transferred to the
pledgee or assignee, and all references herein to "the
14
<PAGE> 15
Bank" shall be read to refer instead to the pledgee or assignee with respect to
such Collateral. The Institution may not voluntarily or involuntarily or by
operation of law or otherwise assign or transfer any of its rights or
obligations hereunder or with respect to any Advances or Commitments without
the express prior written consent of the Bank.
Section 5.4 Discretion of Bank to Grant or Deny Advances
Nothing contained herein or in any documents describing or setting forth the
Bank's Credit Policy or other policies shall be construed as an agreement or
commitment on the part of the Bank to grant Advances hereunder, or to enter
into any other transaction, the right and power of the Bank in its discretion
to either grant (with or without conditions) or deny any Advance or other
transaction requested hereunder being expressly reserved.
Section 5.5 Access to Bank Records
The Bank shall grant to all governmental regulatory agencies having
jurisdiction over the Institution, to the Institution's independent public
accounts (to be named by written notice delivered to the Bank) and to the
Institution's internal auditors the right at any reasonable time to examine and
audit the Institution's records in the Bank's possession, the right to request
directly from the Bank any reports, summaries or information of the Bank
relating to the Institution and the right to observe the processing of reports
or examine the Institution's documents at the Bank; provided, however, the
Bank's obligations hereunder shall not apply to the extent that the records,
reports, summaries, information or documents sought or requested are contained
in or derived from data not provided by the Bank to the Institution or the
Institution to the Bank pursuant to this Agreement.
Section 5.6 Amendment; Waivers
No modification, amendment or waiver of any provision of this Agreement or
consent to any departure therefrom shall be effective unless executed by the
party against whom such change is asserted and shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on the Institution in any case shall entitle the Institution to any other or
further notice or demand in the same, or similar or other circumstance. Any
forbearance, failure or delay by the Bank in exercising any right, power or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by the Bank of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of the
Bank shall continue in full force and effect until specifically waived by the
Bank in writing.
Section 5.7 Jurisdiction; Legal Fees
In any action or proceeding brought by the Bank or the Institution in order to
enforce any right or remedy under this Agreement, the Parties hereby consent
to, and agree that they will submit to, the jurisdiction of the United States
District Court for the District of Kansas, or if such action or proceeding may
not be brought in federal court, the jurisdiction of the District Court of the
County of Shawnee, State of Kansas, to the exclusion of all other courts. The
Institution agrees that if any action or proceeding is brought by the
Institution seeking to obtain any legal or equitable relief against the Bank
under or arising out of this Agreement or any transaction contemplated hereby,
and such relief is not granted by the final decision after any and all appeals
of a court of competent jurisdiction, the Institution will pay all attorneys'
fees and other costs incurred by the Bank in connection therewith. The
Institution agrees to reimburse the Bank for all costs and expenses
15
<PAGE> 16
(including reasonable fees and out-of-pocket expenses of counsel for the Bank)
incurred by the Bank in connection with the enforcement or preservation of the
Bank's rights under this Agreement including, but not limited to, its rights in
respect of any Collateral and the audit or possession thereof.
Section 5.8 Applicable Law; Severability
This Agreement and all Advances granted under this Agreement shall be governed
by the statutory and common law of the United States and, to the extent federal
law incorporates or defers to state law, the laws (exclusive of choice of law
provisions) of the State of Kansas. Notwithstanding the foregoing, the Uniform
Commercial Code as in effect in the State of Kansas shall be deemed applicable
to this Agreement and to any Advance hereunder. In the event that any portion
of this Agreement conflicts with applicable law, such conflict shall not affect
other provisions of this Agreement that can be given effect without the
conflicting provisions, and to this end the provisions of the Agreement are
declared to be severable.
Section 5.9 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the successors
and permitted assignees of the Institution and the Bank.
Section 5.10 Notices
Any notice, advice, request, consent or direction given, made or withdrawn
pursuant to this Agreement shall be in writing or by machine-readable
electronic transmission, and shall be deemed to have been duly given to and
received by a party hereto when it shall have been mailed to such party at its
addresses given below, if delivered by first-class mail or if delivered by hand
or by machine-readable electronic transmission, when actually received by such
party at its principal office.
Section 5.11 Entire Agreement
This Agreement embodies the entire agreement and understanding between the
parties hereto relating to the subject matter hereof and supersedes all prior
agreements between such parties that relate to such subject matter.
Notwithstanding the above, Advances made by the Bank to the Institution prior
to the execution of this Agreement shall continue to be governed by the terms
of the Confirmation of Advance pursuant to which such Advances were made, and
otherwise by the terms and conditions of this Agreement.
Section 5.12 Counterparts
This Agreement may be executed in one or more counterparts, all of which shall
constitute but one Agreement.
16
<PAGE> 17
IN WITNESS WHEREOF, the Institution and the Bank have caused this Agreement to
be signed in their names by their duly authorized officers as of the dates
listed below.
Institution:
Date: March 31, 1997 FirState Bank
--------------------------------------
Name of Institution
11210 Huron
--------------------------------------
Address
By: /s/ Brigitte M. Howard
----------------------------------
Authorized Signature
/s/ Brigitte M. Howard, SVP
--------------------------------------
Typed Name and Title
Attest: /s/ Janise S. Wiens
Secretary
Federal Home Loan Bank of Topeka
2 Townsite Plaza
P.O. Box 176
Topeka, KS 66601-0176
Date: April 16,1997 By: /s/ Roger L. Williams
----------------------------------
Authorized Signature
/s/ Roger L. Williams, SVP-Finance
----------------------------------
Typed Named and Title
Attest: /s/ Corporate Secretary
17
<PAGE> 18
Institution Acknowledgment and Notarization
State of Colorado )
) ss:
County of Adams )
On this 31st day of March 1997, before me personally Brigitte Howard came to me
known, who being by me duly sworn, did depose and state that he/she is the
Senior V.P. of said Institution; the Institution described in and which
executed the above instrument; that he/she knows the seal of said corporate
seal; that the seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the board of directors or other governing body of
said Institution and that said Board of Directors acknowledged the execution of
said instrument to be the voluntary act and deed of said Institution.
(Corporate Seal) /s/ Kathleen A. Grable
-----------------------------------
Notary Public Signature
Colorado
------------------------------------
Notary Public in and for the State of
My commission expires 4-26-98
18
<PAGE> 1
Exhibit 10.4
[FEDERAL HOME LOAN BANK OF TOPEKA LETTERHEAD]
Line of Credit Confirmation
Number: 49222
Expiration Date: 02/25/1999
$5,731,000.00
Institution: Firstate Bank of Colorado
Address: 11210 Huron Street Northglenn, Colorado 80234
The Federal Home Loan Bank of Topeka (Bank) hereby establishes a line of credit
for the above-named institution (Institution) in the amount indicated above and
commits to honor draws made from time to time by the Institution under this line
of credit in accordance with the terms and conditions specified in the line of
credit application.
Your current stock holdings will permit total borrowings of $9,414,000 from the
Bank. To increase your borrowing capability, Additional capital stock will need
to be purchased. The maximum amount outstanding under this line of credit at any
one time shall not exceed the amount indicated above.
This line of credit will expire on the date indicated above. All amounts
outstanding under this line of credit are due and payable on the expiration
date.
This line of credit replaces and cancels any prior line of credit issued to the
Institution, and all amounts outstanding under any prior line of credit are
hereby considered to be outstanding under this line of credit.
Federal Home Loan Bank of Topeka
2 Townsite Plaza
P.O. Box 176
Topeka, KS 66601-0176
By: /s/ Suzan Saville
----------------------
Dated: 02/24/1998 Suzan Saville
Credit Officer
<PAGE> 1
Exhibit 10.5
[WELLS FARGO LETTERHEAD]
Mr. Timothy Wiens
President
Firstate Bank of Colorado
11210 Huron St.
Northelenn, CO 80234
Dear Mr. Wiens:
We are pleased to inform you that we have established the ability for your
institution to purchase Fed Funds from us in an amount not to exceed
$1,500,000.
This arrangement should not be considered as a commitment to fund as it is
subject to cancellation with notice and funds under it are available at our
sole discretion with respect to any request for purchase.
We appreciate the fine relationship between our institutions and look forward
to dealing with you Fed Funds needs,
Sincerely,
/s/ Cindy Spagnola
Cindy Spagnola
Vice President
<PAGE> 1
Exhibit 10.6
[BANKERS' BANK OF THE WEST LETTERHEAD]
August 25, 1998
Brigette Howorko, Senior Vice President FirstState Bank
PO Box 33089
Northglenn, CO 80234
Dear Ms. Howorko;
We are pleased to inform you Bankers' Bank of the West (BBW) has approved the
renewal of the Federal Funds purchase line for FirstState Bank on an unsecured
basis with a maturity of 8/31/99. All federal funds purchase lines are
accessible as funds are available. The maximum amount of the established line
is $7,200,000.00. All Federal Funds lines are subject to quarterly review as
well as annual renewal, and terms may be altered in the event of a significant
change in the financial condition of the bank. Please continue to provide BBW
with Call Reports on a quarterly basis.
BBW's policy of the sale of funds to respondent banks is outlined in our
Federal Funds Sale Agreement, a copy of which should be in your file Once
executed, the signed agreement is continuing in nature and need not be
re-executed annually. Your bank should keep this annual re-approval letter in
your file as well.
The staff at BBW is pleased to provide this service to your bank. Should you
have any questions or need additional service, please feel free to call me.
Sincerely,
/s/ Dale W. Utley
Dale W. Utley
Senior Vice President
<PAGE> 1
Exhibit 10.7
[BANKERS' BANK OF THE WEST LETTERHEAD]
October 20, 1997
Max Revell, Vice President
First State Bank
PO Box 730
Kimball, NE 69145
Dear Mr. Revell;
We are pleased to inform you Bankers' Bank of the West (BBW) has approved the
renewal of the Federal Funds purchase line for First State Bank on an unsecured
basis with a maturity of 10/31/98. All federal funds purchase lines are
accessible as funds are available. The maximum amount of the established line is
$3,5001,000.00. All Federal Funds lines are subject to quarterly review as well
as annual renewal, and terms may be altered in the event of a significant change
in the financial condition of the bank. Please continue to provide BBW with Call
Reports on a quarterly basis.
BBW's policy of the sale of funds to respondent banks is outlined in our Federal
Funds Sale Agreement, a copy of which should be in your file Once executed, the
signed agreement is continuing in nature and need not be re-executed annually.
Your bank should keep this annual re-approval letter in your file as well.
The staff at BBW is pleased to provide this service to your bank. Should you
have any questions or need additional service, please feel free to call me.
Sincerely,
/s/ Dale W. Utley
Dale W. Utley
Vice President
<PAGE> 1
Exhibit 10.8
MANAGEMENT AGREEMENT
THIS AGREEMENT, made and entered into this 21 day of January, 1997 by and
between FIRST WESTERN CORP., a Nebraska corporation, hereinafter referred to as
"FWC" and Western Management Corporation, a Nebraska corporation, hereinafter
referred to as "WMC".
WITNESSETH:
WHEREAS: FWC desires to avail itself of the services of WMC and utilize its
managerial ability be entering into a management agreement with WMC.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
I. EFFECTIVE DATE: The effective date of this agreement is January 1, 1998.
II. TERM: The term of this agreement shall be for a period from and after
the effective date thereof to the date of the annual meeting of the Board of
Directors for the year 1998 and shall remain in force and effective from year to
year thereafter, upon renewal hereof in accordance with Article III below.
III. RENEWAL, MODIFICATION AND TERMINATION: Renewal of this agreement shall
be made by ratification thereof by the Board of Directors of FWC each year at
its annual meeting, beginning with the year 1998, which ratification shall
approve the contract for the coming year. For purposes of this agreement the
"year" referred to in this paragraph shall mean the period beginning with the
date of the annual meeting of the Board of Directors of FWC to the date of the
next such annual meeting as prescribed by the By-laws of FWC. It is mutually
understood and agreed by and between the parties hereto that this agreement and
all terms and conditions therein contained are subject to negotiations and
amendment at each of the said annual meetings of the Board of Directors and that
such agreement may be terminated or renewed by either party.
IV. DELEGATION: It is further mutually understood and agreed that the
formulation of Company policy is not hereby delegated to FWC and that the
function of the Board of Directors of FWC shall not be modified or abridged by
the execution of this agreement. Likewise the appointment of WMC as manager
hereunder shall not operate to relieve the Board of Directors of FWC, or any
member thereof, of any responsibility imposed upon it by law.
V. SERVICES: Subject to the control and supervision of the Board of
Directors of FWC, WMC shall, during the term of this contract, provide services
as set forth below in the management of FWC. Such services shall include, but
not be limited to:
1. Strategic planning
2. Tax planning and Budgeting
3. Business development
<PAGE> 2
Exhibit 10.8
4. Salary administration
5. Bond and security purchase planning
6. Community and industry relation
7. Marketing
8. Replacement and continuity of management
9. Other tasks as may be assigned by the Board
10. Membership on loan committee and problem loan resolution
11. Quarterly and annual filings of required Federal Reserve Reports
VI. COMPENSATION: For and in consideration of the functions described, FWC
agrees to pay the sum of $9,000.00 (Nine thousand and no/100's dollars)
annually. Paid in monthly installments of $750. Additional fees, based on
billing statement from WMC, for over 100 hours annually, may be billed at an
hourly rate of $85.00 per hour for Joel H. Wiens, $65.00 per hour for Lynn M.
Anthony, $65.00 per hour for Timothy D. Wiens and $65.00 per hour for Michael J.
Nelson, shall be due and payable upon approval at the FWC December Board
meeting. All out of pocket expenses of WMC personnel will be reimbursed by FWC.
If in the opinion of FWC, the Holding Company is unprofitable or unable to make
such payment, all or any part of the payment due may be deleted. FWC management
has determined this fee to be reasonable based on a survey of like type of
service available in the market place.
VII. LIABILITY: Neither WMC nor the personnel furnished by it shall be liable
for mistakes or errors in judgement relating to the operations of and shall not
be liable for any loss or mistakes of law by an officer furnished by it.
VIII. BINDING EFFECT: It is further agreed that this contract shall be binding
upon all parties hereto and upon all parties hereto and upon their successors
and assigns.
IX. AGREEMENTS: This agreement shall continue in force from year to year
until cancelled.
WITNESS our hands and seal this 21 day of January , '97.
WESTERN MANAGEMENT CORPORATION FIRST WESTERN CORPORATION
By: /s/ Lynn M. Anthony By: /s/ Joel H Wiens
---------------------- ---------------------
<PAGE> 1
Exhibit 10.10
Management Agreement
THIS AGREEMENT, made and entered into this 13th day of March, 1998 by and
between FIRSTATE BANK, a Colorado State Bank, hereinafter referred to as 'FBC"
and Western Management Corporation, a Nebraska corporation, hereinafter referred
to as "WMC"
WITNESSETH:
WHEREAS: FBC desires to avail itself of the services of WMC and utilize its
managerial ability be entering into a management agreement with WMC.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
I. EFFECTIVE DATE: The effective date of this agreement is January 1, 1998.
II. TERM: The term of this agreement shall be for a period from and after the
effective date thereof to the date of the annual meeting of the Board of
Directors for the year 1998 and shall remain in force and effective from year to
year thereafter, upon renewal hereof in accordance with Article III below,
III. RENEWAL, MODIFICATION AND TERMINATION: Renewal of this agreement shall be
made by ratification thereof by the Board of Directors of FBC each year at its
annual meeting, beginning with the year 1998, which ratification shall approve
the contract for the coming year. For purposes of this agreement the "year"
referred to in this paragraph shall mean the period beginning with the date of
the annual meeting of the Board of Directors of FBC to the date of the next such
annual meeting as prescribed by the By-laws of FBC. It is mutually understood
and agreed by and between the parties hereto that this agreement and all terms
and conditions therein contained are subject to negotiations and amendment at
each of the said annual meetings of the Board of Directors and that such
agreement may be terminated or renewed by either party.
IV. DELEGATION: It is further mutually understood and agreed that the
formulation of Company policy is not hereby delegated to FBC and that the
function of the Board of Directors of FBC shall not be modified or abridged by
the execution of this agreement. Likewise the appointment of WMC as manager
hereunder shall not operate to relieve the Board of Directors of FBC, or any
member thereof, of any responsibility imposed upon it by law.
V. SERVICES: Subject to the control and supervision of the Board of Directors of
FBC, WMC shall, during the term of this contract, provide services as set forth
below in the management of FBC. Such services shall include, but not be limited
to:
<PAGE> 2
1. Strategic planning
2. Tax planning and Budgeting
3. Business development
4. Salary administration
5. Bond and security purchase planning
6. Community and industry relation
7. Marketing
8. Replacement and continuity of management
9. Problem loan resolution
10. Other tasks as may be assigned by the Board
11. Membership on loan committee and problem loan resolution
12. Quarterly and annual filings of required Federal Reserve Reports
VI. COMPENSATION: For and in consideration of the functions described, FBC
agrees to pay $750 for the Firstate Bank headquarters located, in Northglenn and
in addition to that, $250 per branch location, on a monthly basis. Additional
fees based on a billing statement from WMC, not to exceed $15,000 (Fifteen
Thousand dollars) may be billed annually at an hourly rate of $85.00 per hour
for Joel H. Wiens, $65.00 per hour for Lynn M. Anthony, and $65.00 per hour for
Michael J. Nelson, shall be due and payable upon approval at the FBC December
Board meeting. All out of pocket expenses of WMC personnel will be reimbursed by
FBC. If in the opinion of FBC, the Bank is unprofitable or unable to make such
payment, all or any part of the payment due may be deleted. FBC management has
determined this fee to be reasonable based on a survey of like type of service
available in the market place.
VII. LIABILITY: Neither WMC nor the personnel furnished by it shall be liable
for mistakes or errors in judgement relating to the operations of and shall not
be liable for any loss or mistakes of law by an officer furnished by it.
VIII. BINDING EFFECT: It is further agreed that this contract shall be binding
upon all parties hereto and upon all parties hereto and upon their successors
and assigns.
IX. AGREEMENTS: This agreement shall continue in force from year to year until
cancelled,
WITNESS our hands and seal this 13th day of March, 1998
WESTERN MANAGEMENT CORPORATION FIRSTATE BANK OF COLORADO
By: /s/ Lynn M Anthony By: /s/ Tim Wiens
------------------- ---------------
<PAGE> 1
Exhibit 10.11
Management Agreement
THIS AGREEMENT, made and entered into this 21 day of January, 1998 by and
between FIRST STATE BANK, a Nebraska State Bank, hereinafter referred to as
"FSB' and Western Management Corporation, a Nebraska corporation,
hereinafter referred to as "WMC".
WITNESSETH:
WHEREAS, FSB desires to avail itself of the services of WMC and utilize its
managerial ability be entering into a management agreement with WMC.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
I. EFFECTIVE DATE: The effective date of this agreement is January 1, 1998.
II. TERM: The term of this agreement shall be for a period from and after
the effective date thereof to the date of the annual meeting of the Board of
Directors for the year 1998 and shall remain in force and effective from
year to year thereafter, upon renewal hereof in accordance with Article III
below.
III. RENEWAL, MODIFICATION AND TERMINATION: Renewal of this agreement shall
be made by ratification thereof by the Board of Directors of FSB each year
at its annual meeting, beginning with the year 1998, which ratification
shall approve the contract for the coming year. For purposes of this
agreement the "year" referred to in this paragraph shall mean the period
beginning with the date of the annual meeting of the Board of Directors of
FSB to the date of the next such annual meeting as prescribed by the By-laws
of FSB. It is mutually understood and agreed by and between the parties
hereto that this agreement and all terms and conditions therein contained
are subject to negotiations and amendment at each of the said annual
meetings of the Board of directors and that such agreement may be terminated
or renewed by either party.
IV. DELEGATION: It is further mutually understood and agreed that the
formulation of Company policy is not hereby delegated to FSB and that the
function of the Board of Directors of FSB shall not be modified or abridged
by the execution of this agreement. Likewise the appointment of WMC as
manager hereunder shall not operate to relieve the Board of Directors of
FSB, or any member thereof, of any responsibility imposed upon it by law,
V. SERVICES: Subject to the control and supervision of the Board of
Directors of FSB, WMC shall, during the term of this contract, provide
services as set forth below in the management of FSB. Such services shall
include. but not be limited to:
1. Strategic planning
2. Tax planning and Budgeting
3. Business development
4. Salary administration
5. Bond and security purchase planning
6. Community and industry relation
7. Marketing
8. Replacement and continuity of management
9. Problem loan resolution
<PAGE> 2
10. Other tasks as may be assigned by the Board
11. Membership on loan committee and problem loan resolution
12. Quarterly and annual filings of required Federal Reserve Reports
VI. COMPENSATION: For and in consideration of the functions described, FSB
agrees to pay the sum of $36,000-00 (Thirty -Six Thousand and no/100's
dollars) annually. Paid in monthly installments of $3,000.00 due on the 10th
of each month. Additional fees, based on a billing statement from WMC, not
to exceed $50,000 (Fifty Thousand dollars) may be billed annually at an
hourly rate of $85.00 per hour for Joel H. Wiens, $65.00 per hour for Lynn
M. Anthony, and $65.00 per hour for Timothy D. Wiens and $50 for other
personnel as deemed necessary, shall be due and payable upon approval at the
FSB December Board meeting. All out of pocket expenses of WMC personnel will
be reimbursed by FSB. If in the opinion of FSB, the Bank is unprofitable or
unable to make such payment, all or any part of the payment due may be
deleted. FSB management has determined this fee to be reasonable based on a
survey of like type of service available in the market place.
VII. LIABILITY: Neither WMC nor the personnel furnished by it shall be
liable for mistakes or errors in judgement relating to the operations of and
shall not be liable for any loss or mistakes of law by an officer furnished
by it.
VIII. BINDING EFFECT: It is further agreed that this contract shall be
binding upon all parties hereto and upon all parties hereto and upon their
successors and assigns.
IX. AGREEMENTS: This agreement shall continue in force from year to year
until cancelled.
WITNESS our hands and seal this 21 day of January, 98.
WESTERN MANAGEMENT CORPORATION FIRST STATE BANK
By: /s/ Lynn M Anthony By: /s/ Mike Nelson
--------------------------- ------------------
<PAGE> 1
EXHIBIT 10.9
MANAGEMENT AGREEMENT
THIS AGREEMENT, made and entered into 21 day of January, 1997 by and between
FIRST MORTGAGE BANCORP, a Nebraska corporation, hereinafter referred to as "FMB"
and Western Management Corporation, a Nebraska corporation, hereinafter referred
to as "WMC".
WITNESSETH:
WHEREAS: FMB desires to avail itself of the services of WMC and utilize its
managerial ability be entering into a management agreement with WMC.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
I. EFFECTIVE DATE: The effective date of this agreement is January 1, 1998.
II. TERM: The term of this agreement shall be for a period from and after the
effective date thereof to the date of the annual meeting of the Board of
Directors for the year 1998 and shall remain in force and effective from year to
year thereafter, upon renewal hereof in accordance with Article III below.
III. RENEWAL, MODIFICATION AND TERMINATION: Renewal of this agreement shall be
made by ratification thereof by the Board of Directors of FMB each year at its
annual meeting, beginning with the year 1998, which ratification shall approve
the contract for the coming year. For purposes of this agreement the "year"
referred to in this paragraph shall mean the period beginning with the date of
the annual meeting of the Board of Directors of FMB to the date of the next such
annual meeting as prescribed by the By-laws of FMB. It is mutually understood
and agreed by and between the parties hereto that this agreement and all terms
and conditions therein contained are subject to negotiations and amendment at
each of the said annual meetings of the Board of Directors and that such
agreement may be terminated or renewed by either party.
IV. DELEGATION: It is further mutually understood and agreed that the
formulation of Company policy is not hereby delegated to FMB and that the
function of the Board of Directors of FMB shall not be modified or abridged by
the execution of this agreement. Likewise the appointment of WMC as manager
hereunder shall not operate to relieve the Board of Directors of FMB, or any
member thereof, of any responsibility imposed upon it by law.
V. SERVICES: Subject to the control and supervision of the Board of Directors
of FMB, WMC shall, during the term of this contract, provide services as set
forth below in the management of FMB. Such services shall include, but not be
limited to:
1. Strategic planning
2. Tax planning and Budgeting
3. Business development
<PAGE> 2
4. Salary administration
5. Bond and security purchase planning
6. Community and industry relation
7. Marketing
8. Replacement and continuity of management
9. Other tasks as may be assigned by the Board
10. Membership on loan committee and problem loan resolution
11. Quarterly and annual filings of required Federal Reserve Reports
VI. COMPENSATION: For and in consideration of the functions described, FMB
agrees to pay the sum of $24,000.00 (Twenty Four thousand and no/100's dollars)
annually. Paid in monthly installments of $2,000. Additional fees, based on
billing statement from WMC, for over 100 hours annually, may be billed at an
hourly rate of $85.00 per hour for Joel H. Wiens, $65.00 per hour for Lynn M.
Anthony, $65.00 per hour for Timothy D. Wiens and $65.00 per hour for Michael J.
Nelson, shall be due and payable upon approval at the FMB December Board
meeting. All out of pocket expenses of WMC personnel will be reimbursed by FMB.
If in the opinion of FMB, the Company is unprofitable or unable to make such
payment, all or any part of the payment due may be deleted. FMB management has
determined this fee to be reasonable based on a survey of like type of service
available in the market place.
VII. LIABILITY: Neither WMC nor the personnel furnished by it shall be liable
for mistakes or errors in judgement relating to the operations of and shall not
be liable for any loss or mistakes of law by an officer furnished by it.
VIII. BINDING EFFECT: It is further agreed that this contract shall be binding
upon all parties hereto and upon all parties hereto and upon their successors
and assigns.
IX. AGREEMENTS: This agreement shall continue in force from year to year until
cancelled.
WITNESS our hands and seal this 21 day of Jan , 97.
WESTERN MANAGEMENT CORPORATION FIRST MORTGAGE BANCORP
By: /s/ Lynn M Anthony By: /s/ Joel H Wiens
------------------ ----------------
<PAGE> 1
Exhibit 10.12
ELECTRONIC DATA PROCESSING AGREEMENT
This Agreement is made and entered into this 8 day of May 1998 by and between
First Commerce Technologies, Inc., Lincoln, Nebraska, hereinafter referred to as
Processor, and Firs State Bank, Kimball, Nebraska, including a branch located in
Elm Creek, Nebraska, hereinafter referred to as Client, and supercedes any and
all other prior such Agreements upon the following terms and condition:
1. Services.
Processor will provide to Client the electronic data processing
services described in attached Addendum A,
2. Fees And Charges.
Client agrees to pay processor, via the ACII network on the
fifteenth day of each month, processing fees as set forth on
Addendum B for services performed the previous month. Processor,
at its option, may impose a charge of 1 1/2% per month on account
balances not paid by the due date. Charges for services performed
for the Client by the Processor which are not specified in
Addendum B will be at a price and upon the terms and conditions
agreed to by the parties at the time the Client requests such
services.
In order to adjust for the effects of inflation, after the first
twelve months of this Agreement, and semiannually thereafter, all
fees and charges reflected in this Agreement will be increased,
but not decreased, based on changes in the Consumer Price Index
for All Urban Consumers - Other Goods and Services (the "CPI-U")
as published by the U.S. Department of Labor, Bureau of Labor
Statistics. The first adjustment to be made at the beginning of
the thirteenth month will be equal to the percent of change over
the one year period for the twelve consecutive most recent months
of information published. This annual adjustment will not be less
than 3% nor more than 9%. Subsequent semiannual adjustments will
reflect the CPI-U change in each respective six month period and
will not be less than 1 1/2% nor more than 4 1/2% in any one
period.
In addition to the charges described above, Client agrees to pay
for any sales, use, or other tax or charge, levied or assessed
upon or as a result of the performance of any service pursuant to
this Agreement or materials furnished with respect to this
Agreement, except taxes based on Processor's income.
3. Term.
The original term of this Agreement shall be for a period of
three (3) yeas beginning on APRIL 1, 1998,
4. Input Data.
Client will provide Processor input data in a format acceptable
to or designated by Processor. Input data shall be complete and
correct, in a condition suitable for machine processing and
compatible with the data processing equipment and programs of
Processor. If the data submitted by the Client to the Processor
are incorrect, incomplete, or not in the form designated by
<PAGE> 2
Processor, Client will pay Processor for any additional work
performed to correct or complete the data.
Processor may rely upon any data, information, or instructions
provided by Client. If any error results from incorrect input
supplied by Client, Client shall be responsible for discovering
and reporting such error and supplying the data necessary to
correct such error.
5. Delivery Schedule.
Client will deliver input data to the Processor as established by
Addendum C. This schedule will be subject to mutually agreed upon
changes based upon the need and convenience of the Client and the
Processor. The priority for processing Clients data will be
established by Processor in accordance with a policy of providing
reasonable and efficient delivery of services to all Clients.
6. Contact Representative.
Client will designate a qualified individual who will handle all
relations with the Processor. At the time of the conversion,
Processor will train the contact representative in the use of the
data processing system(s).
7. System Modification.
The Processor will notify the Client of changes in the system
which affect procedures or reports and require Client to take
action with respect to such changes. These notifications shall be
in the form of addenda to the User Manual.
8. Electronic, Transactions.
Client authorizes Processor to facilitate the origination and
receipt of transactions to and from the National Automated
Clearing House Association (ACH). Client shall comply with all
rules, regulations, and operating procedures of the ACH or its
operators as in effect from time-to-time and shall enter into all
agreements required by the ACH or its operators. All entries into
the system shall be under the route transit identification number
of a financial institution to be designated by Client and all
clearing and settlement for such entries shall be conducted
through such financial institution.
9. Laws: Regulations.
Client shall be responsible for determining the applicability of
all state and federal laws and regulations including, but not
limited to, laws and regulations governing interest rates,
charges, penalties, disclosures, timing, applicable law and
conflict of laws, and to adopt standards, policies, practices and
procedures consistent with such laws and regulations. Processor
assumes no responsibility with respect to such determinations and
expressly limits its obligation to processing data supplied to
Client in accordance with this Agreement.
10. IRS Filing.
Client represents to Processor that it has complied with all
laws, regulations, procedures. and requirements in attempting to
secure correct Tax Identification Numbers (TINs) for Client's
<PAGE> 3
payees and agrees to attest to this compliance by affidavit
provided annually, Client authorizes Processor to act as Clients
agent and sign on Clients behalf any affidavit required by the
Internal Revenue Service with respect to TINs.
Client acknowledges that Processor's execution of IRS Affidavits
on Clients behalf does not relieve Client of responsibility to
provide accurate TINs or liability for any penalties which may be
assessed for failure to comply with TIN requirements.
11. Confidentiality.
Processor shall hold in confidence all information received by it
in the course of rendering services designated herein relating to
the Clients assets, liabilities, or the assets, liabilities,
business or affairs of any of the Clients customers. Processor
may disclose Client information pursuant to (1) any law of the
United States or any state; (2) the order of any court or
governmental agency; (3) the rules and regulations of any
governmental agency; (4) any subpoena; or (5) any rule of
discovery in connection with any civil or criminal action. Upon
termination Processor shall return to Client all information in
its possession in whatever form held.
12. Ownership.
All data, documentation, specifications, tapes and programs
furnished by the Client shall remain the property of the Client.
Files, documentation and records developed by the Processor from
data furnished by the Client shall be the property of the
Processor and shall remain the property of the Processor upon
termination of this Agreement. All specifications, tapes, and
programs used or developed by Processor in connection with this
Agreement (except those furnished by Client) are and shall remain
the sole property of Processor.
13. Risk Of Loss.
Client will deliver and/or transmit the required input to
Processor at Client's expense and pay the cost of delivery and
for transmission back to Client. Client will maintain source data
and other backup media sufficient for file and input data
recreation in order to mitigate against the, possibility of loss
of input data and Client data maintained by Processor.
Processor will bear the risk of loss with respect to items in its
custody, but only to the, extent of the cost to replace or repair
the material on which the items or records arc recorded.
Processor will bear no risk of loss for items that are not
machine-readable, including, but not limited to, mutilated
currency, food coupons, bond coupons, credit card merchant
receipts, and foreign checks.
14. Catastrophic Loss Or Malfunction.
Processor will maintain industry acceptable procedures for
emergency processing in the event of catastrophic hardware loss
or malfunction.
<PAGE> 4
15. Insurance.
Throughout the term of the agreement, Processor shall maintain
insurance coverage (or shall be self insured) for losses from
fire, disaster, and other causes contributing to interruption of
these services. The proceeds, of such insurance shall be payable
to Processor. Nothing in this agreement shall be construed as to
permit Client to receive any of such proceeds, or to be named as
an additional loss payee under any insurance policy.
16. Disclaimer of Warranties.
PROCESSOR DISCLAIMS ALL WARRANTIES, WHETHER WRITTEN, ORAL,
EXPRESSED, OR IMPLIED INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
17. Indemnification
Except for losses, liabilities, damages, costs or expenses as
might be incurred or to which Processor may be subjected by
reason of its own negligence or willful misconduct Client agrees
to indemnify and bold the Processor harmless from all loss,
liability, costs, damages and expenses (including reasonable
attorney's fees) to which Processor may be subjected, or which
may be incurred in connection with any claim by third parties
which may arise out of or as a result of this Agreement or the
performance by Processor of services hereunder.
18. Limitation Of Liability.
Processor agrees to perform data processing services herein in a
commercially reasonable manner, which is similar to the services
provided by it to its other Clients, and no other or higher
degree of care. In no event shall the Processor, its employees or
agent be liable for any failure of delay in processing due to
fire, flood, other natural catastrophe, the failure of data
processing or handling equipment, strike or other causes beyond
Processor's reasonable control. PROCESSOR, ITS AGENTS OR
EMPLOYEES WILL IN NO EVENT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES INCURRED BY CLIENT
INCLUDING, BUT NOT LIMITED TO, LOSS OF INTEREST, LOSS OF INCOME,
OR LOSS OF BUSINESS OPPORTUNITY REGARDLESS OF WHETHER PROCESSOR
WAS ADVISED OF THE POSSIBLE OCCURRENCE OF SUCH DAMAGES.
19. Information To Third Parties.
Processor will furnish data processing information to such
regulatory authorities, auditors, or examiners or such other
parties as requested by Client in writhing. Client will pay any
fees incurred for producing such information.
20. Financial Information.
Processor shall make available to the Client, upon request, an
annual report on the financial condition of the Processor.
<PAGE> 5
21. Audit.
Processor shall, upon request, provide Client one (1) copy of the
report resulting from the third party review by Processor's
independent certified public accountants. Processor shall, upon
request, make available for Clients review a current copy of
Processor's Disaster Recovery Plan. Client (or a Representative
of the Client) shall have the right to perform additional audit
procedures on Processor. Client assumes responsibility for all
costs associated with the performance of Client's additional
audit procedures, including expenses incurred by Processor
related to such procedures.
22. Continuation After Term.
This, Agreement shall automatically renew for successive contract
terms equal to the original term, unless written notice is
delivered by either Client or Processor to the other at least
nine (9) months prior to the expiration of the original term
hereof or any renewal or extension thereof.
23. Early Termination.
Client may terminate the Agreement before expiration of the
original term of this Agreement, upon satisfaction of each of the
following conditions: (a) Client shall have been acquired by
another financial institution; (b) within six months after it is
acquired Client shall have notified Processor in writing of its
intention to terminate, with such notice providing for a
termination date not less than one year thereafter; and (c)
Client shall have paid Processor a fee, which shall accompany the
foregoing termination notice, equal to 40% of the scheduled
processing fee which would have been paid from the actual
termination date through the original term of the Agreement. For
any portion of the processing fee which may be volume sensitive
as set forth on Addendum B, the termination charge for such
portion shall be based on the average processing fee assessed for
the three (3) calendar months immediately preceding the month of
notice.
If processor fails to provide or offer services consistent with
Year 2000 requirements, Client may terminate this Agreement by
giving Processor a six (6) month notice of termination and not be
liable for any other termination fee.
24. Default.
If Client is in default of any of its obligations hereunder,
including nonpayment of processing fees, Processor may, at its
option and in addition to all other remedies immediately
terminate the Agreement as to future obligations without further
notice.
25, Disposition of Client Data.
At the expiration of this Agreement, Processor may dispose of any
data left by Client unless written instructions for disposition
are received within ten (10) days of the termination date. Client
shall pay any expense incurred and disposing of or transferring
the data to another processor.
26. User Manual.
Processor agrees to provide Client with one User Manual for each
application. Client agrees to abide by the procedures,
instructions, and conditions set forth in the User's Manual.
Processor
<PAGE> 6
may periodically amend and/or update the Users Manual, and will
provide Client with documentation regarding such amendments and
updates.
27. Year 2000 Statement
FCT acknowledges the responsibility for assuring that its active
systems effectively handle Year 2000 conditions. As such, FCT is
making the necessary adjustments to appropriate systems to
accommodate the calendar rollover to the Year 2000. In addition,
a significant testing program is being implemented to ensure that
our mission critical applications process Year 2000 dates
correctly.
28, Miscellaneous.
A. Addenda
All addenda and other schedules or exhibits
attached to or referred to in this Agreement shall
be deemed to be a part of this Agreement as if
fully set forth.
B. Notices
All notices required or permitted under this
Agreement shall be given in writing and shall be
deemed given when mailed, first class, postage
prepaid, addressed to the party at the address set
forth in connection with the party's signature or
such other address as any party shall provide to
the other by notice.
C. Use of Services
Client will use the services provided under this
Agreement only for its own internal business
purposes and will not sell or otherwise provide,
directly or indirectly, any such services or any
portion thereof to any third party.
D. Entire Agreement
This Agreement, together with the Addenda hereto,
constitutes, the entire agreement between
Processor and Client with respect to the subject
matter hereof. There are no restrictions,
promises, warranties, covenants, or undertakings
other than those expressly set forth herein. This
Agreement supersedes all prior negotiations,
agreements, and undertakings between the parties
with respect to such subject matter.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written and have executed the Agreement on the date
set forth in connection with their respective signatures.
<PAGE> 7
First Commerce Technologies, Inc. First State Bank
126 North 11th Street, P.O. Box 82414 115 S Walnut Street P.O. Box 730
Lincoln, Nebraska 68501 Kimball, Nebraska 69145
Signature: /s/ J. Michael Tadlock Signature: /s/ Michael J. Nelson
---------------------------- -------------------------
Print Name: J. Michael Tadlock Print Name: Michael J. Nelson
--------------------------- ------------------------
Title: Senior Vice President Title: President
-------------------------------- -----------------------------
Date: 5/13/98 Date: May 8, 1998
--------------------------------- ------------------------------
<PAGE> 8
ADDENDUM A
This is an Addendum to the Electronic Data Processing Agreement dated May 8,
1998. Processor will provide the following services to client as set forth in
the User's Manual.
Standard applications included in the "basic fee" on Addendum B.
Demand Deposit Accounting (DDA) Certificates Of Deposit (CDS)
Individual Retirement Accounting (IRA) Loan Accounting System (LAS)
General Ledger System (GLS) Client Services Information (CSI) Tax
Repotting System (TRS) Funds Transfer System (FES) Card Management
System (CMS) Bond Accounting., System (Bonds)
Additional applications included on Addendum B:
Online System (OLS)
Online input and inquiry transactions
Item Processing Services (Schedule A)
View/Print/Archive Report Software
Call Report Preparation Software
First Commerce Technologies, Inc. First State Bank
126 North 11th Street, P.O. Box 82414 115 S. Walnut Street, P.O. Box 730
Lincoln, Nebraska 68501 Kimball, Nebraska 69145
Signature: /s/ J. Michael Tadlock Signature: /s/ Michael J. Nelson
Print Name: J. Michael Tadlock Print Name: Michael J. Nelson
Title: Senior Vice President Title: President
Date: 5/18/98 Date: May 8, 1998
<PAGE> 9
ADDENDUM B
This is an Addendum to the Electronic Data Processing Agreement dated May 8,
1998 Processing will be provided as follows:
Data Center Services processing with full on-line input and inquiry
with reports printed in the Processing Center and transported by ground
to Client's facility.
Processing fees will be paid by Client to the Processor for the applications
listed on Addendum A.
BASE FEE
The following base monthly processing fee applies to the standard
applications listed on Addendum A.
Base Monthly Processing Fee; $5,243.00
Up to 8,800 accounts Included in Base Fee
8,801 to 25,000 accounts $0.60 per account
Over 25,000 accounts $0.55 per account
All additional applications listed on Addendum A will be charged based
on fees provided in Schedule A or contracted for separately.
Additional Fees:
1) Monthly ATM Processing Fees: 2 ATMs at $220 Per ATM
The monthly fee for ATM service includes the cost of a modem and
related maintenance and line monitoring, and unlimited transactions and
authorizations.
2) All phone line charges, drops and installation fees. Charges are passed
on to the user bank in relationship to amounts charged by provider, and
may be adjusted periodically.
3) Transportation of data and/or items to and from the dam center. Charges
are passed on to the user bank in relationship to the amounts charged
by provider, and may be adjusted periodically.
4) Equipment purchases and maintenance, leased equipment and repairs are
contracted for separately.
5) Custom forms may be printed on bank premise at bank expense. In an
In-Bank printing environment, user bank is responsible for all paper
and forms printed in bank. Purchasing of supplies, stock paper,
statements, and special forms may be made through FCT to get quantity
pricing.
6) All FRAD'S, modems, modem sharing devices, and converters for telephone
communications are leased and contracted for separately.
<PAGE> 10
7) FCT's Online System (Online input and inquiry transactions)
8) Item Processing Services (Schedule A)
9) View/Print/Archive Report Software
10) Call Report Preparation Software
11) Microfiche Generation Service
The pricing set forth in this Addendum B will be adjusted for increased volume
as reflected above. If, through acquisitions, mergers or other means, the client
significantly increases the number of accounts, volume of transactions or number
of branches, Processor reserves the right to adjust the monthly processing fee
of this Agreement with mutual agreement of the Client.
First Commerce Technologies, Inc. First State Bank
126 North 11th Street, P.O. Box 82414 115 S. Walnut Street, P.O. Box 730
Lincoln, Nebraska 68501 Kimball, Nebraska 69145
Signature: /s/ J. Michael Tadlock Signature: /s/ Michael J. Nelson
Print Name: J. Michael Tadlock Print Name: Michael J. Nelson
Title: Senior Vice President Title: President
Date: 5/13/98 Date: May 8, 1998
<PAGE> 11
ADDENDUM C
This is an Addendum to an Electronic Data Processing Agreement dated May 8,
1998.
Delivery schedules as of the date of this Addendum are as follows:
Client shall have available for courier pick up all input data on or
before, 4:00 p.m. on each day Monday through Friday.
Processor shall deliver by courier all output data on or before 8:00
a.m. each day Tuesday through Saturday,
First Commerce Technologies, Inc. First State Bank
126 North 11th Street, P.O. Box 82414 115 S. Walnut Street, P.O. Box 730
Lincoln, Nebraska 68501 Kimball, Nebraska 69145
Signature: /s/ J. Michael Tadlock Signature: /s/ Michael J. Nelson
-------------------------- -------------------------
Print Name: J. Michael Tadlock Print Name: Michael J. Nelson
------------------------- ------------------------
Title: Senior Vice President Title: President
------------------------------ -----------------------------
Date: 5/13/98 Date: May 8, 1998
------------------------------- ------------------------------
<PAGE> 12
FIRST COMMERCE TECHNOLOGIES, INC.
Schedule A
ITEM PROCESSING SERVICES
FEE SCHEDULE
<TABLE>
<CAPTION>
Service Description unit Service Fee
<S> <C> <C>
ITEM CAPTURE
Inclearing Item Capture Per Item $0.010
Proof of Deposit (POD) Item Capture Per Item $0.015
Bulk File/Fine Sorting of Items Per Item $0.0083
STATEMENT PRINTING
Printed Statement Data Per Page $0.07
</TABLE>
First Commerce Technologies, Inc. First State Bank
126 North 11th Street, P.O. Box 82414 115 S. Walnut Street, P.O. Box 730
Lincoln, Nebraska 68501 Kimball, Nebraska 69145
Signature: /s/ J. Michael Tadlock Signature: /s/ Michael J. Nelson
---------------------------- -------------------------
Print Name: J. Michael Tadlock Print Name: Michael J. Nelson
--------------------------- ------------------------
Title: Senior Vice President Title: President
-------------------------------- -----------------------------
Date: 5/13/98 Date: May 8, 1998
--------------------------------- ------------------------------
<PAGE> 1
Exhibit 10.13
ELECTRONIC DATA PROCESSING AGREEMENT
This Agreement is made and entered into this 14 day of April 1998 by and between
First Commerce Technologies, Inc., Lincoln, Nebraska, hereinafter referred to as
Processor, and Firstate Bank of Colorado, Northglenn Colorado, including all
existing branches, hereinafter referred to as Client, and supercedes any and all
other prior such Agreements upon the following terms and condition:
1. Services.
Processor will provide to Client the electronic data processing
services described in attached Addendum A,
2. Fees And Charges.
Client agrees to pay processor, via the ACII network on the
fifteenth day of each month, processing fees as set forth on
Addendum B for services performed the previous month. Processor,
at its option, may impose a charge of 1 112% per month on account
balances not paid by the due date. Charges for services performed
for the Client by the Processor which are not specified in
Addendum B will be at a price and upon the terms and conditions
agreed to by the parties at the time the Client requests such
services.
In order to adjust for the effects of inflation, after the first
twelve months of this Agreement, and semiannually thereafter, all
fees and charges reflected in this Agreement will be increased,
but not decreased, based on changes in the Consumer Price Index
for All Urban Consumers - Other Goods and Services (the "CPI-U")
as published by the U.S. Department of Labor, Bureau of Labor
Statistics. The first adjustment to be made at the beginning of
the thirteenth month will be equal to the percent of change over
the one year period for the twelve consecutive most recent months
of information published. This annual adjustment will not be less
than 3% nor more than 9%. Subsequent semiannual adjustments will
reflect the CPI-U change in each respective six month period and
will not be less than 1 1/2% nor more than 4 1/2% in any one
period.
In addition to the charges described above, Client agrees to pay
for any sales, use, or other tax or charge, levied or assessed
upon or as a result of the performance of any service pursuant to
this Agreement or materials furnished with respect to this
Agreement, except taxes based on Processor's income.
3. Term.
The original term of this Agreement shall be for a period of
three (3) yeas beginning on APRIL 1, 1998,
4. Input Data.
Client will provide Processor input data in a format acceptable
to or designated by Processor. Input data shall be complete and
correct, in a condition suitable for machine processing and
compatible with the data processing equipment and programs of
Processor. If the data submitted by the Client to the Processor
are incorrect, incomplete, or not in the form designated by
Processor, Client will pay Processor for any additional work
performed to correct or complete the data.
Processor may rely upon any data, information, or instructions
provided by Client. If any error results from incorrect input
supplied by Client, Client shall be responsible for discovering
and reporting such error and supplying the data necessary to
correct such error.
<PAGE> 2
Exhibit 10.13
5. Delivery Schedule.
Client will deliver input data to the Processor as established by
Addendum C. This schedule will be subject to mutually agreed upon
changes based upon the need and convenience of the Client and the
Processor. The priority for processing Clients data will be
established by Processor in accordance with a policy of providing
reasonable and efficient delivery of services to all Clients.
6. Contact Representative.
Client will designate a qualified individual who will handle all
relations with the Processor. At the time of the conversion,
Processor will train the contact representative in the use of the
data processing system(s).
7. System Modification.
The Processor will notify the Client of changes in the system
which affect procedures or reports and require Client to take
action with respect to such changes. These notifications shall be
in the form of addenda to the User Manual.
8. Electronic, Transactions.
Client authorizes Processor to facilitate the origination and
receipt of transactions to and from the National Automated
Clearing House Association (ACH). Client shall comply with all
rules, regulations, and operating procedures of the ACH or its
operators as in effect from time-to-time and shall enter into all
agreements required by the ACH or its operators. All entries into
the system shall be under the route transit identification number
of a financial institution to be designated by Client and all
clearing and settlement for such entries shall be conducted
through such financial institution.
9. Laws: Regulations.
Client shall be responsible for determining the applicability of
all state and federal laws and regulations including, but not
limited to, laws and regulations governing interest rates,
charges, penalties, disclosures, timing, applicable law and
conflict of laws, and to adopt standards, policies, practices and
procedures consistent with such laws and regulations. Processor
assumes no responsibility with respect to such determinations and
expressly limits its obligation to processing data supplied to
Client in accordance with this Agreement.
10. IRS Filing.
Client represents to Processor that it has complied with all
laws, regulations, procedures. and requirements in attempting to
secure correct Tax Identification Numbers (TINs) for Client's
payees and agrees to attest to this compliance by affidavit
provided annually, Client authorizes Processor to act as Clients
agent and sign on Clients behalf any affidavit required by the
Internal Revenue Service with respect to TINs.
Client acknowledges that Processor's execution of IRS Affidavits
on Clients behalf does not relieve Client of responsibility to
provide accurate TINs or liability for any penalties which may be
assessed for failure to comply with TIN requirements.
11. Confidentiality.
Processor shall hold in confidence all information received by it
in the course of rendering services designated herein relating to
the Clients assets, liabilities, or the assets, liabilities,
business or affairs of any of the Clients customers. Processor
may disclose Client information pursuant to (1) any law of the
United States or any
<PAGE> 3
Exhibit 10.13
state; (2) the order of any court or governmental agency; (3) the
rules and regulations of any governmental agency; (4) any
subpoena; or (5) any rule of discovery in connection with any
civil or criminal action. Upon termination Processor shall return
to Client all information in its possession in whatever form
held.
12. Ownership.
All data, documentation, specifications, tapes and programs
furnished by the Client shall remain the property of the Client.
Files, documentation and records developed by the Processor from
data furnished by the Client shall be the property of the
Processor and shall remain the property of the Processor upon
termination of this Agreement. All specifications, tapes, and
programs used or developed by Processor in connection with this
Agreement (except those furnished by Client) are and shall remain
the sole property of Processor.
13. Risk Of Loss.
Client will deliver and/or transmit the required input to
Processor at Client's expense and pay the cost of delivery and
for transmission back to Client. Client will maintain source data
and other backup media sufficient for file and input data
recreation in order to mitigate against the, possibility of loss
of input data and Client data maintained by Processor.
Processor will bear the risk of loss with respect to items in its
custody, but only to the, extent of the cost to replace or repair
the material on which the items or records arc recorded.
Processor will bear no risk of loss for items that are not
machine-readable, including, but not limited to, mutilated
currency, food coupons, bond coupons, credit card merchant
receipts, and foreign checks.
14. Catastrophic Loss Or Malfunction.
Processor will maintain industry acceptable procedures for
emergency processing in the event of catastrophic hardware loss
or malfunction.
15. Insurance.
Throughout the term of the agreement, Processor shall maintain
insurance coverage (or shall be self insured) for losses from
fire, disaster, and other causes contributing to interruption of
these services. The proceeds, of such insurance shall be payable
to Processor. Nothing in this agreement shall be construed as to
permit Client to receive any of such proceeds, or to be named as
an additional loss payee under any insurance policy.
16. Disclaimer of Warranties.
PROCESSOR DISCLAIMS ALL WARRANTIES, WHETHER WRITTEN, ORAL,
EXPRESSED, OR IMPLIED INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
17. Indemnification
Except for losses, liabilities, damages, costs or expenses as
might be incurred or to which Processor may be subjected by
reason of its own negligence or willful misconduct Client agrees
to indemnify and bold the Processor harmless from all loss,
liability, costs, damages and expenses (including reasonable
attorney's fees) to which Processor may be subjected, or which
may be incurred in connection with any claim by third parties
which may arise out of or as a result of this Agreement or the
performance by Processor of services hereunder.
<PAGE> 4
Exhibit 10.13
18. Limitation Of Liability.
Processor agrees to perform data processing services herein in a
commercially reasonable manner, which is similar to the services
provided by it to its other Clients, and no other or higher
degree of care. In no event shall the Processor, its employees or
agent be liable for any failure of delay in processing due to
fire, flood, other natural catastrophe, the failure of data
processing or handling equipment, strike or other causes beyond
Processor's reasonable control. PROCESSOR, ITS AGENTS OR
EMPLOYEES WILL IN NO EVENT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES INCURRED BY CLIENT
INCLUDING, BUT NOT LIMITED TO, LOSS OF INTEREST, LOSS OF INCOME,
OR LOSS OF BUSINESS OPPORTUNITY REGARDLESS OF WHETHER PROCESSOR
WAS ADVISED OF THE POSSIBLE OCCURRENCE OF SUCH DAMAGES.
19. Information To Third Parties.
Processor will furnish data processing information to such
regulatory authorities, auditors, or examiners or such other
parties as requested by Client in writhing. Client will pay any
fees incurred for producing such information.
20. Financial Information.
Processor shall make available to the Client, upon request, an
annual report on the financial condition of the Processor.
21. Audit.
Processor shall, upon request, provide Client one (1) copy of the
report resulting from the third party review by Processor's
independent certified public accountants. Processor shall, upon
request, make available for Clients review a current copy of
Processor's Disaster Recovery Plan. Client (or a Representative
of the Client) shall have the right to perform additional audit
procedures on Processor. Client assumes responsibility for all
costs associated with the performance of Client's additional
audit procedures, including expenses incurred by Processor
related to such procedures.
22. Continuation After Term.
This, Agreement shall automatically renew for successive contract
terms equal to the original term, unless written notice is
delivered by either Client or Processor to the other at least
nine (9) months prior to the expiration of the original term
hereof or any renewal or extension thereof.
23. Early Termination.
Client may terminate the Agreement before expiration of the
original term of this Agreement, upon satisfaction of each of the
following conditions.- (a) Client shall have been acquired by
another financial institution; (b) within six months after it is
acquired Client shall have notified Processor in writing of its
intention to terminate, with such notice providing for a
termination date not less than one year thereafter; and (c)
Client shall have paid Processor a fee, which shall accompany the
foregoing termination notice, equal to 40% of the scheduled
processing fee which would have been paid from the actual
termination date through the original term of the Agreement. For
any portion of the processing fee which may be volume sensitive
as set forth on Addendum B, the termination charge for such
portion shall be based on the average processing fee assessed for
the three (3) calendar months immediately preceding the month of
notice.
<PAGE> 5
Exhibit 10.13
If processor fails to provide or offer services consistent with
Year 2000 requirements, Client may terminate this Agreement by
giving Processor a six (6) month notice of termination and not be
liable for any other termination fee.
24. Default.
If Client is in default of any of its obligations hereunder,
including nonpayment of processing fees, Processor may, at its
option and in addition to all other remedies immediately
terminate the Agreement as to future obligations without further
notice.
25. Disposition of Client Data.
At the expiration of this Agreement, Processor may dispose of any
data left by Client unless written instructions for disposition
are received within ten (10) days of the termination date. Client
shall pay any expense incurred and disposing of or transferring
the data to another processor.
26. User Manual.
Processor agrees to provide Client with one User Manual for each
application. Client agrees to abide by the procedures,
instructions, and conditions set forth in the User's Manual.
Processor may periodically amend and/or update the Users Manual,
and will provide Client with documentation regarding such
amendments and updates.
27. Year 2000 Statement.
FCT acknowledges the responsibility for assuring that its active
systems effectively handle Year 2000 conditions. As such, FCT is
making the necessary adjustments to appropriate systems to
accommodate the calendar rollover to the Year 2000. In addition,
a significant testing program is being implemented to ensure that
our mission critical applications process Year 2000 dates
correctly.
28. Miscellaneous.
A. Addenda All addenda and other schedules
or exhibits attached to or
referred to in this Agreement
shall be deemed to be a part of
this Agreement as if fully set
forth.
B. Notices All notices required or permitted
under this Agreement shall be
given in writing and shall be
deemed given when mailed, first
class, postage prepaid, addressed
to the party at the address set
forth in connection with the
party's signature or such other
address as any party shall
provide to the other by notice.
C. Use of Services
Client will use the services
provided under this Agreement
only for its own internal
business purposes and will not
sell or otherwise provide,
directly or indirectly, any such
services or any portion thereof
to any third party.
<PAGE> 6
Exhibit 10.13
D. Entire Agreement
This Agreement, together with the
Addenda hereto, constitutes, the
entire agreement between
Processor and Client with respect
to the subject matter hereof.
There are no restrictions,
promises, warranties, covenants,
or undertakings other than those
expressly set forth herein. This
Agreement supersedes all prior
negotiations, agreements, and
undertakings between the parties
with respect to such subject
matter.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written and have executed the Agreement on the date
set forth in connection with their respective signatures.
First Commerce Technologies, Inc. Firstate Bank of Colorado
126 North 11th Street, P.O. Box 82414 11210 Huron Street
Lincoln, Nebraska 68501 Northglenn, CO 80234
Signature: /s/ J. Michael Tadlock Signature: /s/ Timothy D. Wiens
----------------------- ---------------------
Print Name: J. Michael Tadlock Print Name: Timothy D. Wiens
---------------------- --------------------
Title: Senior Vice President Title: Pres & CEO
--------------------------- -------------------------
Date: 4/16/98 Date: 4-14-98
---------------------------- --------------------------
<PAGE> 7
Exhibit 10.13
ADDENDUM A
This is an Addendum to the Electronic Data Processing Agreement dated 4-14-98.
Processor will provide the following services to client as set forth in the
User's Manual.
Standard applications included in the "basic fee" on Addendum B.
Demand Deposit Accounting (DDA)
Savings Accounting System (SAS)
Certificates Of Deposit (CDS)
Individual Retirement Accounting (IRA)
Loan Accounting System (LAS)
General Ledger System (GLS)
Client Services Information (CSI)
Tax Reporting System (TRS)
Funds Transfer System (FES)
Asset Participation System (APS)
Card Management System (CMS)
Bond Accounting., System (Bonds)
Additional applications included on Addendum B:
Online System (OLS)
Online input and inquiry transactions
Item Processing Services (Schedule A)
View/Print/Archive Report Software
Deposit Platform Software
Reportwriter Software
FCT Safe Deposit Box
FTI Accounts Payable
Cash Management Software
Voice Response
First Commerce Technologies, Inc. Firstate Bank of Colorado
126 North 11th Street, P.O. Box 82414 11210 Huron Street
Lincoln, Nebraska 68501 Northglenn, CO 80234
Signature: /s/ J. Michael Tadlock Signature: /s/ Timothy D. Wiens
----------------------- ---------------------
Print Name: J. Michael Tadlock Print Name: Timothy D. Wiens
---------------------- --------------------
Title: Senior Vice President Title: Pres & CEO
--------------------------- -------------------------
Date: 4/16/98 Date: 4-14-98
---------------------------- --------------------------
<PAGE> 8
Exhibit 10.13
ADDENDUM B
This is an Addendum to the Electronic Data Processing Agreement dated 4-14-98.
Processing will be provided as follows:
Data Center Services processing with full on-line input and inquiry
with reports printed in the Processing Center and transported by ground
to Client's facility the processing center and ground transported to
Client's facility.
Processing fees will be paid by Client to the Processor for the applications
listed on Addendum A.
BASE FEE
The following base monthly processing fee applies to the standard
applications listed on Addendum A.
Base Monthly Processing Fee; $9,390.00
Up to 17,000 accounts Included in Base Fee
17,001 to 25,000 accounts $0.60 per account
Over 25,000 accounts $0.55 per account
All additional applications listed on Addendum A will be charged based
on fees provided in Schedule A or contracted for separately.
Additional Fees:
1) All phone line charges, drops and installation fees. Charges are passed
on to the user bank in relationship to amounts charged by provider, and
may be adjusted periodically.
2) Transportation of data and/or items to and from the data center. Charges
are passed on to the user bank in relationship to the amounts charged by
provider, and may be adjusted periodically.
3) Equipment purchases and maintenance, leased equipment and repairs are
contacted for separately.
4) Custom forms may be printed on bank premise at bank expense. In an
In-Bank printing environment, user bank is responsible for all paper and
forms printed in bank. Purchasing of supplies, stock paper, statements,
and special forms may be made through FCT to get quantity pricing.
5) All FRAD's, modem, modern sharing devices, and converters for telephone
communications are leased and contacted for separately.
6) FCT's Online System (Online input and inquiry transactions)
7) Item Processing Services (Schedule A)
8) View/Print/Archive Report Software
<PAGE> 9
Exhibit 10.13
9) Microfiche Generation Service
The pricing set forth in this,; Addendum B will be adjusted for increased volume
as reflected above. If, through acquisitions, mergers or other means, the client
significantly increases the number of accounts, volume of transactions or number
of branches, Processor reserves the right to adjust the monthly processing fee
of this Agreement with mutual agreement of the Client.
First Commerce Technologies, Inc. Firstate Bank of Colorado
126 North 11th Street, P.O. Box 82414 11210 Huron Street
Lincoln, Nebraska 68501 Northglenn, CO 80234
Signature: /s/ J. Michael Tadlock Signature: /s/ Timothy D. Wiens
----------------------- ---------------------
Print Name: J. Michael Tadlock Print Name: Timothy D. Wiens
---------------------- --------------------
Title: Senior Vice President Title: Pres & CEO
--------------------------- -------------------------
Date: 4/16/98 Date: 4-14-98
---------------------------- --------------------------
<PAGE> 10
Exhibit 10.13
ADDENDUM C
This is an Addendum to an Electronic Data Processing Agreement dated 4-14-98.
Delivery schedules as of the date of this Addendum are as follows:
Client shall have available for courier pick up all input data on or
before, 4:00 p.m. on each day Monday through Friday.
Processor shall deliver by courier all output data on or before 8:00
a.m. each day Tuesday through Saturday,
First Commerce Technologies, Inc. Firstate Bank of Colorado
126 North 11th Street, P.O. Box 82414 11210 Huron Street
Lincoln, Nebraska 68501 Northglenn, CO 80234
Signature: /s/ J. Michael Tadlock Signature: /s/ Timothy D. Wiens
----------------------- ---------------------
Print Name: J. Michael Tadlock Print Name: Timothy D. Wiens
---------------------- --------------------
Title: Senior Vice President Title: Pres & CEO
--------------------------- -------------------------
Date: 4/16/98 Date: 4-14-98
---------------------------- --------------------------
<PAGE> 11
Exhibit 10.13
FIRST COMMERCE TECHNOLOGIES, INC.
Schedule A
ITEM PROCESSING SERVICES
FEE SCHEDULE
<TABLE>
<CAPTION>
Service Description unit Service Fee
<S> <C> <C>
ITEM CAPTURE
Inclearing Item Capture Per Item ......................$ 0.010
Proof of Deposit (POD) Item Capture Per Item ......................$ 0.015
Transit/Clearing Item Capture & Cash Letter Sort Per Item ......................$ 0.011
Check Archival Image Per Item ......................$ 0.005
Proof of Deposit Adjustment...............................Per Adjustment................................$ 0.50
Reject/Re-Entry..............................................Per Item...................................$ 0.05
STATEMENT PRINTING
Laser Printed Statement Image................................Per Page...................................$ 0.105
STATEMENT RENDERING
Truncated Statement DDA & Savings...........................Per Account.................................$ 0.10
Image Statement DDA.........................................Per Account.................................$ 0.15
Non-Truncated Statement DDA.................................Per Account.................................$ 0.30
Statement Stuffers..........................................Per Insert..................................$ 0.013
Postage & Pre-Sorting......................................Per Envelope.................................At Cost
IMAGE SERVICES
PC Image Software & Setup....................................Per PC.....................................$750.00
Daily Paid Items File Maintenance............................Per Day....................................$ 22.75
Online Access via PC...........................................TBD...............Price Based on Service Request
CD-ROM Archival (25,000 items per CD)........................Per CD.....................................$ 25.00
CD-ROM Commercial Accounts...................................Per CD.....................................$ 25.00
OPTIONAL SERVICES
Courier Services...........................................Per Delivery.................................At cost
Programming Support Service Request..........................Per Hour...................................$ 75.00
Check Photocopy..............................................Per Item...................................$ 1.00
Check Research Services / Bookkeeping Services...............Per Hour...................................$ 23.50
Fax Services ................................................Per Page...................................$ 1.25
3 Year Service Agreement Surcharge...........................................12% of Total Monthly Service Cost
</TABLE>
First Commerce Technologies, Inc. Firstate Bank of Colorado
126 North 11th Street, P.O. Box 82414 11210 Huron Street
Lincoln, Nebraska 68501 Northglenn, CO 80234
Signature: /s/ J. Michael Tadlock Signature: /s/ Timothy D. Wiens
----------------------- ---------------------
Print Name: J. Michael Tadlock Print Name: Timothy D. Wiens
---------------------- --------------------
Title: Senior Vice President Title: Pres & CEO
--------------------------- -------------------------
Date: 4/16/98 Date: 4-14-98
---------------------------- --------------------------
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Percentage Ownership
Name of Subsidiary State of Incorporation by Registrant
- ------------------ ---------------------- --------------------
Firstate Bank Nebraska 91.4%
Firstate Bank of Colorado Colorado 100%
First Mortgage Bancorp Colorado 100%
<PAGE> 1
Exhibit 23.1
Board of Directors
First Western Corp.
We consent to the use of our report included herein and to the references to our
firm under the headings "Selected Consolidated Financial Data" and "Experts" in
the prospectus.
/s/ Clifton Gunderson L.L.C.
CLIFTON GUNDERSON L.L.C.
Denver, Colorado
November 11, 1998
<PAGE> 1
EXHIBIT 25.1
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _____
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
FIRST WESTERN CORPORATION
(Exact name of obligor as specified in its charter)
Nebraska 47-0484682
(State of incorporation) (I.R.S. employer identification no.)
11210 Huron Street
Northglenn, Colorado 80234
(Address of principal executive offices) (Zip Code)
% Junior Subordinated Debentures of First Western Corporation
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 11th day
of November, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
------------------------ --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold,
<PAGE> 5
purchase, convey, mortgage or otherwise deal in real and
personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require,
to make by-laws not inconsistent with the Constitution or
laws of the United States or of this State, to discount
bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of exchange,
and generally to use, exercise and enjoy all the powers,
rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other
2
<PAGE> 6
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of
3
<PAGE> 7
interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property held and owned by it, and to exercise in
respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts,
evidences of indebtedness and other property, any and all the
rights, powers and privileges of individual owners thereof,
including the right to vote thereon; to invest and deal in
and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper,
and from time to time to vary or realize such investments; to
issue bonds and secure the same by pledges or deeds of trust
or mortgages of or upon the whole or any part of the property
held or owned by the Corporation, and to sell and pledge such
bonds, as and when the Board of Directors shall determine,
and in the promotion of its said corporate business of
investment and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge, mortgage and
convey real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or
4
<PAGE> 8
transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the
5
<PAGE> 9
foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of stock and whether such dividends shall be cumulative
or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH),
6
<PAGE> 10
if any, shall have been met and after the Corporation shall have
complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase
accounts (fixed in accordance with the provisions of section (b) of
this Article FOURTH), and subject further to any conditions which
may be fixed in accordance with the provisions of section (b) of
this Article FOURTH, then and not otherwise the holders of Common
Stock shall be entitled to receive such dividends as may be declared
from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders
ratably in proportion to the number of shares of Common Stock
held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of
7
<PAGE> 11
Directors in the resolution or resolutions adopted pursuant to
authority granted in section (b) of this Article FOURTH and the
consent, by class or series vote or otherwise, of the holders of
such of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed
by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any of
them; provided, however, that the Board of Directors may provide in
the resolution or resolutions as to any series of Preferred Stock
adopted pursuant to section (b) of this Article FOURTH that the
consent of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such series
voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class
8
<PAGE> 12
shall be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any
increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office until
the next annual election of directors. At such election, the
stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall
have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the
term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
9
<PAGE> 13
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
10
<PAGE> 14
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
11
<PAGE> 15
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
12
<PAGE> 16
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or
13
<PAGE> 17
transfer of securities by the Corporation, or any Subsidiary
has an aggregate fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
14
<PAGE> 18
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 19
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the time
and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
<PAGE> 20
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
2
<PAGE> 21
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time
3
<PAGE> 22
for that purpose, and any provisions of these By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the
4
<PAGE> 23
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
5
<PAGE> 24
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of Directors shall preside at all meetings of the Board of Directors
at which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE> 25
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
7
<PAGE> 26
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
8
<PAGE> 27
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal
9
<PAGE> 28
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation
shall indemnify a person in connection with a proceeding initiated by such
person only if the proceeding was authorized by the Board of Directors of the
Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 29
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: November 11, 1998 By: /s/ Emmett R. Harmon
-------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 30
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on June 30, 1998.
<TABLE>
<S> <C> <C>
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 232,976
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,579
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416,957
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 150,100
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . . . . . . . 3,978,706
LESS: Allowance for loan and lease losses. . . . . . . . . . . . . . . 63,164
LESS: Allocated transfer risk reserve. . . . . . . . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,915,542
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,596
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,696
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . 1,066
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,759
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,586
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,208,857
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 31
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,568,934
Noninterest-bearing . . . . . . . . . . . . . . . . . 838,655
Interest-bearing. . . . . . . . . . . . . . . . . . . 3,730,279
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 418,382
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,350
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,728
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,745,394
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394,325
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . 6,520
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,463
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,208,857
</TABLE>
2
<PAGE> 1
EXHIBIT 25.2
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _____
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
FIRST WESTERN CORPORATION
FW CAPITAL I
(Exact name of obligor as specified in its charter)
Nebraska 47-0484682
Delaware To be applied for
(State of incorporation) (I.R.S. employer identification no.)
11210 Huron Street
Northglenn, Colorado 80234
(Address of principal executive offices) (Zip Code)
% Cumulative Preferred Securities of FW Capital I
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 11th day
of November, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By:/s/ Emmett R. Harmon
----------------------------- -------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold,
<PAGE> 5
purchase, convey, mortgage or otherwise deal in real and
personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require,
to make by-laws not inconsistent with the Constitution or
laws of the United States or of this State, to discount
bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of exchange,
and generally to use, exercise and enjoy all the powers,
rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other
2
<PAGE> 6
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of
3
<PAGE> 7
interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property held and owned by it, and to exercise in
respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts,
evidences of indebtedness and other property, any and all the
rights, powers and privileges of individual owners thereof,
including the right to vote thereon; to invest and deal in
and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper,
and from time to time to vary or realize such investments; to
issue bonds and secure the same by pledges or deeds of trust
or mortgages of or upon the whole or any part of the property
held or owned by the Corporation, and to sell and pledge such
bonds, as and when the Board of Directors shall determine,
and in the promotion of its said corporate business of
investment and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge, mortgage and
convey real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or
4
<PAGE> 8
transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
5
<PAGE> 9
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of stock and whether such dividends shall be cumulative
or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH),
6
<PAGE> 10
if any, shall have been met and after the Corporation shall have
complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase
accounts (fixed in accordance with the provisions of section (b) of
this Article FOURTH), and subject further to any conditions which
may be fixed in accordance with the provisions of section (b) of
this Article FOURTH, then and not otherwise the holders of Common
Stock shall be entitled to receive such dividends as may be declared
from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders
ratably in proportion to the number of shares of Common Stock
held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of
7
<PAGE> 11
Directors in the resolution or resolutions adopted pursuant to
authority granted in section (b) of this Article FOURTH and the
consent, by class or series vote or otherwise, of the holders of
such of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed
by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any of
them; provided, however, that the Board of Directors may provide in
the resolution or resolutions as to any series of Preferred Stock
adopted pursuant to section (b) of this Article FOURTH that the
consent of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such series
voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class
8
<PAGE> 12
shall be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any
increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office until
the next annual election of directors. At such election, the
stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall
have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the
term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to
9
<PAGE> 13
the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
10
<PAGE> 14
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
11
<PAGE> 15
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
12
<PAGE> 16
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or
13
<PAGE> 17
transfer of securities by the Corporation, or any Subsidiary
has an aggregate fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
14
<PAGE> 18
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 19
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the time
and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
<PAGE> 20
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
2
<PAGE> 21
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time
3
<PAGE> 22
for that purpose, and any provisions of these By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the
4
<PAGE> 23
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
5
<PAGE> 24
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of Directors shall preside at all meetings of the Board of Directors
at which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE> 25
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
7
<PAGE> 26
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
8
<PAGE> 27
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal
9
<PAGE> 28
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation
shall indemnify a person in connection with a proceeding initiated by such
person only if the proceeding was authorized by the Board of Directors of the
Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 29
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: November 11, 1998 By: /s/ Emmett R. Harmon
--------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 30
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on June 30, 1998.
<TABLE>
<S> <C>
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 232,976
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,579
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416,957
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . 150,100
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,978,706
LESS: Allowance for loan and lease losses. . . . . . 63,164
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,915,542
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,596
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,696
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . 1,066
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,759
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,586
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,208,857
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 31
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,568,934
Noninterest-bearing . . . . . . . . 838,655
Interest-bearing. . . . . . . . . . 3,730,279
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . 418,382
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,350
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,728
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,745,394
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394,325
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . 6,520
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,463
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,208,857
</TABLE>
2
<PAGE> 1
EXHIBIT 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
FIRST WESTERN CORPORATION
(Exact name of obligor as specified in its charter)
Nebraska 47-0484682
(State of incorporation) (I.R.S. employer identification no.)
11210 Huron Street
Northglenn, Colorado 80234
(Address of principal executive offices) (Zip Code)
Guarantee of First Western Corporation with respect to the
% Cumulative Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 11th day
of November, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
------------------------- -----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold,
<PAGE> 5
purchase, convey, mortgage or otherwise deal in real and
personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require,
to make by-laws not inconsistent with the Constitution or
laws of the United States or of this State, to discount
bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of
exchange, and generally to use, exercise and enjoy all the
powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other
2
<PAGE> 6
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of
3
<PAGE> 7
interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
4
<PAGE> 8
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
5
<PAGE> 9
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH),
6
<PAGE> 10
if any, shall have been met and after the Corporation shall have
complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase
accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions
which may be fixed in accordance with the provisions of section
(b) of this Article FOURTH, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends as may
be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of
7
<PAGE> 11
Directors in the resolution or resolutions adopted pursuant to
authority granted in section (b) of this Article FOURTH and the
consent, by class or series vote or otherwise, of the holders of
such of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed
by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any of
them; provided, however, that the Board of Directors may provide in
the resolution or resolutions as to any series of Preferred Stock
adopted pursuant to section (b) of this Article FOURTH that the
consent of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such series
voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class
8
<PAGE> 12
shall be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any
increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office until
the next annual election of directors. At such election, the
stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall
have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the
term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to
9
<PAGE> 13
the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
10
<PAGE> 14
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b)
and (c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
11
<PAGE> 15
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
12
<PAGE> 16
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,000,000 or more.
13
<PAGE> 17
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
14
<PAGE> 18
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 19
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
<PAGE> 20
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
2
<PAGE> 21
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall direct
the disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time
3
<PAGE> 22
for that purpose, and any provisions of these By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
4
<PAGE> 23
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member
of any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
5
<PAGE> 24
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE> 25
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
7
<PAGE> 26
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
8
<PAGE> 27
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal
9
<PAGE> 28
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 29
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: November 11, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 30
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been approved by
any state banking authorities. Refer to your appropriate state banking
authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on JUNE 30, 1998.
--------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins..................................... 232,976
Interest-bearing balances .............................................................. 0
Held-to-maturity securities ........................................................................ 195,579
Available-for-sale securities....................................................................... 1,416,957
Federal funds sold and securities purchased under agreements to resell.............................. 150,100
Loans and lease financing receivables:
Loans and leases, net of unearned income ............ 3,978,706
LESS: Allowance for loan and lease losses .......... 63,164
LESS: Allocated transfer risk reserve .............. 0
Loans and leases, net of unearned income, allowance, and reserve........................ 3,915,542
Assets held in trading accounts..................................................................... 0
Premises and fixed assets (including capitalized leases)............................................ 135,596
Other real estate owned ............................................................................ 1,696
Investments in unconsolidated subsidiaries and associated companies................................. 1,066
Customers' liability to this bank on acceptances outstanding........................................ 0
Intangible assets................................................................................... 55,759
Other assets........................................................................................ 103,586
Total assets........................................................................................ 6,208,857
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 31
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices................................................................................. 4,568,934
Noninterest-bearing ............... 838,655
Interest-bearing. ................. 3,730,279
Federal funds purchased and Securities sold under agreements to repurchase.......................... 418,382
Demand notes issued to the U.S. Treasury............................................................ 99,350
Trading liabilities (from Schedule RC-D)............................................................ 0
Other borrowed money:............................................................................... ///////
With original maturity of one year or less.............................................. 524,000
With original maturity of more than one year............................................ 43,000
Bank's liability on acceptances executed and outstanding............................................ 0
Subordinated notes and debentures................................................................... 0
Other liabilities (from Schedule RC-G).............................................................. 91,728
Total liabilities................................................................................... 5,745,394
EQUITY CAPITAL
Perpetual preferred stock and related surplus........................................................ 0
Common Stock......................................................................................... 500
Surplus (exclude all surplus related to preferred stock)............................................. 62,118
Undivided profits and capital reserves............................................................... 394,325
Net unrealized holding gains (losses) on available-for-sale securities............................... 6,520
Total equity capital................................................................................. 463,463
Total liabilities, limited-life preferred stock, and equity capital.................................. 6,208,857
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000876180
<NAME> FIRST WESTERN CORP.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 DEC-31-1997
<CASH> 14,449 10,427
<INT-BEARING-DEPOSITS> 6 149
<FED-FUNDS-SOLD> 12,480 11,310
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 35,110 15,470
<INVESTMENTS-CARRYING> 9,241 13,042
<INVESTMENTS-MARKET> 9,344 13,125
<LOANS> 253,659 169,809
<ALLOWANCE> 1,592 1,321
<TOTAL-ASSETS> 335,493 227,600
<DEPOSITS> 294,044 200,294
<SHORT-TERM> 3,588 3,072
<LIABILITIES-OTHER> 4,031 3,283
<LONG-TERM> 13,300 3,380
0 0
0 0
<COMMON> 140 140
<OTHER-SE> 19,728 16,771
<TOTAL-LIABILITIES-AND-EQUITY> 335,493 227,600
<INTEREST-LOAN> 16,808 13,860
<INTEREST-INVEST> 1,200 1,667
<INTEREST-OTHER> 707 736
<INTEREST-TOTAL> 18,715 16,263
<INTEREST-DEPOSIT> 8,185 6,986
<INTEREST-EXPENSE> 8,755 7,481
<INTEREST-INCOME-NET> 9,960 8,782
<LOAN-LOSSES> 180 140
<SECURITIES-GAINS> (3) 0
<EXPENSE-OTHER> 7,043 6,544
<INCOME-PRETAX> 4,718 3,806
<INCOME-PRE-EXTRAORDINARY> 2,953 2,497
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,953 2,497
<EPS-PRIMARY> 21.09 18.67
<EPS-DILUTED> 21.09 18.67
<YIELD-ACTUAL> 0 0
<LOANS-NON> 414 484
<LOANS-PAST> 279 744
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 1,321 851
<CHARGE-OFFS> 68 58
<RECOVERIES> 159 111
<ALLOWANCE-CLOSE> 1,592 1,321
<ALLOWANCE-DOMESTIC> 200 164
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1,392 1,157
</TABLE>
