<TABLE>
<CAPTION>
<S> <C>
As filed with the Securities and Exchange Commission on April 7, 2000
Registration Nos. 333-
333- -01
Securities & Exchange Commission
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Blue Valley Ban Corp
--------------------
(Exact name of registrant as specified in its charter)
Kansas
(State or other jurisdiction of incorporation or organization)
6022
(Primary Standard Industrial Classification Code Number)
48-1070996
(I.R.S. Employer Identification No.)
BVBC Capital Trust I
--------------------
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
6022
(Primary Standard Industrial Classification Code Number)
Applied for
(I.R.S. Employer Identification No.)
11935 Riley, Overland Park, Kansas 66225-6128; (913) 338-1000
-------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Robert D. Regnier, Chief Executive Officer
Blue Valley Ban Corp
11935 Riley
Overland Park, Kansas 66225-6128
(913) 338-1000
with copies to:
Steven F. Carman, Esq. Thomas C. Erb,Esq.
Blackwell Sanders Peper Martin LLP Lewis, Rice & Fingersh, L.C.
Two Pershing Square 500 North Broadway
2300 Main Street, Suite 1000 St. Louis, Missouri 63102
Kansas City, Missouri 64108 (314) 444-7600
(816) 983-8000
- ------------------------------------------------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act, check the following box. [__]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration 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, check the following box. [__]
CALCULATION OF REGISTRATION FEE
- ------------------------------- ----------------------- -------------------------- ------------------------- -----------------------
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per unit aggregate offering price registration fee
- ------------------------------- ----------------------- -------------------------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
Trust Preferred Securities of 1,437,500 (1) $8.00 $11,500,000 $3,036 (2)
BVBC Capital Trust I
Junior Subordinated Debentures
of Blue Valley Ban Corp (3) ___ ___ ___
Guarantee of Blue Valley Ban
Corp with respect to the
Trust Preferred Securities (4) ___ ___ ___
Total ___ ___ $11,500,000 $3,036
<FN>
(1) Includes 187,500 Trust Preferred Securities which may be sold by BVBC Capital Trust I to cover over-allotments.
(2) The registration fee is calculated pursuant to Rule 457(i) and (n).
(3) The % Junior Subordinated Debentures will be purchased by BVBC Capital Trust I with the proceeds of the sale of the
% Cumulative Trust Preferred Securities. The Junior Subordinated Debentures may be later distributed for no
additional consideration to the holders of the Trust Preferred Securities upon the dissolution of BVBC Capital
Trust I and the distribution of its assets.
(4) This Registration Statement is deemed to cover the Junior Subordinated Debentures of Blue Valley Ban Corp, the
rights of holders of the Junior Subordinated Debentures of Blue Valley Ban Corp under the Indenture, the rights of
holders of the Trust Preferred Securities under the Trust Agreement, the Guarantee, the Expense Agreement and
certain backup undertakings as described herein which, taken together, fully, irrevocably and unconditionally
guarantee all of the respective obligations of BVBC Capital Trust I under the Trust Preferred Securities. No
separate consideration will be received for the Guarantee, the Expense Agreement or such backup undertakings.
</FN>
The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrants shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the
Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
</TABLE>
<PAGE>
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 IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject To Completion, Dated , 2000
PROSPECTUS
1,250,000 TRUST PREFERRED SECURITIES
BVBC CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED
ON A SUBORDINATED BASIS BY
BLUE VALLEY BAN CORP
--------------------
BVBC Capital Trust I is offering 1,250,000 trust preferred securities. No
public market currently exists for the trust preferred securities.
The trust preferred securities generally consist of an indirect beneficial
interest in our % junior subordinated debentures. The junior subordinated
debentures have the same payment terms as the trust preferred securities and
will be purchased and held by BVBC Capital Trust I using the proceeds of this
offering. A brief description of the trust preferred securities can be found
under "Prospectus Summary - The Offering" in this prospectus.
We have applied to have the trust preferred securities listed for
trading on the American Stock Exchange under the symbol " ."
--------------------
YOU SHOULD CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 10 BEFORE
INVESTING IN THE TRUST PREFERRED SECURITIES.
--------------------
THE TRUST PREFERRED SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS, OR
OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE BANK INSURANCE FUND OF
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
--------------------
Per Trust
Preferred
Security Total
-------- -----
Public Offering Price............... $ 8.00 $10,000,000
Proceeds to BVBC Capital Trust I ... $ 8.00 $10,000,000
This is a firm commitment underwriting. We will pay underwriting
commissions of $ per trust preferred security, or a total of $ , for arranging
the investment in our junior subordinated debentures. We have granted the
underwriter the right to purchase up to an additional 187,500 trust preferred
securities to cover over-allotments, if any.
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
Date of this Prospectus is , 2000
<PAGE>
[GRAPH OMITTED]
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements based on our
current expectations, assumptions, estimates and projections about us and our
industry. Forward-looking statements relate to future events or to our future
financial performance. In some cases, you can identify forward-looking
statements by terminology like "may," "will," "should," "expects," "plans,"
"intends," "anticipates," "could," "believes," "estimates," "predicts,"
"objective," "potential," "projection," "forecast," "goal" or similar
expressions. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of factors more fully described
in the "Risk Factors" section and elsewhere in this prospectus.
Although we believe that the expectations reflected in any forward-looking
statements are reasonable, we cannot guarantee future events or results. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur.
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING OUR COMPANY AND THE TRUST PREFERRED SECURITIES BEING SOLD
IN THIS OFFERING AND OTHER CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS WE INDICATE OTHERWISE, (A) ALL
INFORMATION IN THIS PROSPECTUS (1) REFLECTS THE FOUR-FOR-ONE STOCK SPLIT OF OUR
COMMON STOCK EFFECTIVE AS OF JANUARY 20, 2000, AND (2) ASSUMES NO EXERCISE OF
THE UNDERWRITER'S OVER-ALLOTMENT OPTION TO PURCHASE UP TO AN ADDITIONAL 187,500
TRUST PREFERRED SECURITIES FROM BVBC CAPITAL TRUST I, AND (B) REFERENCES IN THIS
PROSPECTUS TO "WE," "US," "OUR" AND "BLUE VALLEY" INCLUDE BLUE VALLEY BAN CORP,
BANK OF BLUE VALLEY, BLUE VALLEY BUILDING CORP., AND BLUE VALLEY INVESTMENT
CORP., BUT NOT BVBC CAPITAL TRUST I.
BLUE VALLEY
We organized Blue Valley and our wholly-owned subsidiary, Bank of Blue
Valley, in 1989 to provide banking services to closely-held businesses, their
owners, professionals and individuals in Johnson County, Kansas, a high growth,
demographically attractive area within the Kansas City, Missouri - Kansas
Metropolitan Statistical Area. Our focus has been to take advantage of the
current and anticipated growth in our market area as well as to serve the needs
of small and mid-sized commercial borrowers - customers that we believe
currently are underserved as a result of banking consolidation in the industry
generally and within our market specifically.
We have experienced significant internal growth since our inception. In
addition, in 1994, we acquired the deposits of a branch of a failed savings and
loan institution to augment our internal growth and expand into an additional
market which management believed was attractive. In 1994, we also completed the
construction of our current headquarters in Overland Park, Kansas. We currently
have three banking locations in Johnson County, Kansas, including our main
office in Overland Park, a full-service office in Olathe, Kansas, and a
supermarket banking facility in Shawnee, Kansas. We plan to open an additional
full-service office in Shawnee, Kansas in the third quarter of 2000.
FINANCIAL SUMMARY
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FIVE YEARS ENDED YEAR ENDED DECEMBER 31,
------------------- ---------------------------------------------------------------
DECEMBER 31, 1999 1999 1998 1997 1996 1995
(1)
------------------- ------------ ------------ ----------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net income............................. 39.91% $ 3,083 $ 2,816 $ 2,286 $ 1,622 $ 1,049
Earnings per share (diluted)........... 27.59% 1.42 1.35 1.22 0.85 0.70
Total assets........................... 26.82% 332,613 253,724 201,644 162,739 132,794
Total loans............................ 36.65% 250,410 161,444 127,308 101,323 71,791
Total deposits......................... 25.70% 268,145 209,824 170,792 139,929 112,614
Total stockholders' equity............. 30.08% 18,869 17,016 13,464 10,100 8,761
Return on average total assets......... 1.14% 1.08% 1.28% 1.30% 1.13% 0.89%
Return on average total stockholders'
equity................................. 18.46% 17.43% 18.98% 20.62% 17.79% 17.46%
</TABLE>
[FN]
(1) For the period indicated, these figures represent compound annual
growth rate of net income, earnings per share (diluted), total assets,
total loans, total deposits and total stockholders' equity, and average
annual return on average total assets and average total stockholders'
equity.
</FN>
1
<PAGE>
BUSINESS STRATEGY
Since our founding, we have strived to increase stockholder value by
executing a community banking strategy tailored to provide our customers with
competitive financial products and services, our employees with the opportunity
to share in our financial success and our community with a stable, growth
oriented employer. To further our primary business objectives, we have
identified several business strategies designed to increase and diversify our
loan portfolio, generate non-interest income, control non-interest expense and
create new markets for our existing and developing products.
o GROW AND DIVERSIFY OUR LOAN PORTFOLIO. Our lending strategy
emphasizes commercial and residential lending and, to a lesser
extent, consumer lending. To grow our portfolio, we actively
pursue businesses and professionals within our target market area
as well as utilize our existing client relationships to identify
and develop a network of potential referrals. We have also
placed an increasing emphasis on cross-marketing our lending
products and services to existing and new customers for our
deposit and other services. With the advent of new technology
for delivering financial products and services, we have
identified several techniques to market our lending products.
For example, our customers are now able to use our electronic
banking services to apply for residential and personal loans over
the Internet. Throughout our history, we have continually
broadened our product offerings in order to decrease our reliance
on any one source of lending activity and to generate additional
income. To further diversify our loan portfolio, we intend to
continue to identify and invest in new lines of business that
provide an acceptable rate of return on a risk-adjusted basis.
o PURSUE OPPORTUNITIES TO INCREASE OUR NON-INTEREST INCOME. In
order to increase stockholder value, we believe that traditional
community banks must identify and develop products which generate
fee-based income in order to augment traditional sources of
interest income. Our residential mortgage loan originations and
our trust, investment brokerage and other services provide these
sources of non-interest income. Although our trust and
investment brokerage operations do not currently represent a
material source of income, we anticipate the income resulting
from these activities to increase in the future. We also seek to
deploy programs and employ individuals capable of anticipating
and meeting the many financial service needs of our relatively
affluent customer base. The experience of our management team is
critical to understanding and providing the high level of
customer service which we believe is essential in competing for
these customers.
o CONTROL THE EXPENSES NECESSARY TO FACILITATE OUR GROWTH. As a
high-growth community bank with diversified and developing lines of
business, we continue to place emphasis on controlling costs. Each
of our prospective lines of business, as well as our current
activities, are reviewed to determine the potential contribution to
net income and earnings per share.
2
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o EXPAND OUR PRESENCE WITHIN OUR MARKET AREA. We operate as a
community bank, serving the banking needs of small and
medium-sized companies and individuals in the Kansas City,
Missouri - Kansas Metropolitan Statistical Area generally, and
suburban Johnson County, Kansas in particular. We will consider
opening new branches and establishing new ATMs in high growth
areas within our market area to grow our deposit base and to
expand our ability to provide lending and other services to new
and existing customers. To the extent that opportunities present
themselves, we will consider acquisition opportunities within our
market area and in contiguous areas. Our management team expects
to build upon our reputation as a community bank capable of
responding promptly to customer needs, thereby distinguishing
ourselves from many regional and national banks. We also expect
to continue to respond to changes in technology to enable us to
enhance our level of customer service. For example, through our
"Blue Wave" Internet banking service, our deposit customers can
check balances, transfer funds, pay bills and order new checks
electronically around the clock. By offering these services to
our customers, we believe we have distinguished ourselves from
many community banks in our market area.
We believe that our primary strengths are our:
o high level of customer service standards,
o growth opportunities in our primary market area,
o market perception as an independent community bank focused on
serving the needs of our market, as compared to a regional or
national bank, and
o experienced senior management team.
BVBC TRUST
BVBC Trust is a newly created Delaware business trust. We created BVBC
Trust to offer the trust preferred securities and to purchase our junior
subordinated debentures. BVBC Trust has a term of 35 years, but may dissolve
earlier as provided in its trust agreement.
The principal executive offices of Blue Valley and BVBC Trust are located
at 11935 Riley, Overland Park, Kansas 66225-6128. The main telephone number for
both Blue Valley and BVBC Trust is (913) 338-1000. Our Internet address is
http://www.bankbv.com.
3
<PAGE>
THE OFFERING
Trust preferred securities
issuer .................... BVBC Trust.
Securities offered............ BVBC Trust is offering 1,250,000 of its
trust preferred securities, which represent
an indirect beneficial interest in junior
subordinated debentures issued by Blue
Valley and held by BVBC Trust.
BVBC Trust will sell its trust preferred
securities to the public and its common
securities to Blue Valley. Together, the
trust preferred securities and the common
securities are referred to as trust
securities. BVBC Trust will use the proceeds
from the sale of trust securities to buy from
Blue Valley a series of % junior subordinated
debentures due June 30, 2030. The junior
subordinated debentures will have the same
payment terms as the trust preferred
securities.
Quarterly distributions are
payable to you on the trust
preferred securities....... The distributions payable on each preferred
security will:
o be fixed at a rate per year
of %;
o accrue from the date of issuance of
the trust preferred securities; and
o be payable quarterly on March 31, June
30, September 30 and December 31 of
each year that the trust preferred
securities are outstanding, beginning
on June 30, 2000, subject to our right
to defer distributions on the trust
preferred securities.
Blue Valley and BVBC Trust have
rights to defer distributions
to you on the trust preferred
securities................. BVBC Trust will defer distributions on the
trust preferred securities if Blue Valley
defers interest payments on the junior
subordinated debentures. Blue Valley
generally has the right to defer interest
payments on the junior subordinated
debentures for up to 20 consecutive quarters.
During any deferral period, you will still
accumulate the right to receive
4
<PAGE>
distributions when subsequently made at the
annual rate of %, plus you will earn interest
at the annual rate of %, compounded
quarterly, on any unpaid distributions.
You will still be taxed, even if
distributions on the trust
preferred securities are
deferred................... If distributions on the trust preferred
securities are deferred, you will be
required to accrue interest income in the
form of original issue discount and include
it in your gross income for United States
federal income tax purposes for as long as
the junior subordinated debentures remain
outstanding, even if you are a cash basis
taxpayer. For further information on
deferrals and their tax consequences, see
"Risk Factors - Distributions on the trust
preferred securities may be deferred; you may
have to include interest in your taxable
income before you receive cash," "Description
of the Junior Subordinated Debentures -
Option to Extend Interest Payment Period" and
"Material Federal Income Tax Consequences -
Interest Income and Original Issue Discount."
Your trust preferred securities
will be redeemed by BVBC Trust
when the junior subordinated
debentures mature.......... The junior subordinated debentures will
mature on June 30, 2030. BVBC Trust will
redeem your trust preferred securities upon
the stated maturity date of the junior
subordinated debentures or earlier if they
are prepaid.
If the junior subordinated
debentures are prepaid, your
trust preferred securities
will be redeemed........... If Blue Valley receives the prior approval
of the Board of Governors of the Federal
Reserve System, if then required, Blue Valley
may prepay the junior subordinated debentures
prior to maturity:
o on or after June 30, 2005; or
o at any time upon events occurring that may
have a significant adverse
effect on the benefits to Blue Valley of
having the trust preferred securities
outstanding.
5
<PAGE>
Upon any prepayment of the junior
subordinated debentures, your trust preferred
securities will be redeemed at the
liquidation amount of $8 per preferred
security plus any accrued and unpaid
distributions to the date of redemption. For
further information on redemptions, see
"Description of the Trust Preferred
Securities - Redemption - Mandatory and
Optional Rights of Blue Valley" and
"Description of the Junior Subordinated
Debentures - Redemption."
At its option, Blue Valley may
require you to exchange your
trust preferred securities for
its junior subordinated
debentures................. Blue Valley has the right at any time to
dissolve BVBC Trust and distribute the
junior subordinated debentures to you in
exchange for your trust preferred securities.
However, Blue Valley would likely have to
first receive prior approval of the Federal
Reserve and must first pay the creditors, if
any, of BVBC Trust. Upon a dissolution of
BVBC Trust, after satisfaction of liabilities
to creditors, if any, of BVBC Trust, you will
receive junior subordinated debentures in
exchange for the principal amount of your
holdings in trust preferred securities, plus
accrued and unpaid interest equal to the
accrued and unpaid distributions on the trust
preferred securities. For further information
concerning distribution of the junior
subordinated debentures, see "Description of
the Trust Preferred Securities - Distribution
of Junior Subordinated Debentures."
Your trust preferred securities
are fully and unconditionally
guaranteed by Blue Valley on a
subordinated basis......... Blue Valley will fully, irrevocably and
unconditionally guarantee the trust
preferred securities on a subordinated
basis. If Blue Valley does not make a
payment on the junior subordinated
debentures, BVBC Trust will not have
sufficient funds to make payments on the
trust preferred securities. The trust
preferred securities guarantee does not
guarantee payments by BVBC Trust when it has
not received sufficient funds. For further
information concerning our guarantee of the
trust preferred securities, see "Description
of the Trust Preferred Securities Guarantee."
6
<PAGE>
Your trust preferred securities
rank lower in payment priority
compared to other obligations
of Blue Valley............. Blue Valley's obligations under its trust
preferred securities 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 Blue Valley. In
addition, because Blue Valley is a holding
company, all existing and future liabilities
of any Blue Valley subsidiary will rank
prior to all obligations of Blue Valley
relating to the trust preferred securities
and the junior subordinated debentures.
There is no limit on the amount of these
liabilities or the amount of other trust
preferred securities or other junior
subordinated debentures of Blue Valley or
its subsidiaries that may be issued in the
future.
Future issuances of this type will rank
equally with Blue Valley's obligations under
the junior subordinated debentures and its
trust preferred securities guarantee
described in this prospectus. The trust
preferred securities will generally rank
equally and payments on them will be made
proportionately, with the common securities
of BVBC Trust, which will be held by Blue
Valley.
You will have limited voting As a holder of trust preferred securities,
rights........................ you have only limited voting rights. These
rights relate only to the dissolution of BVBC
Trust, the modification of the trust
preferred securities and removal of the
property trustee and the indenture trustee of
BVBC Trust upon selected events described in
this prospectus. See "Description of the
Trust Preferred Securities - Voting Rights;
Amendment of the Trust Agreement."
The trust preferred securities
will be in book entry
form only.................. You will not receive a certificate for your
trust preferred securities. Instead, the
trust preferred securities will be
represented by a global security that will be
deposited with and registered in the name of
The Depository Trust Company or its nominee.
7
<PAGE>
There is no established market
for the trust preferred
securities................. No public trading market currently exists
for the trust preferred securities. We have
applied to have the trust preferred
securities approved for listing on the
American Stock Exchange under the trading
symbol " ." We can not give any
assurance as to the liquidity of any trading
market for the trust preferred securities.
See "Market for the Trust Preferred
Securities."
No rating..................... The trust preferred securities have not been
rated by any nationally recognized
statistical rating organization.
Use of proceeds............... We will receive proceeds from the sale of
our junior subordinated debentures to BVBC
Trust. BVBC Trust will purchase our junior
subordinated debentures with proceeds from
the sale of the trust preferred securities.
We intend to use the net proceeds as follows:
o repay approximately $7.3 million
of debt outstanding as of
February 29, 2000, under our
bank stock loan; and
o retain the remainder for general
corporate purposes, including
investments from time to time in
the Bank in the form of
additional capital and possible
future acquisitions. We have no
agreements or understandings at
this time for any acquisitions,
and we cannot be sure whether
any acquisitions will ever occur.
Risk factors.................. You should review the "Risk Factors" section
of this prospectus for a discussion of some
of the risks inherent in an investment in
the trust preferred securities.
8
<PAGE>
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1)
Including interest on deposits...... 1.41x 1.46x 1.47x 1.44x 1.33x
Excluding interest on deposits...... 4.36x 5.32x 6.50x 5.20x 3.25x
Pro Forma Ratio of Earnings to Fixed
Charges (2)
Including interest on deposits...... 1.39x -- -- -- --
Excluding interest on deposits...... 3.26x -- -- -- --
</TABLE>
[FN]
(1) For purposes of calculating the ratio of earnings to fixed charges,
earnings consists of income before taxes plus interest expense. Fixed
charges consist of interest expense.
(2) For purposes of calculating the pro forma ratio of earnings to fixed
charges, earnings consists of income before taxes plus pro forma
interest expense. Pro forma interest expense consists of historical
interest expense plus (1) interest expense on the junior subordinated
debentures assuming that we issued a total principal amount of $10
million at 10.0% at the beginning of the period minus (2) historical
interest expense on the $7.3 million of our debt under our bank stock
loan that we intend to retire with the proceeds from this offering.
</FN>
9
<PAGE>
RISK FACTORS
In addition to the other information in this prospectus, you should
carefully consider the following factors before investing in the common stock or
the trust preferred securities.
RISK FACTORS RELATING TO BLUE VALLEY
WE MAY NOT BE ABLE TO IMPLEMENT ASPECTS OF OUR GROWTH STRATEGY.
We may not be able to implement aspects of our growth strategy. The key
components of our growth strategy are growing and diversifying our loan
portfolio, increasing our non-interest income and expanding our presence within
our market area. Our ability to achieve each of the components of our growth
strategy is subject to a number of risks, and our failure to execute
successfully any or all of these components could adversely affect our financial
performance and our ability to meet our strategic objectives.
To grow our loan portfolio, we plan to aggressively cross-market our
lending products and services to existing and new customers of our deposit and
other services. The business of lending is extremely competitive, and we cannot
be sure whether we will be able to successfully cross-market our lending
products and services to our other customers. See "- We are in a very
competitive industry." To diversify our loan portfolio, me must be able to
correctly identify new lending products that will provide us with an acceptable
return on a risk-adjusted basis. Our senior management may not be able to
successfully identify these products or effectively manage the integration of
products that we have not previously offered.
We also plan to increase our non-interest income by expanding our
mortgage, trust and investment brokerage businesses. In a rising interest rate
environment, our ability to increase our fee income from mortgage originations
is likely to be adversely affected because fewer customers will refinance their
existing residential mortgage loans. We have offered trust services since 1996
and investment brokerage services since 1999. These lines of our business are
still in the formative stages of their growth, their present contributions to
our revenues and net income are currently minimal, and we cannot be sure whether
we will ever derive significant revenues from these areas.
In order to expand our presence within our market area through the
establishment of new branches or ATMs, we must be able to correctly identify
profitable or growing markets. If we attempt to implement our strategy by
acquiring existing branches of other institutions, our success will depend on
our ability to identify acquisition opportunities that will complement our
banking operations, and our ability to successfully integrate their operations
with ours. In either case, we cannot be sure whether we will be able to identify
suitable opportunities for further expansion or to successfully execute our
expansion plans.
OUR OPERATIONS MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO MAINTAIN AND
INCREASE OUR DEPOSIT BASE AND SECURE ADEQUATE FUNDING.
Our operations may be adversely affected if we are unable to maintain and
increase our deposit base and secure adequate funding. We fund our banking and
lending activities primarily
10
<PAGE>
through demand, savings and time deposits and, to a lesser extent, lines of
credit, sale/repurchase facilities from various financial institutions, and
Federal Home Loan Bank borrowings. The success of our business plan depends in
part on our ability to maintain and increase our deposit base and our ability to
maintain access to other funding sources. Our inability to obtain funding on
favorable terms, on a timely basis, or at all, would adversely affect our
operations and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
WE DEPEND ON OUR KEY PERSONNEL.
We are a relatively small organization and depend on the services of
all of our employees. Our growth and development to date has depended in a
large part on a few key employees who have primary responsibility for
maintaining personal relationships with our largest customers. The
unexpected loss of services of one or more of these key employees could have
a material adverse effect on our operations. Our key employees are Robert D.
Regnier, John K. Doull, Mark A. Fortino, Nancy A. Taylor, Penny T. Hershman
and Bonnie M. McConnaughy. Each of these persons are officers of the Bank. We
do not have employment or non-compete agreements with any of these key
employees. We carry a $1 million "key person" life insurance policy on the
life of Mr. Regnier.
CHANGES IN INTEREST RATES MAY ADVERSELY AFFECT OUR EARNINGS AND COST OF
FUNDS.
Changes in interest rates affect our operating performance and financial
condition in diverse ways. A substantial part of our profitability depends on
the difference between the rates we receive on loans and investments and the
rates we pay for deposits and other sources of funds. Our net interest spread
will depend on many factors that are partly or entirely outside our control,
including competition, federal monetary and fiscal policies, and economic
conditions generally. Historically, net interest spreads for many financial
institutions have widened and narrowed in response to these and other factors,
which are often collectively referred to as "interest rate risk." We intend to
try to minimize our exposure to interest rate risk, but we will be unable to
eliminate it.
In our banking operations, we are subject to interest rate risk on loans
held in our portfolio arising from mismatches between the dollar amount of
repricing or maturing assets and liabilities. These mismatches are referred to
as the "interest rate sensitivity gap," which is measured in terms of the ratio
of the interest rate sensitivity gap to total assets. A higher level of assets
repricing or maturing than liabilities over a given time frame is considered
asset-sensitive and is reflected as a positive gap. In contrast, a higher level
of liabilities repricing or maturing than assets over a given time frame is
considered liability-sensitive and is reflected as a negative gap. As of
December 31, 1999, we had a positive interest rate sensitivity gap. A positive
gap will generally enhance earnings in a rising interest rate environment and
will negatively impact earnings in a falling interest rate environment. A
negative gap will generally enhance earnings in a falling interest rate
environment and negatively impact earnings in a rising interest rate
environment. Although we currently have a positive gap, in a rising interest
rate environment, our fee income is likely to be adversely affected because
fewer residential mortgage loans will be refinanced. Fluctuations in interest
rates are not predictable or controllable. Although we have attempted to
structure our asset and liability management strategies to mitigate the impact
on net
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interest income of changes in market interest rates, we can not give any
assurance that a sudden or significant change in prevailing interest rates will
not have a material adverse effect on our operating results.
BECAUSE OUR BUSINESS IS CONCENTRATED IN THE KANSAS CITY METROPOLITAN AREA,
A DOWNTURN IN THE KANSAS CITY ECONOMY MAY ADVERSELY AFFECT OUR BUSINESS.
Because our business is concentrated in the Kansas City metropolitan area,
a downturn in the Kansas City economy may adversely affect our business. Our
success is dependent to a significant extent upon the general economic
conditions in the Kansas City metropolitan area, including Johnson County,
Kansas, and, in particular, the conditions for the medium-sized and small-sized
businesses that are the focus of our customer base. Although currently the
economy in these areas is favorable, we do not know whether these conditions
will continue. Adverse changes in economic conditions in the Kansas City
metropolitan area, including Johnson County, Kansas, could impair our ability to
collect loans, reduce our growth rate and have a negative effect on our overall
financial condition.
A DECREASE IN THE DEMAND FOR HOUSING IN OUR MARKET AREA MAY ADVERSELY
AFFECT OUR EARNINGS.
A decrease in the demand for housing in our market area may adversely
affect our earnings. As of December 31, 1999, approximately $74.3 million, or
29.66%, of our loan portfolio consisted of residential mortgage loans and
construction loans for residential builders, primarily in Johnson County,
Kansas. The demand for housing in Johnson County is influenced by a number of
factors, including prevailing interest rates, inflation, levels of regional
commercial activity, consumer preferences for suburban housing, and the
continuing presence of significant employers in the Johnson County region. A
change in any of these factors, or in factors that we do not anticipate, could
cause the demand for housing in Johnson County to decline. Because of our focus
on residential mortgage loans and construction loans for residential builders,
if this occurs we could experience significant losses in our loan portfolio and
a material decrease in our earnings.
IF OUR BORROWERS DEFAULT ON THEIR LOANS, IT WILL ADVERSELY AFFECT OUR
OPERATING RESULTS.
If our borrowers default on their loans, it will adversely affect our
operating results. Some borrowers may not repay loans that we make to them. This
risk is inherent in the banking business. If a significant amount of loans are
not repaid, it would have an adverse effect on our earnings and overall
financial condition, and could cause us to become insolvent.
Approximately $36.2 million, or 14.46%, of our loan portfolio consists of
indirect automobile loans. Because these types of loans are secured by
automobiles, which depreciate rapidly, our indirect automobile loans may present
a greater risk of loss than other types of secured loans, like loans secured by
residential real estate. We cannot be sure whether our level of charge-offs for
indirect automobile loans in future periods will be consistent with our
historical levels of indirect automobile loan charge-offs.
Approximately $4.0 million, or 6.20%, of our commercial loans are Small
Business Administration loans, of which $3.0 million is guaranteed by the SBA.
SBA lending exposes us
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<PAGE>
to the risk that the SBA will not honor its guarantee in addition to the risk of
loss on the portion that is not guaranteed. In the event of default by the
borrower, the SBA may seek to recover the amount of the guarantee from us if the
SBA establishes that any portion of the loss is attributable to significant
technical difficulties in the manner in which we originated, documented or
funded the loan.
Like all financial institutions, we maintain an allowance for loan losses
to provide for loan defaults and nonperformance. The allowance for loan losses
is maintained at a level management feels is adequate to absorb losses inherent
in the loan portfolio, an evaluation that is primarily based upon a review of
our historical loan loss experience and that of other banks in our market area
with similar loan portfolios, and known and inherent risks contained in the loan
portfolio including, composition, growth of the loan portfolio, and current and
projected economic factors. However, our allowance for loan losses may not be
adequate to cover actual losses, and future provisions for loan losses may
adversely affect our earnings. In addition, various regulatory agencies, as an
integral part of the examination process, periodically review our loan
portfolio. These agencies may require us to add to the allowance for loan losses
based on their judgments and interpretations of information available to them at
the time of their examinations.
WE MAY INCUR SIGNIFICANT COSTS IF WE FORECLOSE ON ENVIRONMENTALLY
CONTAMINATED REAL ESTATE.
If we foreclose on a defaulted real estate loan to recover our investment,
we may be subject to environmental liabilities in connection with the underlying
real property. It is also possible that hazardous substances or wastes may be
discovered on these properties during our ownership or after they are sold to a
third party. If they are discovered on a property that we have acquired through
foreclosure or otherwise, we may be required to remove those substances and
clean up the property. We may have to pay for the entire cost of any removal and
clean-up without the contribution of any other third parties. We may also be
liable to tenants and other users of neighboring properties. These costs or
liabilities may exceed the fair value of the property. In addition, we may find
it difficult or impossible to sell the property prior to or following any
environmental clean-up.
WE ARE IN A VERY COMPETITIVE INDUSTRY.
Our business is extremely competitive. Many of our competitors are, or are
affiliates of, enterprises that have greater resources, name recognition and
market presence than we do. We compete with a number of different institutions,
including: other banks and thrift institutions; automobile financing companies;
mortgage companies; investment companies, mutual funds and money market funds;
full service and discount broker dealers; insurance companies; and credit
unions.
Some of our competitors are not regulated as extensively as we are and,
therefore, may have greater flexibility in competing for business. Some of these
competitors are subject to similar regulation but have the advantages of
established customer bases, higher lending limits, extensive branch networks,
numerous ATMs, and more ability to absorb the costs of maintaining technology or
other factors.
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<PAGE>
WE OPERATE IN A BUSINESS THAT IS SUBJECT TO SIGNIFICANT GOVERNMENT
REGULATION.
The banking industry is heavily regulated. Our success depends not only on
competitive factors but also on the cost of complying with state and federal
regulations affecting banks and bank holding companies. We are subject to
regulation by the Federal Deposit Insurance Corporation, the Kansas Banking
Department and the Board of Governors of the Federal Reserve System. These
regulations put us at a competitive disadvantage compared to less regulated
competitors like finance companies, mortgage banking companies and leasing
companies. Banking industry regulations are primarily intended to protect
depositors, not shareholders, and are subject to continuous change. We cannot
predict the ultimate effect of regulatory change with certainty. Additional laws
affecting financial institutions may be proposed and enacted in the future. We
are currently subject to regulations which may change at any time. We cannot
assure you that the cost of complying with laws and regulations will not
adversely affect our business or economic performance.
See "Regulation and Supervision."
RISK FACTORS RELATING TO THE TRUST PREFERRED SECURITIES
OUR OBLIGATIONS UNDER THE TRUST PREFERRED SECURITIES GUARANTEE AND THE
JUNIOR SUBORDINATED DEBENTURES RANK LOWER THAN OUR OTHER OBLIGATIONS.
Our obligations under the trust preferred securities guarantee and the
junior subordinated debentures are unsecured and will rank junior in priority of
payment to any senior and subordinated debt we may incur, which generally
includes indebtedness, liabilities or obligations we may have, contingent or
otherwise. As of February 29, 2000, we had approximately $9.1 million in
indebtedness that would rank senior in priority of payment to the junior
subordinated debentures. Our obligations under the junior subordinated
debentures will also be effectively subordinated to all existing and future
liabilities and obligations of the Bank.
The trust preferred securities, the junior subordinated debentures and the
trust preferred securities guarantee do not limit our ability or the ability of
the Bank to incur unlimited future indebtedness, liabilities and obligations,
which may rank senior to the junior subordinated debentures and the trust
preferred securities guarantee.
For more information on our obligations under the trust preferred
securities guarantee and the junior subordinated debentures, see "Description of
the Trust Preferred Securities Guarantee - Status of the Trust Preferred
Securities Guarantee" and "Description of the Junior Subordinated Debentures -
Subordination of Junior Subordinated Debentures to Senior and Subordinated Debt
of Blue Valley."
IF WE DO NOT MAKE PAYMENTS UNDER THE JUNIOR SUBORDINATED DEBENTURES, BVBC
TRUST WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS AND THE TRUST
PREFERRED SECURITIES GUARANTEE WILL NOT APPLY.
The ability of BVBC Trust to pay distributions and, upon redemption, the
liquidation amount of $8 per trust preferred security is solely dependent upon
our ability to make the related payments on the junior subordinated debentures
when due. If we default on our obligation to pay principal of or interest on the
junior subordinated debentures, BVBC Trust will not have sufficient funds to pay
distributions or the liquidation amount.
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<PAGE>
In that case, you will not be able to rely upon the trust preferred
securities guarantee for payment of these amounts because the trust preferred
securities guarantee only applies if we make a payment of principal or interest
on the junior subordinated debentures. For more information on our obligations
under the trust preferred securities guarantee and the junior subordinated
debentures, see "Description of the Trust Preferred Securities Guarantee -
Status of the Trust Preferred Securities Guarantee" and "Description of the
Junior Subordinated Debentures - Subordination of Junior Subordinated Debentures
to Senior and Subordinated Debt of Blue Valley."
OUR INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES ARE DEPENDENT
ON OUR RECEIPT OF DIVIDENDS FROM THE BANK.
Substantially all of our assets consist of our investment in the Bank.
Thus, our ability to pay interest and principal on the junior subordinated
debentures to BVBC Trust depends primarily upon our receipt of cash dividends
from the Bank. Dividend payments from the Bank to us are subject to, among other
things:
o regulatory limitations, generally based on current and retained
earnings and capital maintenance requirements, imposed by various
bank regulatory agencies;
o profitability, financial condition and capital expenditures and
other cash flow requirements of the Bank; and
o prior claims of creditors of the Bank.
IF WE ELECT TO DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED
DEBENTURES, YOU MAY HAVE TO INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU
RECEIVE CASH.
It is possible that you will not receive cash distributions on the trust
preferred securities for up to 20 consecutive quarters. This will occur if we
elect to defer interest payments on the junior subordinated debentures. These
periods during which we defer interest payments are referred to as "extension
periods." Because you will be required to include interest in your income for
United States federal income tax purposes during an extension period
irrespective of whether interest is actually paid, you may have to pay taxes
before you actually receive the cash distributions. In addition, the market
price of the trust preferred securities is likely to be adversely affected if we
elect to defer the interest payments.
An extension period may last for up to 20 consecutive quarters, but not
beyond the maturity date of the junior subordinated debentures. We must make
payments of all deferred interest upon the earlier of the end of the extension
period or the maturity date. This right exists only if no event of default under
the junior subordinated debentures has occurred and is continuing. If we
exercise this right, BVBC Trust would defer distributions on the trust preferred
securities during any extension period. However, you would still accumulate
distributions at the annual rate of % of the liquidation amount of $8 per trust
preferred security, plus you will earn interest at the annual rate of %,
compounded quarterly, on any unpaid distributions. When we pay all the
accumulated amounts due to you during an extension period, the extension period
will terminate. However, we have the right to begin another extension period
under the
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<PAGE>
same terms outlined above. You will also not receive the cash distributions
related to any accrued and unpaid interest from BVBC Trust if you sell the trust
preferred securities before the end of an extension period. However, you will be
required to include accrued interest income as original issue discount for
United States federal income tax purposes in respect of your pro rata share of
the junior subordinated debentures held by BVBC Trust. While we will take the
position that original issue discount will not arise before the first extension
period, it is possible that all interest on the junior subordinated debentures
would be required to be accounted for as original issue discount. In these
circumstances, the receipt of interest would not separately be reported as
taxable income. See "Material Federal Income Tax Consequences - Interest Income
and Original Issue Discount" for more information regarding the tax consequences
of the trust preferred securities.
In the event that we exercise our right to defer interest payments on the
junior subordinated debentures, we will be prohibited from paying dividends on
our common stock during the extension period. Because we have no history of
paying dividends on our common stock, and no intention to do so in the immediate
future, the prohibition against paying dividends during an extension period may
have less of a deterrent effect on us than on a company with a history of paying
dividends on its common stock. Nevertheless, we have no current intention of
exercising our right to defer interest payments on the junior subordinated
debentures. However, if we exercise our right in the future, the market price of
the trust preferred securities is likely to be adversely affected.
IF WE REDEEM THE JUNIOR SUBORDINATED DEBENTURES, IT WILL CAUSE A
REDEMPTION OF THE TRUST PREFERRED SECURITIES AND YOU MAY NOT BE ABLE TO REINVEST
THE PROCEEDS AT THE SAME OR HIGHER RATE OF RETURN.
You are subject to the risk that we will redeem the trust preferred
securities. If the trust preferred securities are redeemed, you may not be able
to reinvest the money you receive upon redemption at a rate that is equal to or
higher than the rate of return you receive on the trust preferred securities.
Although the junior subordinated debentures have a stated maturity date of June
30, 2030, they may be redeemed by us prior to maturity in the following
circumstances:
o in whole or in part, beginning on June 30, 2005, at our option;
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 a risk that (1) BVBC Trust
may be subject to federal income tax, (2) the interest we pay on
the junior subordinated debentures will not be deductible by us
for federal income tax purposes, or (3) BVBC Trust 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
BVBC Trust is or will be considered to be an investment company that
is required to be registered under the Investment Company Act of
1940; or
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o in whole upon a change in the laws or regulations if there is a risk
that we will not be able to treat all or a substantial portion of
the trust preferred securities as Tier 1 (core) capital for purposes
of federal banking guidelines.
Our exercise of these redemption rights is subject to our receipt of prior
approval of federal banking regulators, if required, and would cause an early
redemption of the trust preferred securities. For further information concerning
tax or regulatory events that may trigger redemption of the junior subordinated
debentures, resulting in redemption of the trust preferred securities, see
"Description of the Trust Preferred Securities - Redemption."
YOU ARE SUBJECT TO REPAYMENT RISK BECAUSE POSSIBLE TAX LAW CHANGES COULD
RESULT IN A REDEMPTION OF THE TRUST PREFERRED SECURITIES.
Future legislation may be enacted that could adversely affect our ability
to deduct our interest payments on the junior subordinated debentures for
federal income tax purposes, making redemption of the junior subordinated
debentures likely and resulting in a redemption of the trust preferred
securities.
From time to time, the current administration has proposed federal income
tax law changes that would, among other things, generally deny interest
deductions to a corporate issuer if the debt instrument has a term exceeding 15
years and if the debt instrument is not reflected as indebtedness on the
issuer's consolidated balance sheet. Other proposed tax law changes would have
denied interest deductions if the debt instrument had a term exceeding 20 years.
These proposals were not enacted into law. Although it is impossible to predict
future proposals, if a future proposal of this sort were to become effective in
a form applicable to already issued and outstanding securities, we could be
precluded from deducting interest on the junior subordinated debentures.
Enactment of this type of proposal might in turn give rise to a tax event as
described under "Description of the Trust Preferred Securities - Redemption -
Mandatory and Optional Rights of Blue Valley."
You should also be aware that a petition was filed during 1998 in the
United States Tax Court as a result of a challenge by the Internal Revenue
Service ("IRS") of a taxpayer's treatment as indebtedness of a security issued
with characteristics similar to the junior subordinated debentures. Although the
IRS agreed to dismissal of the adjustments related to this issue, it could
assert similar adjustments against other taxpayers. If these adjustments were
proposed and the issue were litigated to a conclusion in which the IRS's
position on this matter were sustained, this judicial determination could
constitute a tax event that could result in an early redemption of the trust
preferred securities. For further information, see "Description of the Trust
Preferred Securities - Redemption - Mandatory and Optional Rights of Blue
Valley," "Description of the Junior Subordinated Debentures - Redemption" and
"Material Federal Income Tax Consequences."
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST
PREFERRED SECURITIES MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF YOUR
INVESTMENT.
Your investment in the trust preferred securities may decrease in value if
the junior subordinated debentures are distributed to you in exchange for your
trust preferred securities. If
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the junior subordinated debentures are distributed to you in exchange for your
trust preferred securities and we exercise our right to redeem less than all of
the junior subordinated debentures, the junior subordinated debentures may not
qualify for listing on The American Stock Exchange or another exchange. Although
the indenture requires us to use our best efforts to list the junior
subordinated debentures on an exchange in the event that they are distributed to
you, this requirement will not prevent us from partially redeeming the junior
subordinated debentures. Accordingly, we cannot predict the liquidity or market
prices for the junior subordinated debentures that may be distributed. The
junior subordinated debentures that you receive upon a distribution, or the
trust preferred securities you hold pending a distribution, may trade at a
discount to the price that you paid to purchase the trust preferred securities,
or if the junior subordinated debentures are not listed on an exchange, they may
not be actively traded at all.
Because you may receive junior subordinated debentures, you must also make
an investment decision with regard to these securities. You should carefully
review all the information regarding the junior subordinated debentures
contained in this prospectus.
Under "Material Federal Income Tax Consequences" we discuss applicable
United States federal income tax consequences of a distribution of the junior
subordinated debentures.
IN THE EVENT OF A DEFAULT UNDER THE TRUST PREFERRED SECURITIES, YOU MAY BE
REQUIRED TO RELY ON THE PROPERTY TRUSTEE OF BVBC TRUST TO ENFORCE YOUR RIGHTS.
You may not be able to directly enforce rights against us if an event of
default occurs with respect to the junior subordinated debentures. For a listing
of events that are events of default, see "Description of the Trust Preferred
Securities - Events of Default; Notice" and "Description of the Junior
Subordinated Debentures - Indenture Events of Default."
If an event of default under the junior subordinated debentures occurs and
is continuing, this event will also be an event of default under the trust
preferred securities. In that case, you generally would first have to rely on
the property trustee's enforcement of its rights as holder of the junior
subordinated debentures against us. If the property trustee fails to exercise
its rights under the junior subordinated debentures, you will then be able to
exercise any other remedies available under the junior subordinated debentures.
However, if the default arises because we fail to pay interest or
principal, except during an extension period, on the junior subordinated
debentures, you may proceed directly against us without first relying on the
property trustee.
LIMITED COVENANTS RELATING TO THE TRUST PREFERRED SECURITIES AND THE
JUNIOR SUBORDINATED DEBENTURES WILL NOT NECESSARILY PROTECT YOU.
Our obligations as set forth in the governing documents relating to the
trust preferred securities and the junior subordinated debentures are limited.
As a result, the governing documents will not necessarily protect you in the
event of an adverse change in our financial condition or results of operations.
The governing documents do not limit our ability or the ability of any of our
subsidiaries to incur additional debt. You should not consider the terms of the
governing documents to be a significant factor in evaluating whether we will be
able to comply
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with our obligations under the junior subordinated debentures or the trust
preferred securities guarantee.
WE WILL CONTROL BVBC TRUST AND YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of trust preferred securities, you have limited voting rights.
These rights relate only to the dissolution or termination of BVBC Trust, the
modification of the trust preferred securities and removal of the property and
indenture trustees of BVBC Trust upon the occurrence of a limited number of
events. You will not have any voting rights regarding Blue Valley's business or
any matters regarding the administrative trustees. See "Description of the Trust
Preferred Securities - Voting Rights; Amendment of the Trust Agreement" for more
information on your limited voting rights.
THERE HAS NOT BEEN A PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES, AND
AN ACTIVE TRADING MARKET FOR THE TRUST PREFERRED SECURITIES MAY NOT DEVELOP.
The trust preferred securities are a new issue of securities with no
established trading market. Although we have applied to have the trust preferred
securities listed on the American Stock Exchange, a listing does not guarantee
that an active trading market for the trust preferred securities will develop.
We can give no assurance of the depth of that market or that holders of trust
preferred securities will be able to sell their trust preferred securities
easily. An inactive or illiquid trading market could adversely affect the price
of your trust preferred securities.
IF WE EXERCISE OUR RIGHT TO REDEEM LESS THAN ALL OF THE JUNIOR
SUBORDINATED DEBENTURES, THE TRUST PREFERRED SECURITIES MAY CEASE TO BE LISTED
ON AN EXCHANGE.
Beginning June 30, 2005, we have the right to redeem the junior
subordinated debentures in whole or in part. If we elect to redeem less than all
of the junior subordinated debentures, BVBC Trust will redeem a proportionate
part of the trust preferred securities. The trust preferred securities may cease
to qualify for listing on the American Stock Exchange and may not qualify for
listing on another exchange or The Nasdaq Stock Market in the event of a partial
redemption. Although the trust agreement requires the administrative trustees to
use their best efforts to maintain the listing of the trust preferred securities
on the American Stock Exchange or another exchange, this requirement will not
prevent us from causing a partial redemption of the trust preferred securities.
TRADING CHARACTERISTICS OF THE TRUST PREFERRED SECURITIES MAY CREATE
ADVERSE TAX CONSEQUENCES FOR YOU.
The trust preferred securities may trade at a price that does not reflect
the value of accrued but unpaid interest on the underlying junior subordinated
debentures. If you dispose of your trust preferred securities between record
dates for payments on the trust preferred securities, you may have adverse tax
consequences. Under these circumstances, you will be required to include accrued
but unpaid interest on the junior subordinated debentures allocable to the trust
preferred securities through the date of disposition in your income as ordinary
income if you use the accrual method of accounting or if this interest
represents original issue discount.
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If interest on the junior subordinated debentures is included in income
under the original issue discount provisions, you would add this amount to your
adjusted tax basis in your share of the underlying junior subordinated
debentures deemed disposed. If your selling price is less than your adjusted tax
basis, which will include all accrued but unpaid original issue discount
interest included in your income, you could recognize a capital loss which,
subject to limited exceptions, cannot be applied to offset ordinary income for
federal income tax purposes. See "Material Federal Income Tax Consequences" for
more information on possible adverse tax consequences to you.
THE TRUST PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES ARE
NOT INSURED.
Neither the trust preferred securities nor the junior subordinated
debentures are insured by the Bank Insurance Fund, the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation or any other
governmental agency.
USE OF PROCEEDS
We will receive proceeds from the sale of our junior subordinated
debentures to BVBC Trust. BVBC Trust will purchase our junior subordinated
debentures with proceeds from the sale of the trust preferred securities. The
net proceeds to us from the sale of the junior subordinated debentures, after
deducting underwriting commissions and estimated offering expenses, will be
approximately $9.2 million, or $10.6 million if the underwriter's over-allotment
option is exercised in full. We intend to use the net proceeds as follows:
o repay approximately $7.3 million of debt outstanding as of February
29, 2000 under our bank stock loan, which accrues interest at the
rate of prime minus 1%, and matures on July 31, 2000; and
o retain the remainder for general corporate purposes, including
investments from time to time in the Bank in the form of additional
capital and possible future acquisitions. We have no agreements or
understandings at this time for any acquisitions, and we cannot be
sure whether any acquisitions will ever occur.
MARKET FOR THE TRUST PREFERRED SECURITIES
We have applied to have the trust preferred securities listed on the
American Stock Exchange under the symbol " ." We are not sure, however,
whether an active and liquid trading market will develop, or if developed, will
continue. The public offering price and distribution rate have been determined
by negotiations among our representatives and the underwriters, and the public
offering price of the trust preferred securities may not be indicative of the
market price following the offering. See "Underwriting."
ACCOUNTING TREATMENT
For financial reporting purposes, we will treat BVBC Trust as our
subsidiary. Accordingly, we will include the accounts of BVBC Trust in our
consolidated financial
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statements. We will include the trust preferred securities as debt in our
consolidated balance sheets, and will include appropriate disclosures about the
trust preferred securities, the trust preferred securities guarantee and the
junior subordinated debentures in the notes to our consolidated financial
statements. For financial reporting purposes, we will record distributions on
the trust preferred securities as interest expense in our consolidated
statements of income.
Future reports of Blue Valley filed under the Securities Exchange Act of
1934 will include a footnote to the consolidated financial statements stating
that:
o BVBC Trust is a wholly-owned subsidiary of Blue Valley;
o the sole asset of BVBC Trust is the junior subordinated debentures,
specifying the principal amount, interest rate and maturity date of
the junior subordinated debentures; and
o the obligations of Blue Valley described in this prospectus, in the
aggregate, constitute a full, irrevocable and unconditional
guarantee on a subordinated basis by Blue Valley of the obligations
of BVBC Trust under the trust preferred securities.
BVBC Trust will not file separate reports under the Securities Exchange Act.
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CAPITALIZATION
The following table sets forth (a) our historical capitalization at
December 31, 1999; and (b) our adjusted capitalization after giving effect to
this offering and the use of net proceeds as described in "Use of Proceeds"
above, and assuming the underwriter's over-allotment option was not exercised.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
AS ADJUSTED
ACTUAL FOR THIS OFFERING
---------------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
SHORT-TERM AND LONG-TERM DEBT:
Borrowed money (1)............................................... $ 9,358 $ 1,908
Guaranteed preferred beneficial interests in Blue Valley's
junior subordinated debentures (2)........................... -- 10,000
Total short-term and long-term debt ..................... 9,358 11,908
STOCKHOLDERS' EQUITY:
Common stock, par value $1.00 per share; 15,000,000 shares
authorized; 2,137,720 shares issued and outstanding .......... 2,138 2,138
Additional paid-in capital ...................................... 5,230 5,230
Retained earnings ............................................... 12,458 12,458
Unrealized depreciation on available-for-sale securities, net ... (957) (957)
Total stockholders' equity .............................. 18,869 18,869
Total capitalization .................................... 28,227 30,777
CAPITAL RATIOS: (3)(4)(5)
Ratio of equity to total assets.................................. 5.67% 5.64%
Risk-based capital ratios:
Total capital to risk-weighted assets ratio................... 8.07 11.77
Tier 1 capital to risk-weighted assets ratio.................. 6.82 9.09
Tier 1 capital to average assets ratio (leverage ratio)....... 5.80 7.73
</TABLE>
..................
[FN]
(1) Does not include deposits, Federal Home Loan Bank borrowings or securities
sold under agreements to repurchase.
(2) In connection with the issuance of the guaranteed preferred beneficial
interest in Blue Valley's junior subordinated debentures, we estimate we
will incur expenses of $800,000 (including underwriter's commissions of
$500,000).
(3) The capital ratios, as adjusted, are computed including the total
estimated net proceeds from the sale of the trust preferred securities, in
a manner consistent with Federal Reserve guidelines.
(4) Federal Reserve guidelines for calculation of Tier 1 capital limits the
amount of cumulative trust preferred securities which can be included in
Tier 1 capital to 25% of total Tier 1 capital. Approximately $6.1 million
of the trust preferred securities offered hereby will be included as Tier
1 capital for Blue Valley. The balance of the trust preferred securities
offered hereby will be included as Tier 2 capital for Blue Valley.
(5) Unrealized depreciation on available-for-sale securities, net, is not
included in calculating regulatory capital ratios.
</FN>
22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our consolidated financial data as of and for
the five years ended December 31, 1999, and should be read in conjunction with
the consolidated financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," each
of which is included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF AND FOR THE
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- -------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF INCOME DATA
Interest income:
Loans, including fees ................. $ 20,422 $ 14,608 $ 12,000 $ 9,100 $ 6,689
Federal funds sold and
interest-bearing deposits............ 431 396 276 315 822
Securities ............................ 2,755 2,814 2,275 2,231 1,682
---------- ----------- ---------- ----------- ----------
Total interest income .............. 23,608 17,818 14,551 11,646 9,193
---------- ----------- ---------- ----------- ----------
Interest expense:
Interest-bearing demand deposits ...... 644 348 296 267 235
Savings and money market deposit
accounts ............................ 3,156 1,637 1,353 1,256 1,081
Other time deposits ................... 6,032 6,247 4,985 3,668 2,859
Funds borrowed ........................ 1,372 973 624 605 720
---------- ----------- ---------- ----------- ----------
Total interest expense ............. 11,204 9,205 7,258 5,796 4,895
---------- ----------- ---------- ----------- ----------
Net interest income................. 12,404 8,613 7,293 5,850 4,298
Provision for loan losses ................ 2,144 1,061 660 648 370
---------- ----------- ---------- ----------- ----------
Net interest income after provision
for loan losses ............... 10,260 7,552 6,633 5,202 3,928
---------- ----------- ---------- ----------- ----------
Non-interest income:
Loans held for sale fee income......... 1,623 1,329 439 232 129
NSF charges & service fees............. 553 598 499 402 327
Other service charges.................. 659 157 107 79 60
Realized gain on securities
available-for-sale................... 3 112 8 71 -
Other income .......................... 186 450 401 424 344
---------- ----------- ---------- ----------- ----------
Total non-interest income .......... 3,024 2,646 1,454 1,208 860
Non-interest expense:
Salaries and employee benefits ........ 4,578 3,312 2,304 1,803 1,444
Occupancy ............................. 894 748 663 581 508
FDIC and other insurance............... 113 121 86 290 163
General & administrative .............. 3,095 1,815 1,603 1,196 1,053
---------- ----------- ---------- ----------- ----------
Total non-interest expense.......... 8,680 5,996 4,656 3,870 3,168
---------- ----------- ---------- ----------- ----------
Income before income taxes ............ 4,604 4,202 3,431 2,540 1,620
Income tax provision................ 1,521 1,386 1,145 918 571
---------- ----------- ---------- ----------- ----------
Net income.......................... $ 3,083 $ 2,816 $ 2,286 $ 1,622 $ 1,049
========== =========== ========== =========== ==========
PER SHARE DATA
Basic earnings ........................ $ 1.45 $ 1.36 $ 1.24 $ 0.88 $ 0.72
Diluted earnings ...................... 1.42 1.35 1.22 0.85 0.70
Dividends.............................. - - - - -
Book value basic (at end of period) ... 8.83 7.99 6.64 5.49 4.77
Weighted average common shares
outstanding:
Basic.............................. 2,131,372 2,065,400 1,843,288 1,836,796 1,447,300
Diluted............................ 2,166,008 2,084,088 1,867,844 1,912,876 1,494,324
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
AS OF AND FOR THE
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA
(AT END OF PERIOD):
Total securities ......................... $ 48,646 $ 53,427 $ 40,247 $ 36,588 $ 35,496
Total loans............................... 250,410 161,444 127,308 101,323 71,791
Total assets ............................. 332,613 253,724 201,644 162,739 132,794
Total deposits .......................... 268,145 209,824 170,792 139,929 112,614
Funds borrowed ........................... 43,177 25,142 16,298 11,904 10,423
Total stockholders' equity................ 18,869 17,016 13,464 10,100 8,761
Trust assets under administration......... 19,436 13,099 8,241 3,081 -
SELECTED FINANCIAL RATIOS AND OTHER DATA :
PERFORMANCE RATIOS:
Net interest margin (1) ............ 4.77 % 4.30 % 4.66 % 4.57 % 4.13 %
Non-interest income to average assets
assets ........................... 1.06 1.20 0.83 0.84 0.73
Non-interest expense to average
assets ........................... 3.04 2.72 2.66 2.69 2.68
Net overhead ratio (2) ............. 1.98 1.52 1.83 1.85 1.95
Efficiency ratio (3) ............... 56.26 53.26 53.23 54.83 61.42
Return on average assets (4) ....... 1.08 1.28 1.30 1.13 0.89
Return on average equity (5) ....... 17.43 18.98 20.62 17.79 17.46
ASSET QUALITY RATIOS:
Non-performing loans to total loans. 0.21% 0.84% 0.33% 0.40% 0.68%
Allowance for possible loan losses to:
Total loans ..................... 1.52 1.45 1.27 1.26 1.16
Non-performing loans ............ 710.80 171.88 380.71 312.50 172.37
Net charge-offs to average total
loans ........................... 0.32 0.23 0.27 0.24 0.23
Non-performing assets to total
assets .......................... 0.22 0.55 0.61 0.28 0.64
BALANCE SHEET RATIOS:
Loans to deposits .................. 93.39% 76.94% 74.54% 72.41% 63.75%
Average interest-earning assets to
average interest-bearing
liabilities ...................... 116.11 116.57 114.55 114.76 110.84
CAPITAL RATIOS:
Total equity to total assets ....... 5.67% 6.71% 6.68% 6.21% 6.60%
Total capital to risk-weighted
assets ratio ..................... 8.07 9.62 9.87 8.91 9.58
Tier 1 capital to risk-weighted
assets ratio ..................... 6.82 8.37 8.65 7.72 8.48
Tier 1 capital to average assets
ratio ............................ 5.80 6.13 6.28 5.57 5.50
RATIO OF EARNINGS TO FIXED CHARGES (6)
Including interest on deposits...... 1.41x 1.46x 1.47x 1.44x 1.33x
Excluding interest on deposits...... 4.36 5.32 6.50 5.20 3.25
PRO FORMA RATIO OF EARNINGS TO FIXED
CHARGES (7)
Including interest on deposits...... 1.39 -- -- -- --
Excluding interest on deposits...... 3.26 -- -- -- --
..................
</TABLE>
[FN]
(1) Net interest income divided by average interest-earning assets.
(2) Non-interest expense less non-interest income divided by average total
assets.
(3) Non-interest expense divided by the sum of net interest income plus
non-interest income.
(4) Net income divided by average total assets.
(5) Net income divided by average common equity.
(6) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before taxes plus interest expense. Fixed
charges consist of interest expense.
(7) For purposes of calculating the pro forma ratio of earnings to fixed
charges, earnings consists of income before taxes plus pro forma interest
expense. Pro forma interest expense consists of historical interest
expense plus (1) interest expense on the junior subordinated debentures
assuming that we issued a total principal amount of $10 million at 10.0%
at the beginning of such period minus (2) historical interest expense on
the $7.3 million of our debt under our bank stock loan that we intend to
retire with the proceeds from this offering.
</FN>
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following presents management's discussion and analysis of our
financial condition and results of operations as of the dates and for the
periods indicated. You should read this discussion in conjunction with our
"Selected Consolidated Financial Data," our consolidated financial statements
and the accompanying notes, and the other financial data contained elsewhere in
this prospectus.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ significantly from those
anticipated in these forward-looking statements as a result of various factors,
including those discussed in "Risk Factors" contained elsewhere in this
prospectus. See "Cautionary Note on Forward-Looking Statements."
GENERAL
Over the past five years, we have achieved significant growth in assets,
increased our deposit base, and increased earnings. Our focus has primarily been
on real estate development, home construction, indirect consumer lending and
small business lending, with an emphasis on customer service so as to attract
and retain core deposits. This strategy, paired with rapid population growth in
Johnson County, Kansas, has been key to our success. From 1995 through 1999:
o our loans grew at a 36.65% compound annual rate;
o our net income grew at a 39.91% compound annual rate and our earnings
per share grew at a 27.59% compound annual rate;
o our annual return on average equity has averaged 18.46%;
o our annual return on average assets has averaged 1.14%;
o our ratio of non-performing assets to total assets declined from 0.64%
to 0.22%; and
o our ratio of net charge-offs to average total loans has averaged less
than 0.26%.
The population of Johnson County, Kansas has grown from approximately
327,000 to 417,000, or 28%, between 1987 and 1997. This represents 55% of the
total increase in the 11-county Kansas City, Missouri-Kansas Metropolitan
Statistical Area (the "Kansas City MSA") and 61% of the increase in the entire
State of Kansas. Between 1986 and 1996, Johnson County's economy created 99,000
jobs and added over 4,000 businesses, representing over half of the Kansas City
MSA's total growth. In addition, we believe that the recent consolidation in the
banking industry that has occurred in our market area has generated significant
opportunities for the remaining independent community banks, including the Bank,
to serve those customers who still desire the level of customer service that we
believe is not available at many larger regional and national banks.
25
<PAGE>
A major contributor to our asset growth over the past five years has been
strong growth in all of our major loan categories. Our growth is not
attributable to any single loan category, but has come from a number of diverse
loan products. We have become less concentrated in any one area with commercial
loans, being our largest portfolio, decreasing from 46.40% of our portfolio at
December 31, 1995, to 25.78% at December 31, 1999. This diversification has
occurred through growth in commercial real estate loans and residential real
estate loans, as well as personal/consumer loans.
Our growth in profitability over the past five years reflects conservative
loan underwriting practices resulting in net charge-off ratios averaging less
than 0.26%. Our efficiency ratios have averaged below 56% for the past five
years. In addition, strong growth of non-interest income to average assets from
0.73% in 1995 to 1.06% in 1999 has significantly contributed to our
profitability over the past five years. Our net interest margin has remained
between 4.13% and 4.77% from 1995 to 1999. Our net interest income and net
interest margin have also benefited from a ratio of loans to deposits that has
increased from a low of 63.75% in 1995 to a high of 93.39% in 1999, and a
growing number of non-interest bearing deposits. Our funding philosophy has been
to increase deposits from retail and commercial deposit sources as necessary to
fund loans within the limits of the Bank's capital base. Although a higher
loan-to-deposit ratio potentially limits the Bank's liquidity, our portfolio of
available-for-sale securities and various lines of credit have provided adequate
sources of liquidity when needed.
Our level of non-performing assets reflects the Bank's conservative
underwriting policies, has resulted in low levels of nonaccrual loans, and has
reduced the costs of resolving non-performing assets. Over the past five years,
non-performing loans to total loans has averaged below 0.50%, net charge-offs to
average total loans has averaged below 0.26%, and non-performing assets to total
assets has averaged below 0.46%. Generally, banks benefit from lower levels of
non-performing loans by realizing more of the interest income accrued on the
loan portfolio and enjoying a greater ability to rely on internal growth to fund
new loans.
Our philosophy has been to value non-performing loans at their estimated
collectible value and to aggressively manage these situations. Generally, the
Bank maintains its allowance for loan losses in excess of its non-performing
loans. Over the five years from 1995 to 1999, our ratio of allowance for loan
losses to non-performing loans averaged 349.65%.
We fund our operations primarily through demand, savings and time deposits
and, to a lesser extent, lines of credit, sale/repurchase facilities from
various financial institutions, and Federal Home Loan Bank borrowings. In 1999,
our total deposits increased by $58 million to $268 million from $210 million. A
significant portion of this increase was a result of a new deposit product, our
"short-term parking account," introduced by the Bank in the fourth quarter of
1998. This account, which pays a higher yield than our other money market
account, requires a minimum balance of $10,000 and allows depositors to access
their funds only on the 15th and last day of each month.
NET INCOME
Net income for 1999 was $3.1 million, a 9.48% increase over the $2.8
million earned in 1998. The principal contributors to our increase in net income
during 1999 were an increase of
26
<PAGE>
$3.8 million, or 44.01%, in additional net interest income and an increase of
$294,000, or 22.12%, in additional fee income from loans held for sale that we
originated and sold in the secondary market. Diluted earnings per share
increased 5.19% to $1.42 in 1999 from $1.35 in 1998. The growth of diluted
earnings per share of 5.19% was less than the growth of net income of 9.48% due
to 81,920 more diluted shares being outstanding at December 31, 1999 compared
with December 31, 1998. We had more diluted shares as a result of stock options
being exercised as well as 64,000 additional options being granted in 1999.
Net income for 1998 was $2.8 million, a 23.18% increase over the $2.3
million earned in 1997. The improvement in 1998 net income was primarily the
result of an increase of $1.3 million, or 18.10%, in net interest income and an
increase of $890,000, or 202.73%, in loans held for sale fee income. As a
result, diluted earnings per share increased 10.66% to $1.35 in 1998 from $1.22,
in 1997. The growth of diluted earnings per share of 10.66% was less than the
growth of net income of 18.10% due to 216,244 more diluted shares being
outstanding at December 31, 1998 compared with December 31, 1997. We had more
diluted shares as a result of stock options being exercised as well as 65,516
additional options being granted in 1998.
Two industry measures of the performance by a banking institution are its
return on average assets, referred to as "ROA," and return on average
stockholders' equity, referred to as "ROE." ROA measures net income in relation
to average total assets and indicates a company's ability to employ its
resources profitably. During 1999 our ROA was 1.08%, compared to 1.28% for 1998
and 1.30% for 1997. This decrease in ROA is partially attributable to our
increased investment in infrastructure during this period to support our future
growth. In addition, the strong asset growth rate of Blue Valley, with assets
increasing at a 26.91% compound annual rate for this time period which exceeded
the compound annual growth rate in net income during the same period,
contributed to the decrease in ROA.
ROE is determined by dividing net income by average stockholders' equity
and indicates how effectively a company can generate net income on the capital
invested by its stockholders. During 1999 our ROE was 17.43%, compared to 18.98%
for 1998 and 20.62% for 1997. While earnings increased in 1999 and in 1998, ROE
decreased in 1999 and 1998. This decrease in ROE is partially attributable to
our increased investment in infrastructure during this period. In addition, the
$5.9 million of additional equity added through earnings, as well as $723,000
added through 109,660 options being exercised during the same time period,
contributed to the decrease in ROE.
NET INTEREST INCOME
The primary component of our net income is our net interest income. Net
interest income is determined by the spread between the yields we earn on our
interest-earning assets and the rates we pay on our interest-bearing
liabilities, as well as the relative amounts of such assets and liabilities. Net
interest margin is determined by dividing net interest income by average
interest-earning assets.
YEARS ENDED DECEMBER 31, 1999 AND 1998. Net interest income for 1999
increased to $12.4 million from $8.6 million in 1998, a $3.8 million, or 44.01%,
increase. This increase was primarily the result of a $59.7 million increase in
average interest-earning assets, which more
27
<PAGE>
than offset a $52.1 million increase in average interest-bearing liabilities.
Additionally, the decline in our cost of funds was greater than the decline in
the average rate we received on our average interest-earning assets. Our net
interest margin improved to 4.77%, from 4.30% during 1998. One of the major
contributors to the improvement in our net interest margin was interest of $2.0
million earned on a purchased lease portfolio on average outstanding leases of
$8.2 million, for a yield of 26.72%. We expect our interest income from these
purchased leases to decline over the next two years as the portfolio matures.
Without the interest income generated from this portfolio, the net interest
margin would have been 4.14%.
Interest income for 1999 was $23.6 million, an increase of $5.8 million,
or 32.50%, from $17.8 million in 1998, primarily as a result of a $59.7 million,
or 29.05%, growth in interest-earning assets. Excluding the interest income
generated from the purchased lease portfolio discussed above, the yield on
average interest-earning assets declined from 8.78% in 1998 to 8.50%. However,
the increase in volume more than offset this 28 basis point decline in yield,
resulting in the $5.8 million increase in interest income from 1998 to 1999.
Interest income on available-for-sale securities decreased by $59,000, and the
tax-equivalent yield on our investment portfolio decreased 15 basis points in
1999 as compared to 1998. This resulted from our sale in 1998 of
higher-yielding, callable debt securities, which appeared to us likely to be
called due to the then-prevailing interest rate environment.
Interest expense for 1999 was $11.2 million, up $2.0 million, or 21.72%,
from $9.2 million in 1998. We attribute the increase to a $42.4 million, or
26.88%, increase in our average balances of interest-bearing deposits as well as
a $9.7 million, or 52.57%, increase in other interest-bearing liabilities,
including FHLB borrowings and increased borrowings under our bank stock loan.
Overall, rates paid on average interest-bearing liabilities decreased to 4.91%
in 1999 from 5.22% in 1998, a decline of 31 basis points. The additional
deposits generated by the introduction of our short-term parking account were
used to fund a portion of our loan growth. The remaining funds were obtained
from other deposit products, as well as advances from the FHLB.
YEARS ENDED DECEMBER 31, 1998 AND 1997. Net interest income for 1998
increased to $8.6 million from $7.3 million in 1997, a $1.3 million, or 18.10%,
increase. This increase was primarily the result of a $45.7 million increase in
average interest-earning assets, which offset a $36.8 million increase in
average interest-bearing liabilities. Although the net interest margin decreased
to 4.30% in 1998 from 4.66% in 1997, the additional volume generated more net
interest income.
Interest income for 1998 was $17.8 million, an increase of $3.2 million,
or 22.45%, up from $14.6 million in 1997, primarily as a result of growth in
interest-earning assets. Yields on interest-earning assets declined 42 basis
points to 8.78% from 9.20% in 1997. Loan interest and fee income increased to
$14.6 million from $12.0 million because of the greater volume of loans
outstanding. These additional loans were funded by deposit growth as well as
advances from the FHLB. The tax-equivalent yield on our investment portfolio
remained constant at 6.39% for both 1998 and 1997. However, interest income on
available-for-sale securities increased by $539,000 as a result of growth in the
portfolio.
28
<PAGE>
Interest expense for 1998 was $9.2 million, up $1.9 million, or 26.83%,
from $7.3 million in 1997. We attribute the increase to growth in our deposit
base, as well as increases in other funding sources such as the FHLB. Overall,
rates paid on average interest-bearing liabilities remained constant at 5.22% in
1998 compared with 5.21% in 1997, or 1 basis point difference.
AVERAGE BALANCE SHEETS. The following table sets forth for the periods and
as of the dates indicated, information regarding our average balances of assets
and liabilities as well as the dollar amounts of interest income from
interest-earning assets and interest expense on interest-bearing liabilities and
the resultant yields or costs. Ratio, yield and rate information are based on
average daily balances where available; otherwise, average monthly balances have
been used. Nonaccrual loans are included in the calculation of average balances
for loans for the periods indicated.
<TABLE>
<CAPTION>
AVERAGE BALANCES, YIELDS AND RATES
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
--------- -------- -------- --------- -------- -------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold...................... $ 9,482 $ 431 4.55 % $ 7,786 $ 396 5.09% $ 5,063 $ 276 5.45 %
Investment securities - taxable......... 33,422 2,087 6.24 33,836 2,191 6.48 28,834 1,846 6.40
Investment securities - non-taxable (1). 14,399 895 6.22 13,502 835 6.18 9,080 575 6.33
Mortgage loans held for sale............ 1,413 112 7.93 2,026 138 6.81 795 56 7.04
Loans, net of unearned discount and fees 206,310 20,310 9.84 148,221 14,470 9.76 115,939 11,944 10.30
--------- -------- --------- ------- ---------- -------
Total earning assets............ 265,026 23,835 8.99 205,371 18,030 8.78 159,711 14,697 9.20
--------- -------- --------- ------- ---------- -------
Cash and due from banks - non-interest
bearing............................... 9,883 7,689 6,425
Allowance for possible loan losses...... (2,842) (2,069) (1,516)
Premises and equipment, net............. 5,505 4,776 4,408
Other assets............................ 7,723 4,491 6,163
--------- ---------- ----------
Total assets.................... $ 285,295 $ 220,258 $ 175,191
========= ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits-interest bearing:
Interest-bearing demand accounts..... $ 19,260 $ 644 3.34 % $ 12,620 $ 348 2.76% $ 10,661 $ 296 2.78 %
Savings and money market
deposits........................... 74,535 3,156 4.23 41,001 1,637 3.99 34,490 1,353 3.92
Time deposits........................ 106,366 6,032 5.67 104,141 6,247 6.00 82,683 4,985 6.03
--------- -------- ---------- ------- ---------- -------
Total interest-bearing deposits. 200,161 9,832 4.91 157,762 8,232 5.22 127,834 6,634 5.19
--------- -------- ---------- ------- ---------- -------
Short-term borrowings .................. 16,122 690 4.28 12,192 591 4.85 9,372 458 4.89
Long-term debt ......................... 11,973 682 5.70 6,223 382 6.14 2,215 166 7.50
Total interest-bearing
liabilities .................. 228,256 11,204 4.91 176,177 9,205 5.22 139,421 7,258 5.21
--------- -------- ---------- ------- ---------- -------
Non-interest bearing deposits........... 37,314 27,567 22,098
Other liabilities ...................... 2,034 1,678 2,588
Stockholders' equity.................... 17,691 14,836 11,084
--------- ---------- ----------
Total liabilities and
stockholders' equity.......... $ 285,295 $ 220,258 $ 175,191
========= ========== ==========
Net interest income/spread ............. $ 12,631 4.08 % $ 8,825 3.56% $ 7,439 3.99 %
======== ===== ======== ======== ========
Net interest margin..................... 4.77 % 4.30% 4.66 %
====== ======== ========
</TABLE>
___________________________
[FN]
(1) Presented on a full tax-equivalent basis assuming a tax rate of 34%.
</FN>
ANALYSIS OF CHANGES IN NET INTEREST INCOME DUE TO CHANGES IN INTEREST
RATES AND VOLUMES. The following table presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. It distinguishes between the increase
or decrease related to changes in balances and changes in interest rates. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to:
o changes in volume, reflecting changes in volume multiplied by the
prior period rate; and
29
<PAGE>
o changes in rate, reflecting changes in rate multiplied by the prior
period volume.
For purposes of this table, changes attributable to both rate and volume,
which cannot be segregated, have been allocated proportionately to the change
due to volume and the change due to rate.
<TABLE>
<CAPTION>
CHANGES IN INTEREST INCOME AND
EXPENSE VOLUME AND RATE VARIANCES
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1999 COMPARED TO 1998 1998 COMPARED TO 1997
---------------------------------------- --------------------------------------
CHANGE CHANGE CHANGE CHANGE
DUE TO DUE TO TOTAL DUE TO DUE TO TOTAL
RATE VOLUME CHANGE RATE VOLUME CHANGE
------------ ------------ ------------ ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold....................... $ (33) $ 68 $ 35 $ (17) $ 137 $ 120
Investment securities - taxable.......... (78) (26) (104) 23 322 345
Investment securities - non-taxable (1).. 5 55 60 (13) 273 260
Mortgage loans held for sale............. 31 (57) (26) (2) 84 82
Loans, net of unearned discount ......... 120 5,720 5,840 (586) 3,112 2,526
--------- ---------- ---------- --------- ---------- ----------
Total interest income.............. 45 5,760 5,805 (595) 3,928 3,333
--------- ---------- ---------- --------- ---------- ----------
Interest-bearing demand accounts......... 84 212 296 (2) 54 52
Savings and money market deposits........ 104 1,415 1,519 25 259 284
Time deposits............................ (352) 137 (215) (25) 1,287 1,262
Short-term borrowings.................... (56) 155 99 (4) 137 133
Long-term debt........................... (25) 325 300 (24) 240 216
--------- ---------- ---------- --------- ---------- ----------
Total interest expense ............ (245) 2,244 1,999 (30) 1,977 1,947
--------- ---------- ---------- --------- ---------- ----------
Net interest income...................... $ 290 $ 3,516 $ 3,806 $ (565) $ 1,951 $ 1,386
========= ========== ========== ========= ========== ==========
</TABLE>
___________________
[FN]
(1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%.
</FN>
PROVISION FOR LOAN LOSSES
We make provisions for loan losses in amounts management deems necessary
to maintain the allowance for loan losses at an appropriate level. The provision
for loan losses increased to $2.1 million in 1999 from $1.1 million in 1998, or
102.07%, while the loan portfolio increased to $250.4 million in 1999 from
$161.4 million in 1998, or 55.11%. The provision for loan losses increased to
$1.1 million in 1998 from $660,000 in 1997, or 60.76%, while the loan portfolio
increased to $161.4 million in 1998 from $127.3 million in 1997, or 26.81%. The
allowance for loan losses as a percentage of loans increased to 1.52% in 1999
and 1.45% in 1998, as compared to 1.27% and 1.26% in 1997 and 1996,
respectively. We increased the allowance for loan losses in 1999 and 1998 based
upon an analysis of several factors, including the changing loan mix and overall
growth in the loan portfolio. We believe that a ratio of between 1.45 and 1.55
is consistent with the level maintained by banks that are similar to the Bank in
both size and market served. Based upon our future business and lending plans,
and depending upon specific facts and circumstances with respect to our loans
and general economic conditions, management expects to maintain its allowance,
as a percentage of total loans, in a range generally consistent with our
reserves over the past five years, which has varied between 1.16% and 1.52%.
NON-INTEREST INCOME
The following table describes the items of our non-interest income for the
periods indicated:
30
<PAGE>
NON-INTEREST INCOME
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
---------- ----------- ---------
(IN THOUSANDS)
Loans held for sale fee income............ $ 1,623 $ 1,329 $ 439
NSF charges and service fees.............. 553 598 499
Other service charges..................... 659 157 107
Realized gain on sales of investment 3 112 8
securities................................
Other income ............................. 186 450 401
---------- ----------- ------------
Total non-interest income............. $ 3,024 $ 2,646 $ 1,454
========== =========== ============
Non-interest income increased to $3.0 million in 1999, from $2.6 million
in 1998 and $1.5 million in 1997, increases of 14.29% and 81.98%, respectively.
These increases were primarily attributable to the increase in origination fees
resulting from the higher level of residential mortgage loans which we
originated and sold in the secondary market in 1999 and 1998. The increase in
loans held for sale fee income is the result of $82.4 million of residential
mortgage loans that we originated and sold in the secondary market in 1999, as
compared to $75.6 million in 1998 and $31.1 million in 1997. Although our
practice has been to hold substantially all of our investment securities to
maturity, in 1998 we recognized a substantial increase in gain on sales of
investment securities when we sold a number of debt securities in our portfolio
that were subject to call. Due to the interest rate environment, it appeared
likely that these securities would be called. By selling the securities and
reinvesting the proceeds, we were able to maintain a comparable yield while
extending the maturity of the dollars invested. Other service charge income
increased by $502,000 in 1999. This increase is a result of the Bank developing
new products which are beginning to generate fee-based income. Our investment
brokerage, commercial mortgage brokerage and brokered lease services generated
an additional $208,000 in 1999 over 1998. In addition a rental fleet of tanker
equipment purchased as part of a portfolio of leases during 1999 generated
rental income of $127,000 before it was eventually liquidated. The remainder of
the increase is a result of the growth in the Bank, and increases in general
customer relationship/retail fee based products, such as ATM, check orders, and
various other retail products. Other service charge income was fairly constant
in 1998 compared with 1997. Other income has declined over the past two years
because as we have grown and expanded our number of employees, we have leased
less of our corporate headquarters to outside parties, which decreased our
rental income by $133,000 in 1999 and $79,000 in 1998.
NON-INTEREST EXPENSE
The following table describes the items of our non-interest expense for
the periods indicated.
31
<PAGE>
NON-INTEREST EXPENSE
YEAR ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ----------- ----------
(IN THOUSANDS)
Salaries and employee benefits............ $ 4,578 $ 3,312 $ 2,304
Occupancy................................. 894 748 663
FDIC and other insurance expense.......... 113 121 86
General and administrative................ 3,095 1,815 1,603
---------- ----------- ------------
Total non-interest expenses........... $ 8,680 $ 5,996 $ 4,656
========== =========== ============
Non-interest expense increased to $8.7 million in 1999, from $6.0 million
in 1998, and $4.7 million in 1997, increases of 44.76% and 28.78%, respectively.
These increases were primarily the result of increases in salaries and employee
benefits and general and administrative expenses. Our salaries and employee
benefits expenses increased to $4.6 million in 1999, from $3.3 million in 1998,
and $2.3 million in 1997, as we hired additional staff to facilitate our growth.
We had 112, 83 and 61 full-time employees at the end of 1999, 1998 and 1997,
respectively. General and administrative expense increased to $3.1 million in
1999, from $1.8 million in 1998, and $1.6 million in 1997, which is a direct
result of our growth, as well as our increased advertising and marketing
efforts. Advertising and marketing expenditures increased to $476,000 in 1999,
from $269,000 in 1998, and $119,000 in 1997. A lease portfolio was purchased
during 1999 with the assistance of a third party. A referral fee is due to a
third party based on performance of the portfolio. The referral fee accrued in
1999 was $305,000 and is included in general and administrative expenses.
INCOME TAXES
Income taxes for fiscal years 1999, 1998 and 1997 were $1.5 million, $1.4
million and $1.1 million, respectively. The increases in taxes in 1999 and 1998
reflect our higher earnings. Our consolidated income tax rate varies from the
statutory rate principally due to the effects of state income taxes and interest
income earned on our municipal securities portfolio which is tax-exempt for
federal income tax purposes.
FINANCIAL CONDITION
LENDING ACTIVITIES. Our loan portfolio is our main source of income, and
has been the principal component of our revenue growth. Our loan portfolio
reflects an emphasis on commercial, residential real estate, construction, and
personal lending and leasing. We emphasize commercial lending to professionals,
businesses and their owners. Commercial loans and loans secured by commercial
real estate accounted for 36.41% of our total loans at December 31, 1999, and
represented over 40% of our total loans at year end 1998, 1997, 1996, and 1995.
These loans increased at more than a 26.04% compound annual rate during the
four-year period ended December 31, 1999. However, as the Bank's portfolio has
become more diversified, these loans have decreased as a percentage of the total
portfolio from 50.31% at year-end 1995 to 36.41% at December 31, 1999.
Loans were $250.4 million at December 31, 1999, an increase of $89.0
million, or 55.11%, compared to December 31, 1998. We experienced increases in
each of our loan categories, with the most significant increases occurring in
commercial real estate, personal,
32
<PAGE>
construction and leasing. Over the last five years, we have expanded our
personal lending lines of business in an effort to more broadly diversify our
risk across multiple lines of business. A significant portion of the growth in
our personal lending lines over the last five years is attributable to growth in
our indirect automobile loan portfolio. As a result of the significant growth
over the past five years in our indirect automobile loan portfolio and
management's belief that our current level of investment in indirect automobile
loans as a percentage of our overall loan portfolio is appropriate, we do not
anticipate significant additional growth in our indirect automobile loan
portfolio in future periods. The growth of our commercial real estate portfolio
is a result of the natural economic growth and development of our market area,
coupled with the addition of experienced construction and development lenders.
The following table sets forth the composition of our loan portfolio by
loan type as of the dates indicated. The amounts in the following table are
shown net of discounts and other deductions.
<TABLE>
<CAPTION>
LOAN PORTFOLIO
AS OF DECEMBER 31,
---------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------- --------------------- ------------------- ------------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------------- ------------ -------- ---------- -------- ---------- -------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial real estate... $ 26,617 10.63 % $ 15,457 9.57 % $ 7,878 6.19 % 7,300 7.20 % $ 2,810 3.91 %
Residential real estate.. 33,251 13.28 28,367 17.57 24,075 18.91 14,253 14.07 8,429 11.74
Commercial............... 64,552 25.78 52,310 32.41 45,969 36.11 41,514 40.97 33,311 46.40
Personal................. 44,747 17.87 19,751 12.23 14,590 11.46 9,507 9.38 4,680 6.52
Home equity.............. 9,820 3.92 6,170 3.82 7,030 5.52 5,267 5.20 3,176 4.42
Construction............. 41,007 16.38 25,624 15.87 16,273 12.78 12,747 12.58 10,048 14.00
Leases................... 30,416 12.14 13,765 8.53 11,493 9.03 10,735 10.60 9,337 13.01
------ ----- ------ ---- ------ ---- ------ ----- ----- -----
Total loans and
leases........... 250,410 100.00 % 161,444 100.00 % 127,308 100.00 %101,323 100.00 % 71,791 100.00 %
======== ========= ======== ========= ========
Less allowance for loan
losses............... 3,817 2,341 1,618 1,275 836
-------- ---------- -------- -------- --------
Loans receivable, net.... $ 246,593 $ 159,103 $ 125,690 $ 100,048 $ 70,955
======== ========== ======== ======== ========
</TABLE>
COLLATERAL AND CONCENTRATION. At December 31, 1999, 1998, and 1997,
substantially all of our loans were collateralized with real estate, inventory,
accounts receivable and/or other assets or were guaranteed by the Small Business
Administration. Loans to individuals and businesses in the construction industry
totaled $49.1 million, or 19.62%, of total loans, as of December 31, 1999. The
Bank does not have any other concentrations of loans to individuals or
businesses involved in a single industry totaling 5% of total loans. The Bank's
lending limit under federal law to any one borrower was $6.8 million at December
31, 1999. The Bank's largest single borrower, net of participations, at December
31, 1999 had outstanding loans of $4.8 million.
The following table presents the aggregate maturities of loans in each
major category of our loan portfolio as of December 31, 1999, excluding the
allowance for loan and valuation losses. Additionally, the table presents the
dollar amount of all loans due more than one year after December 31, 1999 which
have predetermined interest rates (fixed) or adjustable interest rates
(variable). Actual maturities may differ from the contractual maturities shown
below as a result of renewals and prepayments or the timing of loan sales.
33
<PAGE>
<TABLE>
<CAPTION>
MATURITIES AND SENSITIVITIES OF LOANS TO
CHANGES IN INTEREST RATES
AS OF DECEMBER 31, 1999
-------------------------------------------------------------------------------------
MORE THAN ONE YEAR
---------------------------
LESS THAN ONE TO OVER FIVE
ONE YEAR FIVE YEARS YEARS TOTAL FIXED VARIABLE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Commercial Real Estate..... $ 2,190 $ 16,523 $ 7,904 $ 26,617 $ 8,614 $ 15,813
Commercial................. 34,973 22,214 7,365 64,552 10,450 19,129
Construction............... 18,746 21,544 1,046 41,336 2,735 19,855
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets consist primarily of loans past due 90 days or more
and nonaccrual loans and foreclosed real estate. The following table sets forth
our non-performing assets as of the dates indicated:
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS
AS OF DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Real estate loans:
Past due 90 days or more.................. $ - $ - $ - $ - $ 134
Nonaccrual................................ - - - - -
Installment loans:
Past due 90 days or more.................. - 7 - - 202
Nonaccrual................................ 87 38 - 89 57
Credit cards and related plans:
Past due 90 days or more.................. - - - - -
Nonaccrual................................ - - - - -
Commercial and all other loans:
Past due 90 days or more.................. 50 319 - 163 68
Nonaccrual................................ 375 650 367 156 24
Lease financing receivables:
Past due 90 days or more.................. - 121 - - -
Nonaccrual................................ 25 227 58 - -
Debt securities and other assets (excluding other
real estate owned and other repossessed assets):
Past due 90 days or more.................. - - - - -
Nonaccrual................................ - - - - -
----------- ----------- ----------- ----------- -----------
Total non-performing loans .............. 537 1,362 425 408 485
----------- ----------- ----------- ----------- -----------
Foreclosed assets held for sale ................ 186 46 795 40 370
----------- ----------- ----------- ----------- -----------
Total non-performing assets ............. $ 723 $ 1,408 $ 1,220 $ 448 $ 855
=========== =========== =========== =========== ===========
Total non-performing loans to total loans....... 0.21 % 0.84 % 0.33 % 0.40 % 0.68 %
Total non-performing loans to total assets...... 0.16 0.54 0.21 0.25 0.37
Allowance for loan losses to non-performing loans 710.80 171.88 380.71 312.50 172.37
Non-performing assets to loans and foreclosed
assets held for sale ......................... 0.29 0.87 0.95 0.44 1.18
</TABLE>
IMPAIRED LOANS. A loan is considered impaired when it is probable that we
will not receive all amounts due according to the contractual terms of the loan.
This includes loans that are delinquent 90 days or more, nonaccrual loans, and
certain other loans identified by management. Accrual of interest is
discontinued, and interest accrued and unpaid is removed, at the time the loans
are delinquent 90 days. Interest is recognized for nonaccrual loans only upon
receipt, and only after all principal amounts are current according to the terms
of the contract.
34
<PAGE>
Impaired loans totaled $5.2 million at December 31, 1999 and 1998, with
related allowances for loan losses of $825,000 and $747,000, respectively.
Interest of $713,000 and $600,000 was recognized on average impaired loans
of $4.1 million and $3.5 million for 1999 and 1998, respectively. Interest of
$140,000 and $85,000 was recognized on impaired loans on a cash basis during
1999 and 1998, respectively.
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is increased by
provisions charged to expense and reduced by loans charged off, net of
recoveries. The allowance is maintained at a level considered adequate to
provide for potential loan losses, based on management's evaluation of the loan
portfolio. Management assesses the adequacy of the allowance for loan losses
based upon a number of factors including, among others:
o analytical reviews of loan loss experience in relationship to
outstanding loans and commitments;
o unfunded loan commitments;
o problem and non-performing loans and other loans presenting
credit concerns;
o trends in loan growth, portfolio composition and quality;
o appraisals of the value of collateral; and
o management's judgement with respect to current and expected economic
conditions and their impact on the existing loan portfolio.
General allowances have been established, based upon the aforementioned
factors, and allocated to the individual loan categories. Allowances are accrued
on specific loans evaluated for impairment for which the basis of each loan,
including accrued interest, exceeds the discounted amount of expected future
collections of interest and principal or, alternatively, the fair value of loan
collateral.
The following table sets forth information regarding changes in our
allowance for loan and valuation losses for the periods indicated.
35
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF LOAN LOSS EXPERIENCE
AND RELATED INFORMATION
AS OF AND FOR THE
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period.............. $ 2,341 $ 1,618 $ 1,275 $ 836 $ 611
LOANS CHARGED-OFF:
Commercial real estate................... - - - - -
Residential real estate.................. - - - - -
Commercial .............................. 567 310 357 216 198
Personal ................................ 47 49 19 7 60
Home equity ............................. - - - - -
Construction ............................ - - - - 24
Leases .................................. 158 27 83 91 37
------------- ----------- ----------- ------------ ---------
Total loans charged-off............... 772 386 459 314 319
RECOVERIES:
Commercial real estate................... - - - - -
Residential real estate.................. - - - - -
Commercial............................... 90 38 84 78 138
Personal................................. 2 6 1 11 32
Home equity.............................. - - - - -
Construction............................. - - - - -
Leases................................... 12 4 57 16 4
------------- ----------- ----------- ------------ ---------
Total recoveries............................ 104 48 142 105 174
------------- ----------- ----------- ------------ ---------
Net loans charged-off....................... 668 338 317 209 145
Provision for loan losses................... 2,144 1,061 660 648 370
------------- ----------- ----------- ------------ ---------
Balance at end of period.................... $ 3,817 $ 2,341 $ 1,618 $ 1,275 $ 836
============= =========== =========== ============ =========
Loans outstanding:
Average............................ $ 206,310 $ 148,221 $ 115,939 $ 87,501 $ 63,155
End of period...................... 250,410 161,444 127,308 101,323 71,791
Ratio of allowance for loan losses to loans
outstanding:
Average............................ 1.85 % 1.58% 1.40% 1.46% 1.32%
End of period...................... 1.52 1.45 1.27 1.26 1.16
Ratio of net charge-offs to:
Average loans ..................... 0.32 0.23 0.27 0.24 0.23
End of period loans................ 0.27 0.21 0.25 0.21 0.20
</TABLE>
The following table shows our allocation of the allowance for loan losses
by specific category at the end of each of the periods shown. Management
attempts to allocate specific portions of the allowance for loan losses based on
specifically identifiable problem loans. However, the allocation of the
allowance to each category is not necessarily indicative of future losses and
does not restrict the use of the allowance to absorb losses in any category.
36
<PAGE>
<TABLE>
<CAPTION>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
AS OF DECEMBER 31,
---------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------- ------------------- -------------------- ------------------- -----------------
% OF % OF % OF % OF % OF
TOTAL TOTAL TOTAL TOTAL TOTAL
AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE AMOUNT ALLOWANCE
-------- ------------ -------- ------------ -------- ----------- ------- ---------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial real estate.. $ 268 7.02 % $ 155 6.62 % $ 75 4.63 % $ 72 5.65 % $ 68 8.13 %
Residential real estate. 364 9.53 340 14.52 298 18.42 231 18.12 93 11.12
Commercial ............. 1,206 31.60 1,013 43.27 648 40.05 564 44.23 370 44.26
Personal ............... 843 22.09 215 9.19 153 9.46 95 7.45 52 6.22
Home equity ............ 123 3.22 69 2.95 83 5.13 60 4.71 35 4.19
Construction............ 454 11.89 302 12.90 223 13.78 127 9.96 112 13.40
Leases ................. 559 14.65 247 10.55 138 8.53 126 9.88 106 12.68
Unallocated............. - - - - - - - - - -
------ ----------- ------ ---------- ------ ----------- ------ ----------- ------ --------
Total............. $ 3,817 100.00 % $ 2,341 100.00 % $ 1,618 100.00 % $ 1,275 100.00 % $ 836 100.00 %
====== =========== ====== ========== ====== =========== ====== =========== ====== ========
</TABLE>
INVESTMENT SECURITIES. The primary objectives of our investment portfolio
are to secure the adequacy of principal, to provide adequate liquidity and to
provide securities for use in pledging for public funds or repurchase
agreements. Income is a secondary consideration. As a result, we generally do
not invest in mortgage-backed securities and other higher yielding investments.
All securities in our investment portfolio are classified as available for sale
in order to provide us with an additional source of liquidity when necessary.
The balance of the investment portfolio at December 31, 1998 was higher than
either the 1999 or 1997 balance due to a 90-day, $5 million security we
purchased in December 1998 to cover a pledging requirement for one of the Bank's
customers. With the exception of this pledged security, the composition of our
investment portfolio has remained virtually unchanged over the last three years.
The following table presents the composition of our investment portfolio
by major category at the dates indicated.
<TABLE>
<CAPTION>
INVESTMENT SECURITIES PORTFOLIO COMPOSITION
AT DECEMBER 31,
------------------------------------------------------
1999 1998 1997
---------------------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. government and agency securities......................... $ 34,175 $ 38,859 $ 28,688
State and municipal obligations............................... 14,471 14,568 11,559
Mortgage-backed securities.................................... - - -
Other securities.............................................. - - -
--------------- --------------- -----------------
Total................................................... $ 48,646 $ 53,427 $ 40,247
=============== =============== =================
Available for sale (fair value)............................... $ 48,646 $ 53,427 $ 40,247
Held to maturity (amortized cost)............................. - - -
--------------- --------------- -----------------
Total................................................... $ 48,646 $ 53,427 $ 40,247
=============== =============== =================
</TABLE>
The following table sets forth the maturities, carrying value or fair
value (in the case of investment securities available for sale), and average
yields for our investment portfolio at December 31, 1999. Yields are presented
on a tax equivalent basis. Expected maturities will differ from contractual
maturities due to unscheduled repayments and because borrowers on the underlying
mortgages may have the right to call or prepay obligations with or without
prepayment penalties.
37
<PAGE>
Under our investment policy, not more than 10% of the Bank's capital may
be invested in the bonds of any single issuer, other than the United States or
its agencies.
<TABLE>
<CAPTION>
MATURITY OF INVESTMENT SECURITIES PORTFOLIO
ONE YEAR OR LESS ONE TO FIVE YEARS FIVE TO TEN YEARS MORE THAN TEN TOTAL INVESTMENT SECURITIES
YEARS
------------------- ------------------- ------------------ ------------------- ---------------------------
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING FAIR AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD VALUE VALUE YIELD
--------- --------- --------- ------- -------- -------- -------- -------- --------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. government and
agency securities..$ 2,999 5.35 % $ 11,785 5.98 % $ 19,391 6.55 % $ -- -- % $ 34,175 $ 34,175 6.25 %
State and municipal
obligations........ 256 4.50 3,240 4.63 10,975 4.78 -- -- 14,471 14,471 4.74
Mortgage-backed
securities......... -- -- -- -- -- -- -- -- -- -- --
Other securities...... -- -- -- -- -- -- -- -- -- -- --
-------- ------- ------- -------- -------- ------ ------- ------- ------- -------- -------
Total available for
sale............ $3,255 5.29 % $ 15,025 5.69 % $ 30,366 5.91 % $ -- -- % $ 48,646 $ 48,646 5.80 %
======== ======= ======= ======== ======== ====== ======= ======= ======= ======== =======
Total investment
securities.......$3,255 5.29 % $ 15,025 5.69 % $ 30,366 5.91 % $ -- -- % $ 48,646 $ 48,646 5.80 %
======= ======= ======= ======== ======== ====== ======= ======= ======= ========= =======
</TABLE>
DEPOSITS. A significant portion of our deposit growth during 1999 is
attributable to a new money market deposit product, our money management
account, or "short-term parking account," introduced by the Bank in the fourth
quarter of 1998. The money management account provides a hybrid of the features
available from a traditional money market account and a traditional time
deposit. The account requires a minimum balance of $10,000 and allows for daily
deposits but limits withdrawals to the 15th and last days of each month. This
account pays a rate of interest which is higher than a customer could receive on
a traditional money market account but lower than the rates generally available
on certificates of deposit. We believe that the trade-off to depositors between
higher interest rates but more limited access to withdrawals has proven to be an
attractive product in our market areas and provides us with a more attractive
source of funds than other alternatives such as Federal Home Loan Bank
borrowings, due to our ability to cross-sell additional services to these
account holders.
The following two tables set forth the balances for each major category of
our deposit accounts and the weighted-average interest rates paid for
interest-bearing deposits for the periods indicated:
<TABLE>
<CAPTION>
DEPOSITS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1999 1998 1997
------------------------------- --------------------------------- -----------------------------------
(DOLLARS IN THOUSANDS)
PERCENT WEIGHTED PERCENT WEIGHTED PERCENT WEIGHTED
OF AVERAGE OF AVERAGE OF AVERAGE
BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE
--------- ---------- ---------- ---------- ------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Demand....................... $ 36,950 13.78 % -- % $ 33,752 16.09 % -- % $ 27,275 15.97 % -- %
Savings...................... 3,385 1.26 2.93 3,491 1.66 2.94 3,072 1.80 2.90
Interest-bearing demand...... 26,800 9.99 3.34 13,982 6.66 2.76 12,728 7.45 2.78
Money Market................. 35,764 13.34 3.51 35,911 17.11 4.00 35,030 20.51 4.02
Money Management............. 60,449 22.55 5.15 9,831 4.69 5.08 -- -- --
Time Deposits................ 104,797 39.08 5.67 112,857 53.79 6.00 92,687 54.27 6.03
-------- --------- -------- -------- --------- ----------
Total deposits......... $ 268,145 100.00 % $ 209,824 100.00 % $ 170,792 100.00 %
======== ========= ========= ========= ========= ==========
</TABLE>
38
<PAGE>
The following table sets forth the amount of our certificates of deposit
that are greater than $100,000 by time remaining until maturity as of December
31, 1999:
AMOUNTS AND MATURITIES OF
TIME DEPOSITS OF $100,000 OR MORE
AS OF DECEMBER 31, 1999
--------------------------
WEIGHTED
AMOUNT AVERAGE
RATE PAID
------------ -------------
(DOLLARS IN THOUSANDS)
Three months or less............................ $ 12,614 5.29 %
Over three months through six months............ 8,720 5.57
Over six months through twelve months........... 6,316 5.70
Over twelve months.............................. 7,307 6.19
---------- -----------
Total....................................... $ 34,957 5.62 %
========== ===========
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY. Liquidity is measured by a financial institution's ability to
raise funds through deposits, borrowed funds, capital, or the sale of marketable
assets, such as residential mortgage loans or a portfolio of SBA loans. Other
sources of liquidity, including cash flow from the repayment of loans, are also
considered in determining whether liquidity is satisfactory. Liquidity is also
achieved through growth of core deposits and liquid assets, and accessibility to
the money and capital markets. The funds are used to meet deposit withdrawals,
maintain reserve requirements, fund loans and operate the organization. Core
deposits, defined as demand deposits, interest-bearing transaction accounts,
savings deposits and certificates of deposit less than $100,000, were 70.11%,
68.57% and 73.98% of total assets at December 31, 1999, 1998 and 1997,
respectively.
We use various forms of short-term borrowings for cash management and
liquidity purposes on a limited basis. These forms of borrowings include federal
funds purchased, revolving lines of credit and Federal Home Loan Bank
borrowings.
We also have a bank stock loan. The amount outstanding under the amended
bank stock loan agreement is due July 31, 2000. We intend to repay the full
amount outstanding under our bank stock loan with the proceeds from this
offering. See "Use of Proceeds." As of February 29, 2000, the balance
outstanding under the bank stock loan was $7.3 million. The amended bank stock
loan agreement:
o prohibits us from paying dividends or making other distributions on
our common stock;
o prohibits us from incurring additional indebtedness other than the
junior subordinated debentures and our obligations under the trust
preferred securities guarantee; and
o is secured by all of the stock of the Bank.
The Bank is a member of the Federal Home Loan Bank System, which consists
of 12 regional Federal Home Loan Banks governed and regulated by the Federal
Housing Finance
39
<PAGE>
Board. The Federal Home Loan Banks provide a central credit facility for member
institutions. The Bank, as a member of the FHLB of Topeka, is required to
acquire and hold shares of capital stock in the FHLB of Topeka in an amount at
least equal to 0.30% of total assets or 1.00% of the aggregate principal amount
of its unpaid residential mortgage loans. The Bank is currently in compliance
with this requirement, with a $1.0 million investment in stock of the FHLB of
Topeka as of December 31, 1999. In 1998, the Bank took advantage of some special
advances from the FHLB to supplement its funding base. Outstanding advances from
the FHLB of Topeka to the Bank totaled $20.0 million at December 31, 1999.
The following table sets forth a summary of our short-term borrowings
during 1999, 1998 and 1997 and as of the end of each period.
<TABLE>
<CAPTION>
SHORT-TERM BORROWINGS
AVERAGE WEIGHTED
AMOUNT AMOUNT MAXIMUM AVERAGE WEIGHTED
OUTSTANDING OUTSTANDING OUTSTANDING INTEREST AVERAGE
AT DURING THE AT ANY RATE INTEREST
YEAR END YEAR (1) MONTH END DURING THE RATE
YEAR AT YEAR END
------------- ------------- ------------ ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
At or for the year ended December 31, 1999:
Federal Home Loan Bank borrowings. $ 10,000 $ 461 $ 10,000 4.50 % 5.98%
Bank Stock Loan................... 7,450 4,763 7,450 7.03 7.50
Revolving lines of credit......... -- -- -- -- --
Repurchase agreements............. 11,260 9,500 13,056 3.00 3.00
----------- ----------- ---------- ----------- ---------
Total.......................... 28,710 14,724 30,506 4.35 5.21
At or for the year ended December 31, 1998:
Federal Home Loan Bank borrowings. -- -- -- -- --
Bank Stock Loan................... 3,575 3,800 4,038 7.97 7.25
Revolving lines of credit......... -- -- -- -- --
Repurchase agreements............. 8,817 7,040 8,886 3.00 3.00
----------- ----------- ---------- ----------- ---------
Total.......................... 12,392 10,840 12,924 4.74 4.23
At or for the year ended December 31, 1997:
Federal Home Loan Bank borrowings. -- -- -- -- --
Bank Stock Loan................... 4,038 2,801 4,038 8.28 8.50
Revolving lines of credit......... -- -- -- -- --
Repurchase agreements............. 8,114 5,549 8,114 3.00 3.00
----------- ----------- ---------- ----------- ---------
Total.......................... 12,152 8,350 12,152 4.77 4.83
</TABLE>
- -----------
[FN]
(1) Calculations are based on daily averages where available and monthly
averages otherwise.
</FN>
CAPITAL RESOURCES. At December 31, 1999, our total stockholders' equity
was $18.9 million. At year-end 1999, our equity to asset ratio was 5.67%, as
compared to 6.71% at year-end 1998, and 6.68% at year-end 1997.
The Federal Reserve Board's risk-based guidelines establish a
risk-adjusted ratio, relating capital to different categories of assets and
off-balance sheet exposures, such as loan commitments and standby letters of
credit. These guidelines place a strong emphasis on tangible stockholder's
equity as the core element of the capital base, with appropriate recognition of
other components of capital. At December 31, 1999, our Tier 1 capital ratio was
6.82%, while our total risk-based capital ratio was 8.07%, both of which exceed
the capital minimums established in the risk-based capital requirements.
40
<PAGE>
Our risk-based capital ratios at December 31, 1999, 1998 and 1997 are
presented below.
RISK-BASED CAPITAL
DECEMBER 31,
-----------------------------------
1999 1998 1997
---------- ----------- ------------
(DOLLARS IN THOUSANDS)
Tier 1 capital
Stockholder's equity.................... $ 18,869 $ 17,016 $ 13,464
Intangible assets....................... (1,448) (1,600) (1,753)
Unrealized appreciation on
available-for-sale securities........... 957 (352) (260)
Other................................... - - -
---------- ----------- ------------
Total Tier 1 capital................... 18,378 15,064 11,451
---------- ----------- ------------
Tier 2 capital
Qualifying allowance for loan losses.... 3,371 2,255 1,618
---------- ----------- ------------
Total Tier 2 capital................... 3,371 2,255 1,618
---------- ----------- ------------
Total risk-based capital...............$ 21,749 $ 17,319 $ 13,069
========== =========== ============
Risk weighted assets...................... $ 269,660 $ 180,077 $ 132,394
========== =========== ============
Ratios at end of year
Total capital to risk-weighted assets
ratio................................... 8.07 % 9.62 % 9.87 %
Tier 1 capital to average assets ratio
(leverage ratio)........................ 5.80 % 6.13 % 6.28 %
Tier 1 capital to risk-weighted assets
ratio................................... 6.82 % 8.37 % 8.65 %
Minimum guidelines
Total capital to risk-weighted assets
ratio................................... 8.00 % 8.00 % 8.00 %
Tier 1 capital to average assets ratio
(leverage ratio)........................ 4.00 % 4.00 % 4.00 %
Tier 1 capital to risk-weighted assets
ratio................................... 4.00 % 4.00 % 4.00 %
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
As a continuing part of our financial strategy, we attempt to manage the
impact of fluctuations in market interest rates on our net interest income. This
effort entails providing a reasonable balance between interest rate risk, credit
risk, liquidity risk and maintenance of yield. Our funds management policy is
established by our Board of Directors and monitored by our Risk Management
Committee. Our funds management policy sets standards within which we are
expected to operate. These standards include guidelines for exposure to interest
rate fluctuations, liquidity, loan limits as a percentage of funding sources,
exposure to correspondent banks and brokers, and reliance on non-core deposits.
Our funds management policy also establishes the reporting requirements to our
Board of Directors. Our investment policy complements our asset/liability policy
by establishing criteria by which we may purchase securities. These criteria
include approved types of securities, brokerage sources, terms of investment,
quality standards, and diversification.
41
<PAGE>
The following table sets forth our interest-rate sensitivity as of
December 31, 1999:
<TABLE>
<CAPTION>
INTEREST-RATE SENSITIVITY ANALYSIS
TIME TO MATURITY OR REPRICING
----------------------------------------------------------------
0-90 DAYS 91-365 DAYS 1-5 YEARS OVER 5 YEARS TOTAL
--------------- ------------- -------------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans................................. $ 129,414 $ 35,278 $ 82,039 $ 3,679 $ 250,410
Investments........................... 105 3,150 15,025 30,366 48,646
Federal funds sold.................... 8,000 - - - 8,000
------------- ----------- ------------ ----------- ==========
Total interest-earning assets...... $ 137,519 $ 38,428 $ 97,064 $ 34,045 $ 307,056
============= =========== ============ =========== ==========
INTEREST-BEARING LIABILITIES:
Interest-bearing demand............... $ 26,800 $ - $ - $ - $ 26,800
Savings and money market.............. 99,598 - - - 99,598
Time deposits......................... 26,465 40,027 35,997 2,308 104,797
Funds borrowed........................ 23,819 7,450 - 11,908 43,177
------------- ----------- ------------ ----------- ==========
Total interest-bearing liabilities. $ 176,682 $ 47,477 $ 35,997 $ 14,216 $ 274,372
============= =========== ============ =========== ==========
CUMULATIVE:
Rate sensitive assets (RSA)........... $ 137,519 $ 175,947 $ 273,011 $ 307,056 $ 307,056
Rate sensitive liabilities (RSL)...... 176,682 224,159 260,156 274,372 274,372
GAP (GAP = RSA - RSL).............. (39,163) (48,212) 12,855 32,684 32,684
RSA/RSL..................................... 77.83 % 78.49 % 104.94 % 111.91 % -
RSA/Total assets............................ 0.41 0.53 0.82 0.92 -
RSL/Total assets ........................... 0.53 0.67 0.78 0.83 -
GAP/Total assets ........................... (11.77) % (14.50) % 3.87 % 9.83 % -
GAP/RSA .................................... (0.28) (0.27) 0.05 0.11
</TABLE>
We measure the impact of interest rate changes on our income statement
through the use of gap analysis. The gap represents the net position of assets
and liabilities subject to repricing in specified time periods. During any given
time period, if the amount of rate sensitive liabilities exceeds the amount of
rate sensitive assets, a company would generally be considered negatively gapped
and would benefit from falling rates over that period of time. Conversely, a
positively gapped company would generally benefit from rising rates.
We have structured the assets and liabilities of our company to mitigate
the risk of either a rising or falling interest rate environment. We manage our
gap position at a 90-day horizon. Depending upon our assessment of economic
factors such as the magnitude and direction of projected interest rates over the
short- and long-term, we generally operate within guidelines set by our funds
management policy and attempt to maximize our returns within an acceptable
degree of risk. Our policy states that we should maintain a gap position at a
90-day horizon of between 0.60 and 1.40. Our position at December 31, 1999 was
0.78.
Interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously. There are other factors which are
difficult to measure and predict that would influence the effect of interest
rate fluctuations on our income statement. For example, a rapid drop in interest
rates might cause our loans to repay at a more rapid pace and some
mortgage-related investments to prepay more quickly than projected. This could
mitigate some of the benefits of falling rates that are expected when negatively
gapped. Conversely, a rapid rise in
42
<PAGE>
rates might cause the mortgage-related loans to repay at a slower pace, which
could give us an opportunity to increase our margins.
In addition to the gap analysis currently required under our funds
management policy, our Board of Directors and Risk Management Committee continue
to evaluate additional methods of managing the impact of fluctuations in market
interest rates on our net interest income.
Disclosures about fair values of financial instruments, which reflect
changes in market prices and rates, can be found in note 16 to the consolidated
financial statements included in this prospectus.
INFLATION
The consolidated financial statements and related data presented in this
prospectus have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of our assets and liabilities are
monetary in nature. As a result, interest rates have a more significant impact
on our performance than the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or in the same magnitude as
prices of goods and services. We disclose the estimated fair market value of our
financial instruments in accordance with Statement of Financial Accounting
Standards No. 107. See Note 16 to the consolidated financial statements included
in this prospectus.
YEAR 2000
We have not experienced any Year 2000-related problems with our internal
data processing systems and software or those of any third parties with whom we
do business. It is possible, however, that Year 2000 compliance problems exist
that we cannot yet identify. If problems arise and we fail to address them on a
timely basis, it could result in lost revenue, increased operating costs, the
loss of customers and suppliers and other business interruptions. As of December
31, 1999, we had incurred total costs of not more than $20,000 that we believe
are allocable to our efforts to address the Year 2000 problem, of which not more
than $6,000 were incurred and expensed in 1999.
FUTURE ACCOUNTING REQUIREMENTS
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133")." This statement, as amended by SFAS No.
137, requires all derivatives to be recorded on the balance sheet at fair value
and establishes standard accounting methodologies for hedging activities. The
standard will result in the recognition of offsetting changes in value or cash
flows of both the hedge and the hedged item in earnings or comprehensive income
in the same period. The statement is effective for Blue Valley's fiscal year
ending December 31, 2001. Because Blue Valley generally does not hold derivative
instruments, the adoption of this statement is not expected to have a material
impact on the financial statements.
43
<PAGE>
FASB also has issued Statement of Financial Accounting Standards No. 134,
"Accounting for Mortgage-Backed Securities retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Entity ("SFAS 134")." This
statement amends SFAS No. 65 allowing mortgage-backed securities or other
retained interests arising from the securitization of mortgage loans to be
classified based on the mortgage banking entities' ability and intent to sell or
hold those securities. Previously, these securities had to be held within a
trading account. This statement was effective for Blue Valley's fiscal year
ending December 31, 1999. The adoption of this standard did not have a material
impact on the financial statements.
BUSINESS
OVERVIEW
We organized Blue Valley and our wholly-owned subsidiary, Bank of Blue
Valley, in 1989 to provide banking services to closely-held businesses, their
owners, professionals and individuals in Johnson County, Kansas, a high growth,
demographically attractive area within the Kansas City MSA. Our focus has been
to take advantage of the current and anticipated growth in our market area as
well as to serve the needs of small and mid-sized commercial borrowers -
customers that we believe currently are underserved as a result of banking
consolidation in the industry generally and within our market specifically.
We have experienced significant internal growth since our inception. In
addition, in 1994, we acquired the deposits of a branch of a failed savings and
loan institution to augment our internal growth and we expanded into an
additional market which management believed was attractive. In 1994, we also
completed the construction of our current headquarters in Overland Park, Kansas.
We currently have three banking locations in Johnson County, Kansas, including
our main office in Overland Park, a full-service office in Olathe, Kansas, and a
supermarket banking facility in Shawnee, Kansas.
For the five-year period ended December 31, 1999, our compound annual
growth rate in loans was 36.65%, in assets was 26.82%, and in deposits was
25.70%. At December 31, 1999, we had total loans of $250.4 million, total assets
of $332.6 million, total deposits of $268.1 million and total stockholders'
equity of $18.9 million.
Our lending strategy focuses on commercial lending, and, to a lesser
extent, residential and consumer lending. We strive to identify, develop and
maintain diversified lines of business which provide acceptable returns on a
risk adjusted basis. Our primary lines of business consist of commercial and
industrial lending, commercial real estate lending, construction lending,
indirect lending, leasing and residential mortgage lending.
As a complement to our lending activities, we seek to develop lines of
business which diversify our revenue sources and increase our non-interest
income. In addition to fees generated in conjunction with our loan and lease
portfolios, we derive non-interest income by providing investment brokerage
services and trust services.
In addition to the Bank, we have one direct wholly-owned subsidiary, Blue
Valley Building Corp., which owns the building and property that comprises our
headquarters in
44
<PAGE>
Overland Park, Kansas. The Bank has one wholly-owned subsidiary,
Blue Valley Investment Corp., which owns and services a portion of a commercial
lease portfolio that we purchased in 1999.
OUR MARKET AREA
We operate as a community bank, serving the banking needs of small and
medium-sized companies and individuals in the Kansas City MSA generally, and in
suburban Johnson County, in particular. Our trade area generally consists of
Johnson County, Kansas. We believe that coupling our strategy of providing
exceptional customer service and local decision making with attractive market
demographics has led to a rate of growth which exceeds the natural growth rate
of the banking industry as well as the internal growth experienced locally by
our peers.
The income levels and growth rate of Johnson County, Kansas compare
favorably to national averages. Johnson County's population growth rate ranks in
the top 2% of counties nationally, and its per capita income ranks in the top 1%
of counties nationally. Johnson County is also a significant banking market in
the State of Kansas and in the Kansas City MSA. According to available industry
data, as of June 30, 1999, total deposits in Johnson County, including those of
banks, thrifts and credit unions, were approximately $7.8 billion which
represented 19.23% of total deposits in the State of Kansas and 29.54% of total
deposits in the Kansas City MSA.
As our founders anticipated, the trade area surrounding our main banking
facility in Overland Park has become one of the most developed retail areas in
the Kansas City MSA. Our Olathe, Kansas branch is located approximately 10 miles
west of our main office. We opened our Olathe branch in 1994 when we acquired
the deposits of the Olathe branch of a failed savings and loan association. We
made this acquisition because it was located in a contiguous market area and we
believed that it represented a stable deposit base. The Shawnee, Kansas
supermarket banking facility is approximately 20 miles northwest of our
headquarters location. We opened our Shawnee branch for the convenience of our
existing customers in Shawnee, and to expand our market presence in Shawnee. We
are in the process of building a free-standing banking facility in Shawnee,
Kansas and expect to commence operations in the new facility during the third
quarter of 2000. After Overland Park, Shawnee is the second fastest growing area
in Johnson County, Kansas.
BUSINESS STRATEGY
Since our founding, we have strived to increase stockholder value by
executing a community banking strategy tailored to provide our customers with
competitive financial products and services, our employees with the opportunity
to share in our financial success and our community with a stable, growth
oriented employer. To further our primary business objectives, we have
identified several business strategies designed to increase and diversify our
loan portfolio, generate non-interest income, control non-interest expense and
create new markets for our existing and developing products.
o GROW AND DIVERSIFY OUR LOAN PORTFOLIO. Our lending strategy
emphasizes commercial and residential lending and, to a lesser
extent, consumer lending. To
45
<PAGE>
grow our portfolio, we actively pursue businesses and professionals
within our target market area as well as utilize our existing client
relationships to identify and develop a network of potential
referrals. We have also placed an increasing emphasis on
cross-marketing our lending products and services to existing and
new customers for our deposit and other services. With the advent of
new technology for delivering financial products and services, we
have identified several techniques to market our lending products.
For example, our customers are now able to use our electronic
banking services to apply for residential and personal loans over
the Internet. Throughout our history, we have continually broadened
our product offerings in order to decrease our reliance on any one
source of lending activity and to generate additional income. To
further diversify our loan portfolio, we intend to continue to
identify and invest in new lines of business that provide an
acceptable rate of return on a risk-adjusted basis.
o PURSUE OPPORTUNITIES TO INCREASE OUR NON-INTEREST INCOME. In
order to increase stockholder value, we believe that traditional
community banks must identify and develop products which generate
fee-based income in order to augment traditional sources of
interest income. Our residential mortgage loan originations and
our trust, investment brokerage and other services provide these
sources of non-interest income. Although our trust and
investment brokerage operations do not currently represent a
material source of income, we anticipate the income resulting
from these activities to increase in the future. We also seek to
deploy programs and employ individuals capable of anticipating
and meeting the many financial service needs of our relatively
affluent customer base. The experience of our management team is
critical to understanding and providing the high level of
customer service which we believe is essential in competing for
these customers.
o CONTROL THE EXPENSES NECESSARY TO FACILITATE OUR GROWTH. As a
high-growth community bank with diversified and developing lines of
business, we continue to place emphasis on controlling costs. Each
of our prospective lines of business, as well as our current
activities, are reviewed to determine the potential contribution to
net income and earnings per share.
o EXPAND OUR PRESENCE WITHIN OUR MARKET AREA. We operate as a
community bank, serving the banking needs of small and
medium-sized companies and individuals in the Kansas City MSA
generally, and suburban Johnson County, Kansas in particular. We
will consider opening new branches and establishing new ATMs in
high growth areas within our market area to grow our deposit base
and to expand our ability to provide lending and other services
to new and existing customers. To the extent that opportunities
present themselves, we will consider acquisition opportunities
within our market area and in contiguous areas. Our management
team expects to build upon our reputation as a community bank
capable of responding promptly to customer needs, thereby
distinguishing ourselves from many regional and national banks.
We also expect to continue to respond to changes in technology to
enable us to enhance our level of customer service. For example,
through our "Blue Wave" Internet banking service, our
46
<PAGE>
deposit customers can check balances, transfer funds, pay bills and
order new checks electronically around the clock. By offering these
services to our customers, we believe we have distinguished
ourselves from many community banks in our market area.
In order to successfully execute our strategies and achieve our primary
business objectives we rely upon what we believe to be our primary strengths,
including:
o CUSTOMER SERVICE STANDARDS. We believe that our emphasis on local
relationship banking, our high level of customer service standards
and our employees' commitment to customer satisfaction have been
important factors in the success and growth of the Bank.
o GROWTH OPPORTUNITIES. As of December 31, 1999, our total loan
portfolio had grown to approximately $250.4 million. We believe
our Johnson County location presents significant opportunities to
grow our loan portfolio and deposit base. The U.S. Census Bureau
recently reported that the job growth in Johnson County, Kansas
in 1998 was greater than in any other county in the United
States. We believe that our operating strategy, the continued
increase in the local employment base, the relatively affluent
residential population, and the banking needs in our market areas
have positioned us to facilitate further growth in our assets and
deposit base.
o INDEPENDENT COMMUNITY BANK. As a Johnson County-headquartered,
independent community bank, we believe we have certain
competitive advantages in our market area over many banks with a
regional or national focus, particularly during the current
period of industry consolidation. We continue to market our
local decision-making structure to customers who have become
dissatisfied with larger banks that fail to address their service
expectations.
o EXPERIENCED MANAGEMENT TEAM. Each member of our six-person senior
management team has significant banking or banking-related
experience. In 1998, our President and Chief Executive Officer was
named the "1998 Financial Entrepreneur of the Year - Midwest Region"
by Ernst & Young LLP.
LENDING ACTIVITIES
OVERVIEW. Our principal loan categories include commercial, commercial
real estate, construction, indirect, leasing and residential mortgages. We also
offer a variety of consumer loans. Our primary source of income is interest
earned on our loan portfolio. As of December 31, 1999, our loans represented
approximately 75.29% of our total assets. Although our legal lending limit to
any one borrower was $6.8 million at December 31, 1999, our largest single
borrower as of that date had outstanding loans of $4.8 million.
We have been successful in expanding our loan portfolio because of the
commitment of our staff and the economic growth in our area of operation. Our
staff has significant experience in lending and has been successful in offering
our products to potential customers and existing
47
<PAGE>
customers. We believe that we have been successful in maintaining our customers
because of our staff's attentiveness to the banking needs of our customers and
the development of personal relationships with them. We strive to become a
strategic business partner with our customers, not just a source of funds.
We conduct our lending activities pursuant to the loan policies adopted by
our board of directors. These policies currently require the approval of our
loan committee of all credits in excess of $300,000. Credits up to $300,000 can
be approved by the President or by the joint signatures of our Executive Vice
President and Chief Lending Officer, and Senior Vice President - Mortgage
Banking. Our management information systems and loan review policies are
designed to monitor lending sufficiently to ensure adherence to our loan
policies. The following table shows the composition of our loan portfolio at
December 31, 1999.
LOAN PORTFOLIO
AS OF DECEMBER 31, 1999
-------------------------
AMOUNT PERCENT
(DOLLARS IN THOUSANDS)
Commercial real estate........... $ 26,617 10.63 %
Residential real estate.......... 33,251 13.28
Commercial....................... 64,552 25.78
Personal......................... 44,747 17.87
Home equity...................... 9,820 3.92
Construction..................... 41,007 16.38
Leases........................... 30,416 12.14
--------- ---------
Total loans and leases....... 250,410 100.00 %
Less allowance for loan losses... 3,817
---------
Loans receivable, net............ $ 246,593
---------
COMMERCIAL LOANS. As of December 31, 1999, approximately $64.6 million, or
25.78%, of our loan portfolio represented commercial loans. The Bank has
developed a strong reputation in the servicing of small business and commercial
loans. We have expanded this portfolio through the addition of commercial
lending staff and as a result of our reputation. Commercial loans have
historically been a significant portion of our loan portfolio and we expect to
continue our emphasis on this loan category.
The Bank's commercial lending activities historically have been directed
to small and medium-sized companies in the Kansas City MSA, focusing on Johnson
County, Kansas, with annual sales of between $100,000 and $20 million. The
Bank's commercial customers are primarily firms engaged in manufacturing,
service, retail, construction, distribution and sales with significant
operations in our market areas. The Bank's commercial loans are primarily
secured by real estate, accounts receivable, inventory and equipment, and the
Bank generally seeks to obtain personal guarantees for its commercial loans. As
of December 31, 1999, approximately 5.44% of the number of our commercial loans
had outstanding balances in excess of $300,000, and these loans accounted for
47.68% of the total carrying value of our commercial loan portfolio. The Bank
primarily underwrites its commercial loans on the basis of the borrowers' cash
flow and ability to service the debt, as well as the value of any underlying
collateral and the financial strength of any guarantors.
48
<PAGE>
Approximately $4.0 million, or 6.20%, of our commercial loans are Small
Business Administration loans, of which $3.0 million is government guaranteed.
The SBA guarantees the repayment of a portion of the principal on these loans,
plus accrued interest on the guaranteed portion of the loan. Under the federal
Small Business Act, the SBA may guarantee up to 80% of qualified loans of
$100,000 or less and up to 75% of qualified loans in excess of $100,000, up to a
maximum guarantee of $750,000. We are an active SBA lender in our market area
and have been approved to participate in the SBA Certified Lender Program.
COMMERCIAL REAL ESTATE LOANS. The Bank also makes loans to provide
permanent financing for retail and office buildings, multi-family buildings and
churches. As of December 31, 1999, approximately $26.6 million, or 10.63%, of
our loan portfolio represented commercial real estate mortgage loans. Our
commercial real estate mortgage loans are underwritten on the basis of the
appraised value of the property, the cash flow of the underlying property, and
the financial strength of any guarantors.
In 1999, the bank hired a full-time loan officer to focus on the
origination of permanent commercial real estate mortgage loans, the majority of
which are sold to third-party investors. We earn fee income on commercial real
estate mortgage loans that we originate for sale to third-party investors.
CONSTRUCTION LOANS. Our construction loans include loans to developers,
home building contractors and other companies and consumers for the construction
of single family homes, land development, and commercial buildings, such as
retail and office buildings and multi-family properties. As of December 31,
1999, approximately $41.0 million, or 16.38%, of our loan portfolio represented
real estate construction loans. The builder and developer loan portfolio has
been a consistent and profitable component of our loan portfolio over our
ten-year history. We attribute this success to our availability and prompt
service. The Bank's experience and reputation in this area have enabled it to
focus on relationships with a smaller number of larger builders. The Bank's
focus on larger and more established builders has permitted it to increase the
total value of its real estate construction portfolio. Construction loans are
made to qualified builders to build houses to be sold following construction,
pre-sold houses and model houses. These loans are generally underwritten based
upon several factors, including the experience and current financial condition
of the borrowing entity, amount of the loan to appraised value, and general
conditions of the housing market. Construction loans are also made to
individuals for whom houses are being constructed by builders with whom the Bank
has an existing relationship. Those loans are made on the basis of the
individual's financial condition, the loan to value ratio, the reputation of the
builder, and whether the individual will be pre-qualified for permanent
financing.
INDIRECT LOANS. A significant portion of our consumer loan portfolio
consists of indirect automobile loans offered through automobile dealerships
located primarily in our immediate market. The indirect loan portfolio consists
of approximately 2,800 loans. At December 31, 1999, loans representing 99.70% of
the portfolio balance were current, and the historical loss experience of this
portfolio is significantly lower than industry averages. At the period ended
December 31, 1999, the indirect loan portfolio had an overall loss experience of
0.09%, which is lower than the overall bank loss experience of 0.32% in 1999. We
cannot be sure whether our level of charge-offs for indirect automobile loans in
future periods will be consistent with our
49
<PAGE>
historical levels of indirect automobile loan charge-offs. Much of the
growth in our indirect loan portfolio in 1999 resulted from the increase in the
number of loan officers and administrative staff. This allowed us to expand our
dealer relationships and expand our territory slightly. There are currently 23
dealerships participating in this program. As a result of the significant growth
over the past five years in our indirect automobile loan portfolio and
management's belief that our current level of investment in indirect automobile
loans as a percentage of our overall loan portfolio is appropriate, we do not
anticipate significant growth in this loan category in future periods. Our loans
made through this program generally represent loans to purchase new cars. Our
indirect loans are underwritten based on the borrower's income, current debt,
past credit history, collateral, and the reputation of the originating
dealership.
LEASE FINANCING. Our lease portfolio includes capital leases that we have
originated and leases that we have acquired from brokers or third parties. As of
December 31, 1999, our lease portfolio totaled $30.4 million, or 12.14% of our
total loan portfolio, consisting of $10.2 million principal amount of leases
originated by us and $20.2 million principal amount of leases that we purchased.
We provide lease financing for a variety of equipment and machinery, including
office equipment, heavy equipment, telephone systems, tractor trailers and
computers. Lease terms are generally from three to five years. In 1999, we
expanded our lease financing sales staff and administrative staff. As a result,
we have been able to acquire additional brokers and direct relationships.
Management believes this area is attractive because of its ability to provide a
source of both interest and fee income. Our leases are generally underwritten
based upon several factors, including the experience and current financial
condition of the lessee, amount of the financing to appraised value, and general
conditions of the market.
Of our lease portfolio at December 31, 1999, $5.9 million, or 19.44%,
represented leases that Blue Valley Investment acquired on February 1, 1999 for
approximately $12 million from National Retailer Leasing ("NRL"), a tanker truck
leasing company involved in bankruptcy proceedings. These leases represent
leases of tanker trucks used to transport fuel. Many of these tanker trucks are
used at airports and similar locations. Of the total number of leases acquired
by Blue Valley Investment, approximately $8.7 million in principal amount
represented leases that satisfied the Bank's underwriting criteria for leases,
and were purchased by the Bank from Blue Valley Investment. The remaining NRL
assets held by Blue Valley Investment totaling $3.3 million represented leases
that had defaults or delinquencies at the time of purchase. However, as of
December 31, 1999, the total amount of these leases reflected on the balance
sheet of Blue Valley Investment has been paid down to $1.1 million and is
supported by lease paper which is now current. In 1999, interest income from
these leases was $1.4 million. We expect our interest income from the NRL leases
to decline over the next two years as the portfolio matures.
RESIDENTIAL MORTGAGE LOANS. Our residential mortgage loan portfolio
consists primarily of first and second mortgage loans on residential properties.
As of December 31, 1999, $43.1 million, or 17.20%, of our loan portfolio
represented residential mortgage loans. In 1999, we originated approximately
$85.6 million of residential mortgage loans, of which we sold approximately
$82.4 million, or 96.26%, in the secondary market. The terms of these loans are
for 15, 20 or 30 years, and accrue interest at a fixed or variable rate. Due to
interest rate risk considerations, we generally sell our fixed rate residential
mortgage loans in the secondary market. For our own portfolio, we typically
originate fixed-rate loans with a balloon payment in 2-5 years with 15 to 30
year amortizations. By offering these products, we can offer credit to
individuals who are self-employed or have significant income from partnerships
or investments,
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who are often unable to satisfy the underwriting criteria permitting the sale of
their mortgages into the secondary market.
We originate conventional first mortgage loans primarily through referrals
from real estate brokers, builders, developers, prior customers and media
advertising. In addition, since 1999, we have offered customers the ability to
apply for mortgage loans and to pre-qualify for mortgage loans over the Internet
through our electronic banking service. To date, mortgage loans originated over
the Internet have not represented a material amount of our mortgage loan
originations. However, we expect Internet mortgage loan originations to increase
over the next several years at a more rapid rate than our overall mortgage loan
originations. The origination of a mortgage loan from the date of initial
application through closing normally takes 15 to 60 days. We acquire forward
commitments to sell mortgage loans on those that we intend to sell into the
secondary market to reduce market risk on mortgage loans in the process of
origination and those held for sale.
Our mortgage loan credit review process is consistent with the standards
set by traditional secondary market sources. We review appraised value and debt
service ratios, and we gather data during the underwriting process in accordance
with various laws and regulations governing real estate lending. We require
pre-approval from secondary market sources before we approve loans to be sold
into the secondary market. Our internal approval process is less stringent for
loans pre-approved by our secondary market sources, which we believe allows us
to be more responsive to the tight time commitments necessary for locking in
interest rates in the secondary market.
Loans originated by the Bank are sold with servicing released to increase
current income and reduce the costs associated with retaining servicing rights.
Commitments are obtained from the appropriate investor on a loan-by-loan basis
on a 30, 45 or 60 day delivery commitment. Interest rates are committed to the
borrower when a rate commitment is obtained from the investor. Loans are funded
by the Bank and purchased by the investor within 30 days following closing
pursuant to commitments obtained at the time of origination. We sell
conventional conforming loans and all loans that are non-conforming as to credit
quality to secondary market investors for cash on a non-recourse basis.
Consequently, foreclosure losses on all sold loans are generally the
responsibility of the investor and not that of the Bank.
CONSUMER AND OTHER LOANS. As of December 31, 1999, our consumer and other
loans totaled $44.7 million, or 17.90%, of our total loan portfolio.
Substantially all of this amount consisted of installment loans to individuals
in our market area. Installment lending offered directly by the Bank in our
market area includes automobile loans, recreational vehicle loans, home
improvement loans and unsecured lines of credit and other loans, to
professionals, people in education, industry and government, as well as retired
individuals and others. Since 1999, we have offered customers the ability to
apply for consumer loans, personal lines of credit and overdraft protection
lines of credit over the Internet through our electronic banking services. To
date, consumer loans originated over the Internet have not represented a
material amount of our consumer loan portfolio. Our consumer and other loans are
underwritten based on the borrower's income, current debt, past credit history
and collateral.
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INVESTMENT ACTIVITIES
The objectives of our investment policy are to:
o secure the safety of principal;
o provide adequate liquidity;
o provide securities for use in pledging for public funds or repurchase
agreements; and
o maximize after-tax income consistent with servicing the Bank's
customers' needs.
We invest primarily in direct obligations of the United States,
obligations guaranteed as to principal and interest by the United States,
obligations of agencies of the United States and bank-qualified obligations of
state and local political subdivisions. In order to ensure the safety of
principal, we typically do not invest in mortgage-backed securities and other
higher-yielding instruments. We also may invest from time to time in corporate
debt or other securities as permitted by our investment policy. In addition, we
enter into federal funds transactions with our principal correspondent banks,
and primarily act as a net seller of these funds. The sale of federal funds are
effectively short-term loans from us to other banks.
Our investment accounts also include minimal equity investments in the
Federal Home Loan Bank ("FHLB"). We invest in FHLB in order to be a member,
which qualifies us to use their services, including FHLB borrowings. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation - Liquidity and Capital Resources."
DEPOSIT SERVICES
The principal sources of funds for the Bank are core deposits from the
local market areas surrounding the Bank's offices, including demand deposits,
interest-bearing transaction accounts, money market accounts, savings deposits
and certificates of deposit of less than $100,000. Transaction accounts include
interest-bearing and non-interest-bearing accounts which provide the Bank with a
source of fee income and cross-marketing opportunities as well as a low-cost
source of funds. The Bank also offers two types of short-term investment
accounts. The Bank's money market account is a daily access account that has a
higher rate than a personal interest-bearing checking account and allows for
limited check-writing ability. A significant portion of our deposit growth
during 1999 is attributable to a new money market deposit product, our money
management account, or "short-term parking account," introduced by the Bank in
the fourth quarter of 1998. The money management account provides a hybrid of
the features available from a traditional money market account and a traditional
time deposit. The account requires a minimum balance of $10,000 and allows for
daily deposits but limits withdrawals to the 15th and last days of each month.
This account pays a rate of interest which is higher than a customer could
receive on a traditional money market account but lower than the rates generally
available on certificates of deposit. We believe that the trade-off to
depositors between higher interest rates but more limited access to withdrawals
has proven to be an attractive product in our market areas and provides us with
a more attractive source of funds than other alternatives such
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as Federal Home Loan Bank borrowings, due to our ability to cross-sell
additional services to these account holders. Time and savings accounts also
provide a relatively stable and low cost source of funding. In 1999, the Bank
changed its policy to allow for acceptance of brokered deposits which can be
utilized to support the growth of the Bank. As of December 31, 1999, the Bank
had $812,000 in brokered deposits, and the Bank does not anticipate brokered
deposits becoming a meaningful percentage of its deposit base. In pricing
deposit rates, management considers profitability, the matching of term lengths
with assets, the attractiveness to customers and rates offered by our
competitors.
INVESTMENT BROKERAGE SERVICES
In 1999, the Bank began offering investment brokerage services through an
unrelated broker-dealer. These services are currently offered at our Overland
Park, Shawnee and Olathe offices and will be offered at our full-service,
free-standing facility in Shawnee when it opens in the third quarter of 2000.
One of the individuals responsible for providing these services is a joint
employee of the Bank and the registered broker-dealer, and the second individual
is employed by the broker-dealer under contract to the Bank. Investment
brokerage services provide a source of fee income for the Bank. In 1999, the
amount of our fee income generated from investment brokerage services was
$30,000, but management anticipates that this will increase significantly in
future years.
TRUST SERVICES
We began offering trust services in 1996. Until 1999, the Bank's trust
services were offered exclusively through the employees of an unaffiliated trust
company. The Bank hired a full-time officer in 1999 to develop the Bank's trust
business. Trust customers are both existing Bank customers and new customers. We
believe that the ability to offer trust services as a part of our complement of
financial services to new customers of the Bank presents a significant
cross-marketing opportunity. The services currently offered by the Bank's trust
department include the administration of self-directed individual retirement
accounts, qualified retirement plans, custodial and directed trust accounts. The
Bank also offers investment advisory services with the assistance of the
unaffiliated trust company. As of December 31, 1999, the Bank's trust department
administered 85 accounts, with assets under management of approximately $19.4
million. Trust services provide the Bank with a source of fee income and
additional deposits. In 1999, the amount of our fee income from trust services
was $103,000, but management anticipates that this will increase significantly
in future years.
COMPETITION
We encounter competition primarily in seeking deposits and in obtaining
loan customers. The level of competition for deposits in our market area and
nationally is quite high. Our principal competitors for deposits are other
financial institutions within a few miles of our locations, including other
banks, savings institutions and credit unions. Competition among these
institutions is based primarily on interest rates offered, the quality of
service provided, and the convenience of banking facilities. Additional
competition for depositors' funds comes from U.S. government securities, private
issuers of debt obligations and suppliers of other investment alternatives for
depositors.
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We compete in our lending, investment brokerage and trust activities with
other financial institutions, such as banks and thrift institutions, credit
unions, automobile financing companies, mortgage companies, securities firms,
investment companies and other finance companies. Many of our competitors are
not subject to the same extensive federal regulations that govern bank holding
companies and federally insured banks and state regulations governing state
chartered banks. As a result, these non-bank competitors have advantages over us
in providing certain services. Many of the financial institutions with which we
compete are larger than us with greater financial resources, name recognition
and market presence.
EMPLOYEES
As of December 31, 1999, the Bank had approximately 112 full-time
employees. Blue Valley, Blue Valley Building and Blue Valley Investment do not
have any full-time employees. None of the employees of the Bank is subject to a
collective bargaining agreement. We consider the Bank's relationship with its
employees to be excellent.
LEGAL PROCEEDINGS
We are involved from time to time in routine litigation incidental to our
business. We do not believe that we are a party to any material pending
litigation that in our opinion is likely to have a material adverse effect on
our consolidated financial condition, results of operations or cash flows.
PROPERTIES
The Bank's principal office occupies 2.87 acres of ground on the corner of
119th and Riley streets in Overland Park, Kansas. The construction of the
building was completed in 1994 and consists of 38,660 square feet. The building
and land are subject to third-party mortgage indebtedness in the original
principal amount of $2.5 million. As of December 31, 1999, the outstanding
principal amount of this indebtedness was $1.9 million.
The Bank's Olathe, Kansas office occupies 0.93 acres of ground on the
corner of Santa Fe and Ridgeview Streets. The construction of the building was
completed in 1973, and consists of 4,116 square feet.
The Bank's Shawnee, Kansas office currently occupies 425 square feet in a
grocery store located at Highway K-7 and 55th Street. The Bank leases this space
from CMI, Inc. under a lease with a primary term through January 18, 2002. The
Bank expects that its permanent facility in Shawnee, Kansas will be completed
during the third quarter of 2000. When completed, the building will consist of
4,000 square feet and will occupy 0.85 acres of land.
In 1998, the Bank purchased approximately 1.30 acres of undeveloped land
on the corners of K68 and US 69 Highway in Louisburg, Kansas, just south of
Johnson County for potential future development as a full-service branch.
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BVBC CAPITAL TRUST I
BVBC Trust is a Delaware business trust. BVBC Trust will exist solely to:
o issue and sell its common securities to us;
o issue and sell its trust preferred securities to the public;
o use the proceeds from the sale of its common securities and trust
preferred securities to purchase the junior subordinated
debentures from us;
o distribute the cash payments it receives on the junior
subordinated debentures it owns to the holders of the preferred
and common securities; and
o engage in other activities that are necessary or incidental to
these purposes.
REGULATION AND SUPERVISION
Blue Valley and its subsidiaries are extensively regulated under both
federal and state laws. Laws and regulations to which Blue Valley and the Bank
are subject govern, among other things, the scope of business, investments,
reserve levels, capital levels relative to operations, the nature and amount of
collateral for loans, the establishment of branches, mergers and consolidations
and the payment of dividends. These laws and regulations are intended to protect
depositors, not stockholders. Any change in applicable laws or regulations may
have a material effect on Blue Valley's business and prospects, and legislative
and policy changes may affect Blue Valley's operations. Blue Valley cannot
predict the nature or the extent of the effects on its business and earnings
that fiscal or monetary policies, economic controls or new federal or state
legislation may have in the future.
The following references to statutes and regulations affecting Blue Valley
and the Bank are brief summaries only and do not purport to be complete and are
qualified in their entirety by reference to the statutes and regulations.
RECENT LEGISLATION
The enactment of legislation described below has significantly affected
the banking industry generally and will have an on-going effect on Blue Valley
and its subsidiaries in the future.
GRAMM-LEACH-BLILEY ACT. The President signed the Gramm-Leach-Bliley Act
into law on November 12, 1999. This major banking legislation expands the
permissible activities of bank holding companies such as Blue Valley by
permitting them to engage in activities, or affiliate with entities that engage
in activities, that are "financial in nature." Activities that the Act expressly
deems to be financial in nature include, among other things, securities and
insurance underwriting and agency, investment management and merchant banking.
The Federal Reserve and the Treasury Department, in cooperation with one
another, must determine what additional activities are "financial in nature."
With certain exceptions, the Gramm-Leach-Blilely Act similarly expands the
authorized activities of subsidiaries of national banks. The provisions of
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the Gramm-Leach-Bliley Act authorizing the expanded powers became effective
March 11, 2000.
Bank holding companies that intend to engage in the newly authorized
activities must elect to become "financial holding companies." Financial holding
company status is only available to a bank holding company if all of its
affiliated depository institutions are "well capitalized" and "well managed,"
based on applicable banking regulations, and have a Community Reinvestment Act
rating of at least "a satisfactory record of meeting community credit needs."
Financial holding companies and banks may continue to engage in activities that
are financial in nature only if they continue to satisfy the well capitalized
and well managed requirements. Bank holding companies that do not elect to be
financial holding companies or that do not qualify for financial holding company
status may engage only in non-banking activities deemed "closely related to
banking" prior to adoption of the Gramm-Leach-Blilely Act.
The Act also calls for "functional regulation" of financial services
businesses in which functionally regulated subsidiaries of bank holding
companies will continue to be regulated by the regulator that ordinarily has
supervised their activities. As a result, state insurance regulators will
continue to oversee the activities of insurance companies and agencies, and the
Securities and Exchange Commission will continue to regulate the activities of
broker-dealers and investment advisers, even where the companies or agencies are
affiliated with a bank holding company. Federal Reserve authority to examine and
adopt rules regarding functionally regulated subsidiaries is limited. The Act
repeals some of the exemptions enjoyed by banks under federal securities laws
relating to securities offered by banks and licensing of broker-dealers and
investment advisers.
The Gramm-Leach-Bliley Act imposes a new "affirmative and continuing"
obligation on all financial service providers (not just banks and their
affiliates) to safeguard consumer privacy and requires federal and state
regulators, including the Federal Reserve and the FDIC, to establish standards
to implement this privacy obligation. With certain exceptions, the Act prohibits
banks from disclosing to non-affiliated parties any non-public personal
information about customers unless the bank has provided the customer with
certain information and the customer has had the opportunity to prohibit the
bank from sharing the information with non-affiliates. The new privacy
obligations become effective six months after the federal banking agencies adopt
regulations establishing the privacy standards.
Finally, the Act prevents companies engaged in commercial activities from
acquiring savings institutions, requires public disclosure of any agreements
between a depository institution and community groups regarding the
institution's Community Reinvestment Act record, adopts amendments designed to
modernize the Federal Home Loan Bank System and requires operators of automatic
teller machines to disclose any fees charged to non-customers that use the
machines.
The Gramm-Leach-Bliley Act will be the subject of extensive rule making by
federal banking regulators and others. The effects of this legislation will only
begin to be understood over the next several years and at this time cannot be
predicted with any certainty.
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ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION ACT OF 1996. The
Economic Growth and Regulatory Paperwork Reduction Act of 1996 became law on
September 30, 1996. This Act streamlined the non-banking activities application
process for well-capitalized and well-managed bank holding companies by
permitting qualified bank holding companies to commence an approved non-banking
activity without prior notice to the Federal Reserve, although written notice is
required within 10 days after commencing the activity. Also, the Act reduced the
prior notice period to 12 days in the event of any non-banking acquisition or
share purchase, assuming the size of the acquisition does not exceed 10% of
risk-weighted assets of the acquiring bank holding company and the consideration
does not exceed 15% of a bank holding company's Tier 1 capital. Among other
matters, the Economic Growth and Regulatory Paperwork Reduction Act also:
o Provided for the recapitalization of the Savings Association Insurance
Fund of the FDIC (most of the members of which are, or were formerly,
savings associations or savings banks) in order to bring it into
parity with the FDIC's Bank Insurance Fund;
o Amended the Federal Fair Credit Reporting Act;
o Eliminated prior federal regulatory approval requirements for new
officers and directors for recently organized banks and banks that
have recently undergone a change of control;
o Amended the laws governing loans to bank insiders to permit them to
participate in employee-wide programs offered by the bank; and
o Amended laws governing officer and director interlocks among
unaffiliated depository institutions to permit such interlocks under a
greater number of circumstances.
RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF 1994. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 authorized
bank holding companies to expand, by acquiring existing banks, into all states,
even those which had theretofore restricted entry. The legislation also provides
that a holding company may convert the banks it owns in different states to
branches of a single bank, unless a state has elected to prohibit these
interstate transactions. Statewide branching is permitted under Kansas law,
however, out of state banks may establish branches in Kansas only through
mergers with banks already located in Kansas. The federal legislation also
establishes limits on acquisitions by large banking organizations, providing
that no acquisition may be undertaken if it would result in the organization
having deposits exceeding either 10% of all bank deposits in the United States
or 30% of the bank deposits in the state in which the acquisition would occur.
BANK HOLDING COMPANY REGULATION
Blue Valley is a bank holding company registered under the Bank Holding
Company Act of 1956. Under the Bank Holding Company Act, Blue Valley is subject
to periodic examination
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by the Federal Reserve and is required to file periodic reports of its
operations and such additional information as the Federal Reserve may require.
INVESTMENTS AND ACTIVITIES. A bank holding company must obtain
approval from the Federal Reserve before:
o Acquiring, directly or indirectly, ownership or control of any voting
shares of another bank or bank holding company if, after the
acquisition, it would own or control more than 5% of the shares of the
bank or bank holding company (unless it already owns or controls the
majority of the shares);
o Acquiring all or substantially all of the assets of another bank or
bank holding company; or
o Merging or consolidating with another bank holding company.
The Federal Reserve will not approve any acquisition, merger or
consolidation that would have a substantially anticompetitive result unless the
anticompetitive effects of the proposed transaction are clearly outweighed by a
greater public interest in meeting the convenience and needs of the community to
be served. The Federal Reserve also considers capital adequacy and other
financial and managerial factors in reviewing acquisitions or mergers.
With certain exceptions, a bank holding company is also prohibited from:
o Acquiring or retaining direct or indirect ownership or control of more
than 5% of the voting shares of any company that is not a bank or bank
holding company; and
o Engaging, directly or indirectly, in any business other than that of
banking, managing and controlling banks or furnishing services to
banks and their subsidiaries.
Bank holding companies may, however, engage in businesses found by the
Federal Reserve to be closely related to the business of banking or of managing
or controlling banks. These activities include making or servicing loans and
certain types of leases, engaging in certain insurance and discount brokerage
activities, performing certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial advisor, owning savings
associations and making investments in corporations or projects designed to
promote community welfare. Blue Valley would be authorized to engage in the
expanded activities permitted under the Gramm-Leach-Blilely Act if it elects to
become a "financial holding company" and otherwise qualifies for financial
holding company status.
Finally, subject to certain exceptions, the Bank Holding Company Act and
the Change in Bank Control Act, and the Federal Reserve's implementing
regulations, require Federal Reserve approval prior to any acquisition of
"control" of a bank holding company, such as Blue Valley. In general, a person
or company is presumed to have acquired control if it acquires 10% of the
outstanding shares of a bank or bank holding company and is conclusively
determined to have
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acquired control if it acquires 25% or more of the outstanding shares of a bank
or bank holding company.
SOURCE OF STRENGTH. The Federal Reserve expects Blue Valley to act as a
source of financial strength and support for the Bank and to take measures to
preserve and protect the Bank in situations where additional investments in the
Bank may not otherwise be warranted. The Federal Reserve may require a bank
holding company to terminate any activity or relinquish control of a non-bank
subsidiary (other than a non-bank subsidiary of a bank) upon the Federal
Reserve's determination that the activity or control constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
of the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or non-bank subsidiary if the agency determines that divestiture may aid
the depository institution's financial condition. Blue Valley Building is Blue
Valley's only direct subsidiary that is not a bank.
CAPITAL REQUIREMENTS. The Federal Reserve uses capital adequacy guidelines
in its examination and regulation of bank holding companies and banks. If the
capital falls below minimum guideline levels, a bank holding company, among
other things, may be denied approval to acquire or establish additional banks or
non-bank businesses. The Federal Reserve's capital guidelines establish a
risk-based requirement expressed as a percentage of total risk-weighted assets
and a leverage requirement expressed as a percentage of total assets. The
risk-based requirement consists of a minimum ratio of total capital to total
risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital
(which consists principally of stockholders' equity). The leverage requirement
consists of a minimum ratio of Tier 1 capital to total assets of 3%.
The risk-based and leverage standards presently used by the Federal
Reserve are minimum requirements, and higher capital levels may be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. Further, any banking organization experiencing or anticipating
significant growth would be expected to maintain capital ratios, including
tangible capital positions, which is Tier 1 capital less all intangible assets,
well above the minimum levels.
DIVIDENDS. The Federal Reserve has issued a policy statement concerning
the payment of cash dividends by bank holding companies. The policy statement
provides that a bank holding company experiencing earnings weaknesses should not
pay cash dividends exceeding its net income or which could only be funded in
ways that weakened the bank holding company's financial health, such as by
borrowing. Also, the Federal Reserve possesses enforcement powers over bank
holding companies and their non-bank subsidiaries to prevent or remedy actions
that represent unsafe or unsound practices or violations of applicable statutes
and regulations. Among these powers is the ability to proscribe the payment of
dividends by banks and bank holding companies.
BANK REGULATIONS
The Bank operates under a Kansas state bank charter and is subject to
regulation by the Kansas Banking Department and the FDIC. The Kansas Banking
Department and the FDIC
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regulate or monitor all areas of the Bank's operations, including capital
requirements, issuance of stock, declaration of dividends, interest rates,
deposits, record keeping, establishment of branches, acquisitions, mergers,
loans, investments, borrowing, security devices and procedures and employee
responsibility and conduct. The Kansas Banking Department places limitations on
activities of the Bank including the issuance of capital notes or debentures and
the holding of real estate and personal property and requires the Bank to
maintain a certain ratio of reserves against deposits. The Kansas Banking
Department requires the Bank to file a report annually showing receipts and
disbursements of the Bank, in addition to any periodic report requested.
DEPOSIT INSURANCE. The FDIC, through its Bank Insurance Fund, insures the
Bank's deposit accounts to a maximum of $100,000 for each insured depositor. The
FDIC, through its Savings Association Insurance Fund, insures certain deposit
accounts acquired by the Bank in 1994 from a branch of a failed savings
institution. These deposit accounts are insured to a maximum of $100,000 for
each insured depositor. The FDIC bases deposit insurance premiums on the
perceived risk each bank presents to its deposit insurance fund and currently
range from zero (for banks in the lowest risk-based premium category) to 27
cents for each $100 of insured deposits (for banks in the highest risk-based
premium category). In addition, all Bank Insurance Fund-insured and Savings
Association Insurance Fund-insured institutions currently pay an assessment of
2.08 cents for each $100 of insured deposits to service debt issued by the
Financing Corporation, a federal agency established to finance the
recapitalization of the former Federal Savings and Loan Insurance Corporation.
The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance temporarily during
the hearing process for a permanent termination of insurance if the institution
has no tangible capital. Management is not aware of any activity or condition
that could result in termination of the deposit insurance of the Bank.
CAPITAL REQUIREMENTS. The FDIC has established the following minimum
capital standards for state-chartered, insured non-member banks, such as the
Bank: (1) a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total assets of 3%; and (2) a risk-based capital requirement consisting of a
minimum ratio of total capital to total risk-weighted assets of 8%, at least
one-half of which must be Tier 1 capital. These capital requirements are minimum
requirements, and higher capital levels may be required if warranted by the
particular circumstances or risk profiles of individual institutions.
The federal banking regulators also have broad power to take "prompt
corrective action" to resolve the problems of undercapitalized institutions. The
extent of the regulators' powers depends upon whether the institution in
question is "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" or "critically undercapitalized." Under the
prompt corrective action rules, an institution is:
o "Well-capitalized" if the institution has a total risk-based capital
ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, and a leverage ratio of 5% or greater, and the institution is
not subject to an order, written agreement,
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capital directive, or prompt corrective action directive to meet and
maintain a specific capital level for any capital measure;
o "Adequately capitalized" if the institution has a total risk-based
capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of
4% or greater, and a leverage ratio of 4% or greater;
o "Undercapitalized" if the institution has a total risk-based capital
ratio that is less than 8%, a Tier 1 risk-based capital ratio that is
less than 4%, or a leverage ratio that is less than 4%;
o "Significantly undercapitalized" if the institution has a total
risk-based capital ratio that is less than 6%, a Tier 1 risk-based
capital ratio that is less than 3%, or a leverage ratio that is less
than 3%; and
o "Critically undercapitalized" if the institution has a ratio of
tangible equity to total assets that is equal to or less than 2%.
The federal banking regulators must take prompt corrective action with
respect to capital deficient institutions. Depending upon the capital category
to which an institution is assigned, the regulators' corrective powers include:
o Placing limits on asset growth and restrictions on activities,
including the establishing of new branches;
o Requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired;
o Restricting transactions with affiliates;
o Restricting the interest rate the institution may pay on deposits;
o Requiring that senior executive officers or directors be dismissed;
o Requiring the institution to divest subsidiaries;
o Prohibiting the payment of principal or interest on subordinated debt;
and
o Appointing a receiver for the institution.
Companies controlling an undercapitalized institution are also required to
guarantee the subsidiary institution's compliance with the capital restoration
plan subject to an aggregate limitation of the lesser of 5% of the institution's
assets at the time it received notice that it was undercapitalized or the amount
of the capital deficiency when the institution first failed to meet the plan.
The Federal Deposit Insurance Act generally requires the appointment of a
conservator or receiver within 90 days after an institution becomes critically
undercapitalized.
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As of December 31, 1999, the Bank had capital in excess of the
requirements for a "well-capitalized" institution.
INSIDER TRANSACTIONS. The Bank is subject to restrictions on extensions of
credit to executive officers, directors, principal stockholders or any related
interest of these persons. Extensions of credit must be made on substantially
the same terms, including interest rates and collateral as the terms available
for third parties and must not involve more than the normal risk of repayment or
present other unfavorable features. The Bank is also subject to lending limits
and restrictions on overdrafts to these persons.
COMMUNITY REINVESTMENT ACT REQUIREMENTS. The Community Reinvestment Act of
1977 requires that, in connection with examinations of financial institutions
within their jurisdiction, the federal banking regulators must evaluate the
record of the financial institutions in meeting the credit needs of their local
communities, including low and moderate income neighborhoods, consistent with
the safe and sound operation of those banks. These factors are also considered
in evaluating mergers, acquisitions and applications to open a branch or
facility. In its most recent examination, the Bank received a rating of
"outstanding record of meeting community credit needs." This is the highest
rating a bank may receive.
STATE BANK ACTIVITIES. With limited exceptions, FDIC-insured state banks,
like the Bank, may not make or retain equity investments of a rate or in an
amount that are not permissible for national banks and also may not engage as a
principal in any activity that is not permitted for a national bank or its
subsidiary, respectively, unless the bank meets, and continues to meet, its
minimum regulatory capital requirements and the FDIC determines that the
activity would not pose a significant risk to the deposit insurance fund of
which the bank is a member.
REGULATIONS GOVERNING EXTENSIONS OF CREDIT. The Bank is subject to
restrictions on extensions of credit to Blue Valley and on investments in Blue
Valley's securities and using those securities as collateral for loans. These
regulations and restrictions may limit Blue Valley's ability to obtain funds
from the Bank for its cash needs, including funds for acquisitions and for
payment of dividends, interest and operating expenses. Further, the Bank Holding
Company Act and Federal Reserve regulations prohibit a bank holding company and
its subsidiaries from engaging in various tie-in arrangements in connection with
extensions of credit, leases or sales of property or furnishing of services.
RESERVE REQUIREMENTS. The Federal Reserve requires all depository
institutions to maintain reserves against their transaction accounts and
non-personal time deposits. Reserves of 3% must be maintained against net
transaction accounts of $44.3 million or less (subject to adjustment by the
Federal Reserve) and an initial reserve of $1,329,000 plus 10% (subject to
adjustment by the Federal Reserve to a level between 8% and 14%) must be
maintained against that portion of net transaction accounts in excess of this
amount. The balances maintained to meet the reserve requirements imposed by the
Federal Reserve may be used to satisfy liquidity requirements.
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<PAGE>
OTHER REGULATIONS
Interest and various other charges collected or contracted for by the Bank
are subject to state usury laws and other federal laws concerning interest
rates. The Bank's loan operations are also subject to federal laws applicable to
credit transactions. The federal Truth in Lending Act governs disclosures of
credit terms to consumer borrowers. The Home Mortgage Disclosure Act of 1975
requires financial institutions to provide information to enable the public and
public officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it serves. The Equal
Credit Opportunity Act prohibits discrimination on the basis of race, creed or
other prohibited factors in extending credit. The Fair Credit Reporting Act of
1978 governs the use and provision of information to credit reporting agencies.
The Fair Debt Collection Act governs the manner in which consumer debts may be
collected by collection agencies. The various federal agencies charged with the
responsibility of implementing these federal laws have adopted various rules and
regulations. The deposit operations of the Bank are also subject to the Right to
Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act, and Regulation E issued by the Federal Reserve to implement that Act, which
govern automatic deposits to and withdrawals from the use of ATMs and other
electronic banking services.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Blue Valley board of directors is divided into three classes as nearly
equal in number as the total number of directors constituting the entire board
of directors permits. In order to implement this staggered board, at the 2000
annual meeting, the directors of class 1 were elected to hold office for a term
of one year, the directors of class 2 were elected to hold office for a term of
two years, and the directors of class 3 were elected to hold office for a term
of three years. Thereafter, at each succeeding annual meeting, the directors of
each class that are elected will serve a three-year term, and will continue to
hold office until their successors are elected and qualified. All of our
directors are also directors of the Bank, except Messrs. Henry and McDonnell.
Ms. Dotson and Messrs. Bodker and Stein are directors of the Bank, but not of
Blue Valley. Each of our directors has been elected for a term to expire at the
next annual meeting. None of our executive officers have employment contracts
assuring continued employment.
For each of our directors, the additional directors of the Bank and our
executive officers, we have set forth below their ages as of March 1, 2000, and
their principal positions with Blue Valley.
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<PAGE>
Name Age Positions
- ---- --- ---------
DIRECTORS
Robert D. Regnier ................. 51 President, Chief Executive
Officer and Chairman of the
Board of Directors of Blue
Valley; President, Chief
Executive Officer and Director
of the Bank
Donald H. Alexander................ 61 Director of Blue Valley and the
Bank
Wayne A. Henry, Jr................. 47 Director of Blue Valley
C. Ted McCarter.................... 63 Director of Blue Valley and
Chairman of the Board of
Directors of the Bank
Thomas A. McDonnell................ 54 Director of Blue Valley
ADDITIONAL DIRECTORS OF THE BANK
Harvey S. Bodker................... 64 Director of the Bank
Suzanne E. Dotson.................. 53 Director of the Bank
Stewart M. Stein................... 49 Director of the Bank
EXECUTIVE OFFICERS WHO ARE NOT
DIRECTORS
John K. Doull...................... 38 Executive Vice President and
Chief Lending Officer of the
Bank
Mark A. Fortino.................... 33 Senior Vice President and Chief
Financial Officer of the Bank;
Treasurer of Blue Valley
Nancy A. Taylor.................... 56 Senior Vice President -
Mortgage Banking of the Bank
Penny T. Hershman.................. 56 Senior Vice President - Retail
Banking and Director of
Marketing of the Bank
Bonnie M. McConnaughy.............. 40 Vice President and Cashier of
the Bank
Below we have provided information regarding the principal occupations and
business experience of each director and executive officer of Blue Valley and
the additional directors of the Bank named above. Unless otherwise indicated,
each person has held the indicated positions
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<PAGE>
for at least the past five years. Except as otherwise indicated below, there are
no reportable family relationships among our directors and executive officers.
ROBERT D. REGNIER has been a director and the President and Chief
Executive Officer of Blue Valley and the Bank since their formation in 1989. He
has also been the sole director and President and Chief Executive Officer of
Blue Valley Investment since its formation in 1995, and of Blue Valley Building
since its formation in 1994. Prior to joining Blue Valley, Mr. Regnier held
various managerial positions with Boatmen's Bank and Trust and Boatmen's First
National Bank of Kansas City. Mr. Regnier has nearly 30 years of experience in a
number of banking areas, including lending, investments, personnel,
administration, trust, operations, new business development and mergers.
DONALD H. ALEXANDER has been a director of Blue Valley and member of its
Audit Committee since its formation in 1989. Mr. Alexander has also been a
director of the Bank since its formation in 1989. Mr. Alexander is a private
investor with a background in commercial banking. In addition to his positions
with Blue Valley and the Bank, Mr. Alexander has also been Chairman of Ventaire
Corporation in Tulsa, Oklahoma, a metal fabrication company, since 1989;
Chairman of Tulsa Power, LLC in Tulsa, Oklahoma, a machinery fabrication
company, since 1988; Chairman of Huebert Fiberboard Corp. in Boonville,
Missouri, a manufacturing company, since 1996; a director of BHA Group, Inc. in
Raytown, Missouri, an air pollution control equipment manufacturer, since 1986;
and President and director of Alexander & Associates, Inc. in Kansas City,
Missouri, a private investment company, since 1987.
WAYNE A. HENRY, JR. has been a director of Blue Valley since 1994. Mr.
Henry has also been the President and Treasurer and a director of Personal
Financial Designs, Inc. in Holden Missouri, a registered investment advisory
firm providing portfolio management and financial planning services, since
1986. Mr. Henry is a licensed financial planning practitioner and has served
on the board of directors of the Kansas City Chapter of the International
Association of Financial Planning and as President and Chairman of the Heart
of America Society of the Institute of Certified Financial Planners.
C. TED MCCARTER has been a director of Blue Valley since 1990. Mr. Carter
is also the Chairman of the board of directors of the Bank and a member of the
Loan Committee, Trust Committee and Audit Committee of the Bank. He has served
as the Chairman of Agency Premium Resource in Lenexa, Kansas, an insurance
premium finance company, since 1990; the Chairman and President of Valley
Investment Co. in Mission Woods, Kansas, a consulting company, since 1990; a
director and co-owner of Huebert Fiberboard Co. in Boonville, Missouri, a
manufacturing company, since 1990; and a director and co-owner of Emco Specialty
Products, Inc. in Kansas City, Kansas, a manufacturing company, since 1990. Mr.
McCarter has a background in commercial banking having served as President,
Chief Executive Officer, and director of Boatmen's Bank in Kansas City from 1974
to 1990. He has also served as a director of Century Acceptance Corporation of
Kansas City and Boatmen's Bancshares of St. Louis.
THOMAS A. MCDONNELL has been a director of Blue Valley since 1996. Mr.
McDonnell has also served as Chief Executive Officer of DST Systems, Inc. in
Kansas City, Missouri, a transfer agent for mutual funds, stocks and bonds,
since 1984, and as a director of DST since 1971. From August 1983 to November
1995, Mr. McDonnell was Executive Vice President and
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<PAGE>
a director of Kansas City Southern Industries, Inc. in Kansas City, Missouri, a
holding company and the former parent of DST. Mr. McDonnell has also been a
director of Informix Corp. in Menlo Park, California, a developer, manufacturer
and marketer of relational database management systems, connectivity interfaces
and gateways, since 1988; a director of BHA Group, Inc. in Kansas City,
Missouri, a manufacturer of pollution control devices, since 1993; a director of
Computer Sciences Corporation in El Segundo, California, an information
technology company, since 1997; a director of Euronet Services, Inc. in
Budapest, Hungary, an operator of automatic teller machines, since 1997; a
director of Janus Capital Corporation in Denver, Colorado, a registered
investment advisor, since 1985.
HARVEY S. BODKER has been a director of the Bank since its formation in
1989. Mr. Bodker has been the President of Bodker Realty, Inc. in Prairie
Village, Kansas, a commercial real estate brokerage, management and development
company, since 1971. He has also been the managing partner of Rosewood
Development Co. in Prairie Village, Kansas, a developer of small office
buildings since 1978. Mr. Bodker is very active in the community having served
on several boards including the Heart of America Boy Scout Board for over 25
years, the Menorah Medical Center Board of Trustees, Cosmopolitan Club of
Johnson County, and Chairman of the Overland Park Civil Service Commission. Mr.
Bodker has also served on the Kansas Real Estate Commission under two governors,
the Overland Park Planning Commission, the Leawood Board of Zoning Appeals, the
Sunflower State Private Industry Council, and on the Overland Park Chamber of
Commerce.
SUZANNE E. DOTSON has been a director of the Bank since 1993. Ms. Dotson
is a community volunteer with a background in community banking. She has also
been a director of the Brain Injury Association of Kansas and Greater Kansas
City in Kansas City, Missouri, a non-profit association dedicated to brain
injury prevention, research, education and advocacy, since 1992; and a director
of Wayside Waifs in Kansas City, Missouri, an animal shelter and humane society
dedicated to humane education and providing temporary housing for lost,
abandoned, abused and unwanted animals, since 1998. Prior to joining the Bank in
1993, Ms. Dotson served as senior vice president of commercial lending at
Boatmen's First National Bank of Kansas City and executive vice president of
lending at First Continental Bank and Trust in the Kansas City area.
STEWART M. STEIN has been a director of the Bank since its formation in
1989. Mr. Stein is a real estate, commercial and collections attorney. He
has been a partner with the law firm of Morrison & Hecker LLP in Overland
Park, Kansas, since 1997. Mr. Stein was managing partner of the law firm of
Buck, Bohm & Stein, P.C. in Overland Park, Kansas, from 1981 to 1997.
JOHN K. DOULL is currently the Executive Vice President and Chief Lending
Officer of the Bank, and a member of the Bank's Discount Committee, Trust
Committee, Audit Committee, Risk Management Committee and Compliance Committee.
As such, he is primarily responsible for overseeing the lending function of the
Bank. He is also responsible for strategic planning, risk management, funds
management and developing future plans for the Bank. Mr. Doull has over 15 years
experience in banking. Prior to joining Blue Valley, he was a commercial loan
officer at Boatmen's First National Bank of Kansas City. Mr. Doull is also
currently the Board President and a member of the Administrative Team at Indian
Creek Community Church in Olathe, Kansas. He is also the past treasurer of the
Johnson County Housing Coalition.
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<PAGE>
MARK A. FORTINO has been Treasurer of Blue Valley, Blue Valley Investment
and Blue Valley Building, and Senior Vice President and Chief Financial Officer
of the Bank since May, 1998. As such, he is responsible for oversight of all
financial reporting and analysis for Blue Valley, as well as oversight of human
resources, technology and administrative functions. Mr. Fortino also serves on
the Technology Committee and Communications/Moral Committee of the Bank. Mr.
Fortino is a certified public accountant, and for ten years prior to joining
Blue Valley, served in various positions, including Audit Manager, at Baird,
Kurtz & Dobson, a public accounting firm in Kansas City, Missouri. His prior
experience includes bank consulting and auditing, bank mergers and acquisitions,
public securities offerings and periodic SEC reporting. Mr. Fortino is a member
of the Missouri Society of CPAs and the American Institute of CPAs. Mr. Fortino
is also a Board member and Chairman of the Finance Committee of the Girl Scouts
of Midcontinent Council and a member of the Associate Advisory Committee to the
University of Kansas Accounting and Information Systems Board.
NANCY A. TAYLOR has been Senior Vice President - Mortgage Banking of the
Bank since 1989. As such, Ms. Taylor is responsible for mortgage loan
origination (both conforming and non-conforming), mortgage loan operations, the
sale of mortgage loans in the secondary market and consumer construction loans
for the Bank. Ms. Taylor has over 24 years of banking experience.
PENNY T. HERSHMAN has been the Senior Vice President of Retail Banking and
Director of Marketing of the Bank since 1997. As such, she directs the retail
functions for the Bank, including branching and marketing. Ms. Hershman has over
30 years of banking experience. From 1995 to 1997, Ms. Hershman served as
principal of at Tapco Consulting in Novato, California, a consulting firm, where
she specialized in banking, management and marketing. From 1984 to 1995, Ms.
Hershman served in various positions at Novato National Bank in Novato,
California, including President and Chief Executive Officer. Ms. Hershman began
her career at Metcalf Bank in Overland Park, Kansas, where she advanced from
teller to director and Senior Vice President and Cashier.
BONNIE M. MCCONNAUGHY has been Vice President, Cashier, Security Officer
and Bank Security Act Officer of the Bank, and a member of the Bank's Compliance
Committee, Technology Committee and Planning Committee, since 1990. As such, her
primary responsibilities include deposit operations, teller functions, and
developing and implementing new products for the Bank. Ms. McConnaughy has over
18 years of banking experience.
COMMITTEES OF THE BOARD OF DIRECTORS
The Blue Valley board of directors has a standing Audit Committee, which
reports to the full board of directors in discharging its responsibilities
relating to our accounting, reporting and financial control practices. The Audit
Committee has general responsibility for oversight of financial controls, as
well as our accounting, regulatory and audit activities, and annually reviews
the qualifications of our independent auditors. The current members of the Audit
Committee are Messrs. Regnier, Alexander and McCarter.
The Blue Valley board of directors does not currently have a standing
Nominating Committee or Compensation Committee. The full Blue Valley board of
directors nominates
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<PAGE>
persons to serve as directors of Blue Valley. The compensation of the executive
officers and employees of the Bank is determined jointly by the full boards of
directors of Blue Valley and the Bank.
COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table below provides summary information
concerning compensation that we paid or accrued during 1999, 1998 and 1997 to or
on behalf of our Chief Executive Officer and the three other highest paid
executive officers whose salary and bonus for 1999 was in excess of $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
-------------------------
LONG-TERM
COMPENSATION
AWARDS
- --------------------------------------------------- ------ ----------- -------- ---------- ------------ -----------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMP.(2) OPTIONS COMP.(3)
- --------------------------------------------------- ------ ----------- -------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Regnier................................ 1999 $ 185,000 $85,000 $ 17,322 14,000 $ -
President, Chief Executive Officer and 1998 170,000 80,000 16,285 15,160 7,519
Chairman of the Board of Directors of Blue 1997 150,000 80,000 18,129 16,000 -
Valley; Chief Executive Officer and
Director of the Bank
John K. Doull.................................... 1999 $ 115,000 $80,000 $ 17,322 10,000 $ -
Executive Vice President and Chief Lending 1998 105,000 55,000 16,285 11,156 -
Officer of the Bank 1997 95,000 50,000 16,529 12,000 -
Mark A. Fortino.................................. 1999 $ 82,500 $25,000 $ 7,172 4,000 $ -
Treasurer of Blue Valley; Senior Vice 1998 50,000 12,000 - 6,800 -
President and Chief Financial Officer of 1997 - - - - -
the Bank
Nancy A. Taylor.................................. 1999 $ 65,000 $40,000 $ 11,367 3,000 $ -
Senior Vice President - Mortgage Banking 1998 60,000 35,000 9,948 2,800 2,077
of the Bank 1997 55,000 27,500 9,415 4,000 -
</TABLE>
____________________
[FN]
(1) Annual compensation does not include the cost to us of benefits executive
officers receive in addition to salary and cash bonuses. The aggregate
amounts of these personal benefits, however, did not exceed the lesser of
either $50,000 or 10% of the total annual compensation of each named
executive officer.
(2) Includes the amount of our contributions to our Profit Sharing Plan
allocated to the accounts of each of the named executive officers.
(3) Includes amounts paid for unused vacation.
</FN>
GRANTS OF STOCK OPTIONS
The following table sets forth information with respect to the executive
officers identified in the prior table concerning the grants of options during
1999.
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<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION GRANTS
IN 1999
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL EXERCISE
SECURITIES OPTIONS ---------
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------------- ---------- -------------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Regnier............... 14,000 21.88% $14.375 12/16/2009 $126,560 $320,740
John K. Doull................... 10,000 15.63% $14.375 12/16/2009 $90,400 $229,100
Mark A. Fortino................. 4,000 6.25% $14.375 12/16/2009 $36,160 $91,640
Nancy A. Taylor................. 3,000 4.69% $14.375 12/16/2009 $27,120 $68,730
</TABLE>
EXERCISES OF STOCK OPTIONS
The following table sets forth information with respect to the executive
officers identified in the prior table concerning the exercise of options during
1999, and unexercised options held as of December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1999 AND
1999 YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS OPTIONS
SHARES AT YEAR-END: AT YEAR-END:
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
- ----------------------------------- ------------- --------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Robert D. Regnier.................. - - 29,160/ - $47,375/ $ -
John K. Doull...................... - - - /21,156 $ - /$34,863
Mark A. Fortino.................... - - - /6,800 $ - /$ 8,750
Nancy A. Taylor.................... - - 4,000/5,800 $27,500/$ 8,750
_________________
</TABLE>
[FN]
(1) The estimated fair value of our common stock at December 31, 1999 was
$14.375.
</FN>
1998 EQUITY INCENTIVE PLAN
In April, 1998, our board of directors and stockholders approved the Blue
Valley Ban Corp 1998 Equity Incentive Plan (the "Plan"), which superceded our
1994 Stock Option Plan. The Plan is administered by our full board of directors.
The Plan authorizes our board of directors to grant equity awards to
substantially all of our employees and directors. The total number of shares of
our common stock reserved for awards under the Plan is 215,284. Awards granted
under the Plan may consist of any of the following:
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o incentive stock options and nonqualified stock options, which
entitle the holder to purchase a stated number of shares of our
common stock;
o restricted shares of our common stock, which are subject to
forfeiture; and
o deferred share units, which entitle the holder to receive a future
cash payment equal to the increase in the value of shares of our
common stock.
The period of any award granted under the Plan may not exceed ten years,
and awards vest based on the determination by our board of directors. The
exercise price of any incentive stock option granted under the Plan may not be
less than the fair market value of a share of our common stock on the date of
grant. The exercise price of any nonqualified stock option may be less than,
greater than or equal to the fair market value of a share of our common stock on
the grant date. The consideration to be received by Blue Valley in exchange for
any award of restricted shares may not be less than the minimum amount for which
our shares of common stock can be issued under Kansas law. The initial value of
a deferred share unit generally will equal the fair market value of a share of
our common stock on the grant date. The Plan provides for increases in the
number of shares and to the exercise price, if applicable, in the event of a
declaration of a stock dividend or any recapitalization resulting in a stock
split-up, combination or exchange of shares of our common stock.
The Plan further provides that in most instances unvested restricted share
or deferred share unit awards and any unexercised options are forfeited upon the
termination of the recipient's employment with Blue Valley for cause. If
employment is terminated due to an award recipient's death or disability,
unvested awards generally vest, and in the case of options, may be exercised
within 12 months thereafter. If employment is terminated for any other reason,
unvested options, restricted shares and deferred share units are generally
forfeited, and vested options may be exercised within three months after the
termination of employment.
DIRECTOR COMPENSATION
We pay each of our nonemployee directors a fee of $1,500 for each meeting
of our board of directors, and a fee of $350 for each committee meeting, that he
attends in person. Directors are also eligible to receive stock options,
restricted stock and deferred share unit grants under our 1998 Equity Incentive
Plan. In 1999, each nonemployee director of Blue Valley received options to
purchase 2,000 shares of our common stock. Mr. Regnier received options to
purchase 14,000 shares of our common stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of our executive officers and employees are employed by the Bank and
do not receive separate compensation for positions held with Blue Valley, Blue
Valley Investment or Blue Valley Building. Executive compensation is determined
jointly by the full boards of directors of Blue Valley and the Bank. During
1999, Robert D. Regnier, who is a director of Blue Valley and the Bank, and
President and Chief Executive Officer of Blue Valley and the Bank, Mark A.
Fortino, who is Senior Vice President and Chief Financial Officer of the Bank
and Treasurer of Blue Valley, and John K. Doull who is Executive Vice President
- - Lending of the Bank,
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<PAGE>
participated in the deliberations of the boards of directors of Blue Valley and
the Bank concerning executive compensation. There are no other reportable
compensation committee interlocks or insider participation matters.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank periodically makes loans to our executive officers and directors,
the members of their immediate families and companies that they are affiliated
with. As of December 31, 1999, the Bank had aggregate loans to such persons of
approximately $1.4 million, which represented 7.41% of our stockholders' equity
of $18.9 million on that date. These loans:
o were made in the ordinary course of business;
o were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons; and
o did not involve more than the normal risk of collectibility or
present other unfavorable features.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
BENEFICIAL OWNERSHIP OF SECURITIES
The following table shows the common stock owned by directors and executive
officers of Blue Valley and persons known by Blue Valley to beneficially own
more than 5% of our outstanding common stock as of December 31, 1999. The
address of each person listed below is 11935 Riley, Overland Park, Kansas
66225-6128. This information has been prepared based upon the SEC's "beneficial
ownership" rules. Under these rules a person is deemed to be a beneficial owner
of a security if that person has or shares voting power, which includes the
power to vote or to direct the voting of a security, or investment power, which
includes the power to dispose or to direct the disposition of a security. Unless
otherwise indicated, each of the following persons has sole voting and
investment power with respect to the shares beneficially owned.
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<PAGE>
Beneficial Owner Shares Percentage
- ---------------------------------- ----------- ---------
Robert D. Regnier.............. 487,644 (1) 21.90 %
Donald H. Alexander............ 124,500 (1) 5.59
Wayne A. Henry, Jr............. 93,880 (1) 4.22
C. Ted McCarter................ 66,552 (1) 2.99
Thomas A. McDonnell............ 127,920 5.75
John K. Doull.................. 68,880 3.09
Mark A. Fortino................ 4,000 0.18
Nancy A. Taylor................ 32,820 (1) 1.47
All directors and executive officers,
10 in number, as a group.... 1,018,196 (1) 45.73
- ------------
[FN]
(1) Includes options that are currently exercisable, or become exercisable
within 60 days of December 31, 1999, to purchase from us the number of
shares of common stock indicated for the following persons: Robert D.
Regnier, 29,160; Donald H. Alexander, 4,000; Wayne A. Henry, Jr. 5,500;
C. Ted McCarter, 4,000; Nancy A. Taylor, 4,000; Penny T. Hershman,
4,000; and Bonnie M. McConnaughy, 8,000.
</FN>
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The trust preferred securities and the common securities will be issued
under the terms of the trust agreement of BVBC Trust. The trust agreement will
be qualified as an indenture under the Trust Indenture Act. Initially,
Wilmington Trust Company will be the property trustee and will act as trustee
for the purpose of complying with the Trust Indenture Act. The terms of the
trust preferred securities will include those stated in the trust agreement of
BVBC Trust and those made part of the trust agreement by the Trust Indenture
Act. The following is a summary of the material terms and provisions of the
trust preferred securities and the trust agreement. Prospective investors in the
trust preferred securities are urged to read all the provisions of the trust
agreement, including the definitions in the trust agreement, and the Trust
Indenture Act. The form of the trust agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part.
GENERAL OVERVIEW
Under the terms of the trust agreement of BVBC Trust, the administrative
trustees will issue the trust preferred securities and the common securities,
collectively, the trust securities. The trust preferred securities will
represent preferred undivided beneficial interests in the assets of BVBC Trust
and the holders of the trust preferred securities will be entitled to a
preference in most circumstances regarding distributions and amounts payable on
redemption or liquidation over the common securities of BVBC Trust, as well as
other benefits as described in the trust agreement.
The trust preferred securities will rank equally, and payments will be
made thereon pro rata, with the common securities of BVBC Trust except as
described under "Subordination of Common Securities of BVBC Trust Held by Blue
Valley" 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 trust preferred securities guarantee executed by Blue Valley for
the benefit of the holders of the trust preferred securities will be a guarantee
on a subordinated basis and will not guarantee payment of distributions or
amounts payable on redemption or liquidation of the trust preferred securities
if BVBC Trust does not
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<PAGE>
have funds on hand available to make the payments. See "Description of Trust
Preferred Securities Guarantee." If an event of default under the indenture has
occurred and is continuing and the default is attributable to Blue Valley's
failure to pay interest or principal on the junior subordinated debentures on
the due date, a holder of trust preferred securities may institute a legal
proceeding directly against Blue Valley for payment of principal and interest on
the junior subordinated debentures having a principal amount equal to the
aggregate liquidation amount of the trust preferred securities of the holder.
This action is referred to in this discussion as a direct action. See
"Description of the Junior Subordinated Debentures - Enforcement of Rights by
Holders of Trust Preferred Securities" and "Relationship Among the Trust
Preferred Securities, the Junior Subordinated Debentures and the Trust Preferred
Securities Guarantee."
QUARTERLY DISTRIBUTION PAYMENTS AND EXTENSIONS ON DISTRIBUTION PAYMENTS
PAYMENT OF DISTRIBUTIONS. Distributions on the trust preferred securities
will be payable at the annual rate of % of the stated liquidation amount of $8,
payable quarterly in arrears on March 31, June 30, September 30, and December 31
of each year, beginning June 30, 2000. The amount of each distribution due will
include amounts accrued and unpaid through the date the distribution is due.
Distributions on the trust preferred securities will be payable to the holders
as they appear on the register of BVBC Trust on the relevant record date. Until
the trust preferred securities do not remain in book-entry form, the relevant
record date will be one business day prior to the relevant distribution date
and, in the event the trust preferred securities are not in book-entry form, the
relevant record date will be the 15th day of the month in which the relevant
distribution date occurs. The right to receive distributions will be cumulative
from the date of original issuance of the trust preferred securities.
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 payment
date is not a business day, the distribution will be made on the next business
day, and without any interest or other payment regarding any delay. If, however,
the business day falls in the next calendar year, the distribution will be made
on the immediately preceding business day. 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 Delaware or Kansas are authorized or required by law or
executive order to remain closed.
The only funds of BVBC Trust available for distribution to its trust
preferred securities holders will be payments by Blue Valley under the junior
subordinated debentures. See "Description of Junior Subordinated Debentures." If
Blue Valley does not make interest payments on the junior subordinated
debentures, the property trustee will not have funds available to pay
distributions on the trust preferred securities. The payment of distributions,
if and to the extent BVBC Trust has legally available funds and cash sufficient
to make payments, is guaranteed by Blue Valley. For further information, see
"Description of the Trust Preferred Securities Guarantee."
EXTENSION PERIOD. Unless a debenture event of default has occurred and is
continuing, Blue Valley has the right under the indenture to defer interest
payments on the junior subordinated debentures at any time for a period not
exceeding 20 consecutive quarters regarding each extension period. However, no
extension period may extend beyond the stated maturity of the junior
subordinated debentures. As a consequence of any extension election by Blue
Valley,
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quarterly distributions on the trust preferred securities will be deferred by
BVBC Trust during any extension period. Distributions to which holders of trust
preferred securities are entitled will accumulate additional amounts at the rate
per year of % thereof, compounded quarterly from the relevant distribution date.
The term distributions as used in this prospectus includes any additional
accumulated amounts.
During any extension period, Blue Valley may not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment regarding, any of its capital stock, which includes common
and preferred stock, or (2) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any debt securities of Blue Valley
that rank equally with or junior in interest to the junior subordinated
debentures or make any trust preferred securities guarantee payments regarding
any trust preferred securities guarantee by Blue Valley of the debt securities
of any subsidiary of Blue Valley if the trust preferred securities guarantee
ranks equally with or junior in interest to the junior subordinated debentures.
These restrictions do not apply to:
o dividends or distributions in capital stock of Blue Valley;
o any declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under any
plan of this type in the future, or the redemption or repurchase of
any rights pursuant to this type of plan;
o payments under the trust preferred securities guarantee of Blue
Valley; or
o purchases of common stock for issuance under any contracts, benefit
plans or similar arrangements with or for its directors, officers,
employees or consultants.
Prior to the termination of any extension period, Blue Valley may further
extend the extension period, provided that the extension does not cause the
extension period to exceed 20 consecutive quarters or extend beyond the stated
maturity of the junior subordinated debentures. Upon the termination of any
extension period and the payment of all amounts then due, and subject to the
above limitations, Blue Valley may elect to begin a new extension period. There
is no limitation on the number of times that Blue Valley may elect to begin an
extension period.
Blue Valley 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 AND OPTIONAL RIGHTS OF BLUE VALLEY
MANDATORY REDEMPTION OF TRUST PREFERRED SECURITIES. Upon the repayment or
redemption at any time, in whole or in part, of any junior subordinated
debentures, the proceeds from the repayment or redemption will be applied by the
property trustee to redeem a like amount of the trust securities at the
redemption price, as defined below. For more information, see "Description of
the 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
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proceeds will be allocated to the redemption of the trust preferred securities
and common securities pro rata.
OPTIONAL REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES. Blue Valley will
have the right to redeem the junior subordinated debentures (1) beginning on
June 30, 2005, in whole at any time or in part from time to time or (2) at any
time, in whole, but not in part, upon a tax event, an investment company event
or a capital treatment event as defined in the following paragraphs. The
redemption price will be equal to the accrued and unpaid interest on the
redeemed junior subordinated debentures, plus 100% of the principal amount.
These payments will be 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 the Junior Subordinated Debentures -
Redemption."
TAX EVENT REDEMPTION, INVESTMENT COMPANY EVENT REDEMPTION, CAPITAL EVENT
REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If a tax event, an
investment company event or a capital treatment event occurs after original
issuance of the trust preferred securities and is continuing, Blue Valley has
the right to redeem the junior subordinated debentures in whole, but not in
part. If a redemption of the junior subordinated debentures occurs, Blue Valley
would also cause a mandatory redemption of the trust preferred securities and
common securities in whole at the redemption price, as defined below, within 90
days following the occurrence of any of these events. In each case the
redemption would be subject to receipt of prior approval by the Federal Reserve
if then required under its applicable capital guidelines or policies. If any of
these events has occurred and is continuing, and Blue Valley does not elect to
redeem the junior subordinated debentures and cause a mandatory redemption of
the trust securities or to liquidate BVBC Trust and cause the junior
subordinated debentures to be distributed to holders of the trust securities in
liquidation of BVBC Trust, the trust securities will remain outstanding. Also,
additional sums, as defined below, may be payable on the junior subordinated
debentures.
A tax event requires the receipt by Blue Valley and BVBC Trust of a legal
opinion to the effect that, as a result of any amendment to, including any
announced prospective change in, the laws or regulations of the United States or
any political subdivision or taxing authority of the United States, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying the tax laws or regulations, there is more than an
insubstantial risk that:
o BVBC Trust is, or will be within 90 days of the date of the opinion,
subject to United States federal income tax regarding income
received or accrued on the junior subordinated debentures;
o interest payable by Blue Valley on the junior subordinated
debentures is not, or within 90 days of the opinion, will not be,
deductible by Blue Valley, in whole or in part, for United States
federal income tax purposes; or
o BVBC Trust 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,
assessments or other governmental charges.
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An investment company event requires the receipt by Blue Valley and BVBC
Trust of a legal opinion 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, BVBC
Trust is or will be considered an investment company required to be registered
under the Investment Company Act.
A capital treatment event requires the receipt by Blue Valley and BVBC
Trust of a legal opinion to the effect that, as a result of any amendment to,
including any proposed change in, the laws or regulations of the United States
or any of its political subdivisions, or as a result of any official action or
judicial decision interpreting the laws or regulations, there is more than an
insubstantial risk that Blue Valley's ability to treat the trust preferred
securities as Tier 1 capital or its equivalent for purposes of the Federal
Reserve capital adequacy guidelines is impaired. However, the inability of Blue
Valley to treat all or any portion of the liquidation amount of the trust
preferred securities as Tier 1 capital will not constitute the basis for a
capital treatment event if this inability results from Blue Valley having
cumulative preferred stock, minority interests in consolidated subsidiaries, or
any other class of security or interest which the Federal Reserve now or in the
future may accord Tier 1 capital treatment in excess of the amount which may
qualify for treatment as Tier 1 capital under applicable capital adequacy
guidelines of the Federal Reserve. In addition, the distribution of junior
subordinated debentures in connection with the dissolution of BVBC Trust will
not in and of itself constitute a capital treatment event.
Additional sums means the additional amounts as may be necessary to be
paid by Blue Valley on the junior subordinated debentures so that the amount of
distributions payable by BVBC Trust on the outstanding trust securities will not
be reduced as a result of any additional taxes, duties, assessments and other
governmental charges to which BVBC Trust has become subject.
Like amount means (1) regarding 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 trust preferred securities based upon the relative
liquidation amounts of these classes and the proceeds of which will be used to
pay the redemption price of the trust securities, and (2) regarding a
distribution of junior subordinated debentures to holders of trust securities in
connection with a dissolution or liquidation of BVBC Trust, junior subordinated
debentures having a principal amount equal to the liquidation amount of the
trust securities of the holder to whom the junior subordinated debentures are
distributed.
Liquidation amount means the stated amount of $8 per trust security.
Redemption price means, regarding any trust security, the liquidation
amount of the 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.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Subject to Blue Valley's having received prior approval of the Federal
Reserve, Blue Valley will have the right at any time to liquidate BVBC Trust
and, after satisfaction of the liabilities of creditors of BVBC Trust as
provided by applicable law, cause the junior subordinated debentures to be
distributed to the holders of trust securities in liquidation of BVBC Trust.
After the liquidation date fixed for any distribution of junior subordinated
debentures for trust preferred securities:
o the trust preferred securities will no longer be deemed to be
outstanding;
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o the depositary or its nominee, as the record holder of the trust
preferred securities, will receive a registered global certificate
or certificates representing the junior subordinated debentures to
be delivered upon the distribution; and
o any certificates representing trust 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 the trust preferred securities, and
bearing interest equal to the accrued and unpaid distributions on
the trust preferred securities, until the certificates are
presented to the administrative trustees or their agent for
reissuance.
There can be no assurance as to the market prices for the trust preferred
securities or the junior subordinated debentures that may be distributed in
exchange for the trust preferred securities if a dissolution and liquidation of
BVBC Trust were to occur. Accordingly, the trust preferred securities that you
may purchase, or the junior subordinated debentures that you may receive on
dissolution and liquidation of BVBC Trust, may trade at a discount to the price
that you paid to purchase the trust preferred securities. If the junior
subordinated debentures are distributed, Blue Valley is required to use its best
efforts to list them on a national securities exchange or quotation system, but
this requirement will not prevent Blue Valley from partially redeeming the
junior subordinated debentures. If Blue Valley exercises its right to partially
redeem the junior subordinated debentures, they may not qualify for listing on a
national securities exchange or quotation system.
REDEMPTION PROCEDURES
Trust preferred securities redeemed on each redemption date will be
redeemed at the redemption price with the proceeds from the contemporaneous
redemption of the junior subordinated debentures. Redemptions of the trust
preferred securities will be made and the redemption price will be payable on
each redemption date only to the extent that BVBC Trust has funds on hand
available for the payment of the redemption price. See "- Subordination of
Common Securities of BVBC Trust Held by Blue Valley" and "Description of the
Trust Preferred Securities 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 the
holder's registered address. Unless BVBC Trust defaults in payment of the
applicable redemption price, on and after the redemption date, distributions
will cease to accrue on the trust preferred securities called for redemption.
If BVBC Trust gives a notice of redemption regarding the trust preferred
securities, then, by 10:00 a.m., Delaware time, on the redemption date, the
property trustee will pay the redemption price to the depositary, as the record
holder of the trust preferred securities. The depositary thereafter will credit
the redemption price to the participants for whom it holds the trust preferred
securities. If the trust 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 the trust preferred securities funds sufficient to pay the
aggregate redemption price. The property trustee will give the paying agent
irrevocable instructions and authority to pay the redemption price
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upon surrender of certificates evidencing the trust preferred securities.
Notwithstanding the foregoing, distributions payable on or prior to the
redemption date will be payable to the holders of the trust preferred securities
on the relevant record dates for the related distribution dates. If notice of
redemption has been given and funds deposited as required, then upon the date of
the deposit, all rights of the holders of the trust preferred securities will
cease, except the right of the holders of the trust preferred securities to
receive the redemption price, but without interest on the redemption price, and
the trust preferred securities will cease to be outstanding. If any date fixed
for redemption of the trust preferred securities is not a business day, then
payment of the redemption price payable on the date will be made on the next
business day and without any interest or other payment for the delay. If,
however, the business day falls in the next calendar year, the payment will be
made on the immediately preceding business day. If payment of the redemption
price in respect of trust preferred securities called for redemption is
improperly withheld or refused and not paid either by BVBC Trust or by Blue
Valley under the trust preferred securities guarantee, distributions on the
trust preferred securities will continue to accrue at the then applicable rate,
from the redemption date originally established by BVBC Trust for the trust
preferred securities to the date the redemption price is actually paid. In this
case the actual payment date will be the date fixed for redemption for purposes
of calculating the redemption price. See "Description of the Trust Preferred
Securities Guarantee."
Subject to applicable law, including, without limitation, federal
securities laws, Blue Valley may at any time and from time to time purchase
outstanding trust preferred securities by tender, in the open market or by
private agreement.
Payment of the redemption price on the trust preferred securities and any
distribution of junior subordinated debentures to holders of trust preferred
securities will be made to the applicable record holders as they appear on the
register of the trust preferred securities on the relevant record date, which
date will be one business day prior to the relevant redemption date; provided,
however, that if any trust preferred securities are not in book-entry form, the
relevant record date for them 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 are to be redeemed on a
redemption date, then the aggregate redemption price for the trust securities to
be redeemed will be allocated pro rata to the trust preferred securities and
common securities based upon the relative liquidation amounts of these classes.
The particular outstanding trust preferred securities to be redeemed will be
selected by any method as the property trustee deems fair and appropriate. This
method may provide for the selection for redemption of portions equal to $8 or
an integral multiple of $8 of the liquidation amount of trust preferred
securities. The property trustee will promptly notify the trust securities
registrar in writing of the trust preferred securities selected for redemption
and, in the case of any trust 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 trust preferred securities will relate to the
portion of the aggregate liquidation amount of trust preferred securities which
has been or is to be redeemed.
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SUBORDINATION OF COMMON SECURITIES OF BVBC TRUST HELD BY BLUE VALLEY
Payment of distributions on, and the redemption price of, the trust
preferred securities and common securities will be made pro rata based on the
liquidation amounts of these securities. However, if on any distribution date or
redemption date a debenture event of default has occurred and is continuing, no
distributions on or redemption of the common securities will be made. Further,
no other payment on account of the redemption, liquidation or other acquisition
of the common securities will be made unless payment in full in cash of all
distributions payable on all of the outstanding trust preferred securities are
made, or in the case of redemption the full redemption price on all of the
outstanding trust preferred securities then called for redemption, has been made
or provided for. All funds available to the property trustee will first be
applied to the payment in full in cash of all distributions on, or redemption
price of, the trust 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, Blue Valley as holder of the common
securities will be deemed to have waived any right to act regarding any event of
default until the effects of all events of default have been cured, waived or
otherwise eliminated. Until any events of default have been so cured, waived or
otherwise eliminated, the property trustee will act solely on behalf of the
holders of the trust preferred securities and not on behalf of Blue Valley as
holder of the common securities, and only the holders of the trust preferred
securities will have the right to direct the property trustee to act on their
behalf.
LIQUIDATION DISTRIBUTIONS UPON DISSOLUTION
Blue Valley will have the right at any time to dissolve BVBC Trust and
cause the junior subordinated debentures to be distributed to the holders of the
trust preferred securities. This right is subject to Blue Valley having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. See "Distribution of the Junior
Subordinated Debentures" above.
In addition, under the trust agreement, BVBC Trust will automatically
dissolve upon expiration of its term and will earlier dissolve on the first to
occur of: (1) events of bankruptcy, dissolution or liquidation of Blue Valley;
(2) delivery by Blue Valley of written direction to the property trustee to
dissolve BVBC Trust, which direction is optional and wholly within the
discretion of Blue Valley; (3) redemption of all of the trust preferred
securities as described under "- Redemption - Mandatory and Optional Rights of
Blue Valley"; and (4) the entry of an order for the dissolution of BVBC Trust by
a court of competent jurisdiction (each, an "early termination").
If an early termination occurs as described in clause (1), (2) or (4)
above or upon the expiration of the term of BVBC Trust, it will be liquidated by
the trustees as expeditiously as the trustees determine to be possible. The
liquidation will be made after satisfaction of liabilities to creditors of BVBC
Trust as provided by Section 3808(e) of the Delaware Business Trust Act and any
other applicable law. In the liquidation, holders of the trust securities will
receive a like amount of the junior subordinated debentures, unless this
distribution is determined by the property trustee not to be practical. If the
property trustee determines that a distribution of the
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junior subordinated debentures is not practical, then the holders of trust
preferred securities will be entitled to receive an amount equal to the
liquidation amount of $8 per trust security plus accrued and unpaid
distributions thereon to the date of payment. This amount, payable out of the
assets of BVBC Trust available for distribution, is referred to as the
liquidation distribution. If the liquidation distribution can be paid only in
part because BVBC Trust has insufficient assets available to pay the full
aggregate liquidation distribution, then the amounts payable directly by BVBC
Trust on the trust preferred securities will be paid on a pro rata basis. The
holders of the common securities will be entitled to receive distributions upon
a liquidation pro rata with the holders of the trust preferred securities,
except that if a debenture event of default has occurred and is continuing, the
trust preferred securities will have a priority over the common securities.
Under current United States federal income tax law and interpretations and
assuming, as expected, BVBC Trust is treated as a grantor trust, a distribution
of the junior subordinated debentures should not be a taxable event to holders
of the trust 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 trust preferred
securities. See "Material Federal Income Tax Consequences." If Blue Valley
elects neither to redeem the junior subordinated debentures prior to maturity
nor to liquidate BVBC Trust and distribute the junior subordinated debentures to
holders of the trust preferred securities, the trust preferred securities will
remain outstanding until the repayment of the junior subordinated debentures.
If Blue Valley elects to dissolve BVBC Trust and cause the junior
subordinated debentures to be distributed to holders of the trust preferred
securities in liquidation of BVBC Trust, Blue Valley will continue to have the
right to shorten the maturity of the junior subordinated debentures under most
circumstances. See "Description of the Junior Subordinated Debentures - General
Overview."
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:
o the occurrence of a debenture event of default under the
indenture, see "Description of the Junior Subordinated Debentures
- Indenture Events of Default"; or
o default by BVBC Trust in the payment of any distribution when it
becomes due and payable, and continuation of the default for a
period of 30 days; or
o default by BVBC Trust in the payment of any redemption price of
any trust security when it becomes due and payable; or
o 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
covenant or warranty which is addressed in the previous two
points above, and continuation of the default or breach, for a
period of 60 days after there has been given, by registered or
certified mail, to the
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property trustee by the holders of at least 25% in aggregate
liquidation amount of the outstanding trust preferred securities, a
written notice specifying the default or breach and requiring it to
be remedied and stating that the notice is a "Notice of Default"
under the trust agreement; or
o the occurrence of events of bankruptcy or insolvency regarding the
property trustee and the failure by Blue Valley 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 is required to
transmit notice of the event of default to the holders of the trust preferred
securities, the administrative trustees and Blue Valley, unless the event of
default has been cured or waived. Blue Valley 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 trust
preferred securities will have a preference over the common securities upon
termination of BVBC Trust 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 outstanding junior subordinated debentures may declare all
of the junior subordinated debentures to be due and payable immediately. Written
notice must be given to Blue Valley, and to the property trustee, if 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 trust
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 trust preferred securities have the right to bring a direct action as
discussed below. See "Description of the Junior Subordinated Debentures -
Enforcement of Rights by Holders of Trust Preferred Securities."
REMOVAL OF TRUSTEES
Unless a debenture event of default has occurred and is continuing, any
trustee may be removed at any time by the holder of the common securities of
BVBC Trust. If a debenture event of default has occurred and is continuing, the
property trustee, Delaware trustee or both may be removed by the holders of a
majority in liquidation amount of the outstanding trust preferred securities. In
no event will the holders of the trust preferred securities have the right to
vote to appoint, remove or replace the administrative trustees, which voting
rights are vested exclusively in Blue Valley 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.
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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEES
Unless an event of default has occurred and is continuing, at any time,
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 holders of the common securities and the administrative trustees
have power to appoint one or more persons either to act as (1) a co-trustee,
jointly with the property trustee, of all or any part of the trust property, or
(2) to act as separate trustee of any such property. In either case these
trustees will have the powers which may be provided in the instrument of
appointment, and will have vested in them 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 the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees of BVBC Trust
may be a successor trustee to any of the trustees, including a successor
resulting from a merger or consolidation. However, any successor trustee must
meet all of the qualifications and eligibility standards to act as a trustee to
BVBC Trust.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF BVBC TRUST
BVBC 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 trust or other person, except as described
below. BVBC Trust may, at the request of Blue Valley, with the consent of the
administrative trustees and without the consent of the holders of the trust
preferred securities, the property trustee or the Delaware trustee, undertake
the transactions described above; provided, that:
o the successor entity either (1) expressly assumes all of the
obligations of BVBC Trust regarding the trust preferred
securities or (2) substitutes for the trust preferred securities
other securities having substantially the same terms as the trust
preferred securities, so long as the successor securities rank
the same as the trust preferred securities rank in priority
regarding distributions and payments upon liquidation, redemption
and otherwise;
o Blue Valley expressly appoints a trustee of the successor entity
possessing substantially the same powers and duties as the property
trustee as the holder of the junior subordinated debentures;
o any transaction of this kind does not adversely affect the rights,
preferences and privileges of the holders of the trust preferred
securities, including any successor securities, in any material
respect;
o the successor entity has a purpose identical to that of BVBC
Trust;
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o the successor securities will be listed or traded on any national
securities exchange or other organization on which the trust
preferred securities may then be listed;
o prior to the transaction, Blue Valley has received a legal
opinion from independent counsel to BVBC Trust experienced in
such matters to the effect that (1) the transaction does not
adversely affect the rights, preferences and privileges of the
holders of the trust preferred securities, including any
successor securities, in any material respect, and (2) following
any transaction of this kind, neither BVBC Trust nor the
successor entity will be required to register as an investment
company under the Investment Company Act; and
o Blue Valley or any permitted successor or designee owns all of
the common securities of the successor entity and guarantees the
obligations of the successor entity under the successor
securities at least to the extent provided by the trust preferred
securities guarantee. Notwithstanding the foregoing, BVBC Trust
will not, except with the consent of holders of 100% in
liquidation amount of the trust preferred securities, enter into
any transaction of this kind, or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if
the transaction would cause BVBC Trust 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 in certain limited circumstances described below and under
"Description of the Trust Preferred Securities Guarantee - Amendments and
Assignment", in general, the holders of the trust preferred securities will have
no voting rights.
The trust agreement may be amended from time to time by Blue Valley and
the trustees, without the consent of the holders of the trust securities:
o to cure any ambiguity, correct or supplement any provisions in the
trust agreement that may be inconsistent with any other provision,
or to make any other provisions regarding matters or questions
arising under the trust agreement, which are not inconsistent with
the other provisions of the trust agreement; or
o to modify, eliminate or add to any provisions of the trust agreement
to the extent that is necessary to ensure that BVBC 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 BVBC Trust will not be required to register as an
investment company under the Investment Company Act.
Provided, however, that in the case of the first point above, this action
will not adversely affect in any material respect the interests of any holder of
trust securities, and any amendments of the trust agreement will become
effective when notice is given to the holders of the trust securities.
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The trust agreement may be amended by the trustees and Blue Valley (1)
with the consent of holders representing not less than a majority of the
aggregate liquidation amount of the outstanding trust securities, and (2) upon
receipt by the trustees of an opinion of counsel to the effect that the
amendment or the exercise of any power granted to the trustees in accordance
with the amendment will not affect BVBC Trust's status as a grantor trust for
United States federal income tax purposes or BVBC Trust's exemption from status
as an investment company under the Investment Company Act. However, without the
consent of each holder of trust securities, the trust agreement may not be
amended to (1) 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 (2)
restrict the right of a holder of trust securities to institute suit for the
enforcement of any payment of distributions afterwards.
For the time that any junior subordinated debentures are held by the
property trustee, the trustees will not:
o 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 regarding the
junior subordinated debentures;
o waive any past default that is waivable under the indenture;
o exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures will be due
and payable; or
o consent to any amendment, modification or termination of the
indenture or the junior subordinated debentures, where this
consent is required, without, in each case, obtaining the prior
approval of the holders of a majority in aggregate liquidation
amount of all outstanding trust preferred securities. However,
where a consent under the indenture would require the consent of
each affected holder of junior subordinated debentures, this
consent may not be given by the property trustee without the
prior consent of each holder of the trust preferred securities.
The trustees will not revoke any action previously authorized or
approved by a vote of the holders of the trust preferred
securities except by subsequent vote of the holders of the trust
preferred securities. The property trustee will notify each
holder of the trust preferred securities of any notice of default
regarding the junior subordinated debentures. In addition to
obtaining these approvals of the holders of the trust preferred
securities, prior to taking any of the above actions, the
trustees will obtain an opinion of counsel stating that BVBC
Trust will not, as a consequence of the proposed action by the
property trustee, cease to be classified as a grantor trust and
will not be classified as an association taxable as a corporation
for United States federal income tax purposes on account of the
action.
Any required approval of holders of the trust preferred securities may be
given at a meeting of holders of trust preferred securities convened for this
purpose or under written consent. The property trustee will cause a notice of
any meeting at which holders of the trust
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preferred securities are entitled to vote, or of any matter upon which action by
written consent of the holders is to be taken, to be given to each holder of
record of the trust preferred securities in the manner set forth in the trust
agreement.
No vote or consent of the holders of the trust preferred securities will
be required for BVBC Trust to redeem and cancel the trust preferred securities
in accordance with the trust agreement.
Any of the trust preferred securities that are owned by Blue Valley, the
trustees or any affiliate of Blue Valley or any trustees, will, for purposes of
the vote or consent, be treated as if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
The trust preferred securities will be represented by one or more global
certificates registered in the name of the depositary or its nominee. Beneficial
interests in the trust preferred securities will be shown on, and transfers will
be effected only through, records maintained by participants in the depositary.
Except as described below, trust preferred securities in certificated form will
not be issued in exchange for the global certificates.
A global security will be exchangeable for trust preferred securities
registered in the names of persons other than the depositary or its nominee only
if:
o the depositary notifies Blue Valley that it is unwilling or unable
to continue as a depositary for the global security and no successor
depositary has been appointed, or if at any time the depositary
ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, at a time when the depositary is required to
be so registered to act as a depositary;
o Blue Valley in its sole discretion determines that the global
security will be so exchangeable; or
o there has occurred and is continuing an event of default under
the indenture.
Any global security that is exchangeable under the preceding sentence will be
exchangeable for definitive certificates registered in the names which the
depositary directs. It is expected that the instructions will be based upon
directions received by the depositary regarding ownership of beneficial
interests in the global security. In the event that trust preferred securities
are issued in certificated form, they will be in denominations of $8 or integral
multiples of $8 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
trust preferred securities, the global trust preferred security may not be
transferred except (1) as a whole by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary, (2) to another
nominee of the depositary or (3) by the depositary or any nominee to a successor
depositary or any nominee of the successor.
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Payments on trust preferred securities represented by a global security
will be made to the depositary, as the depositary for the trust preferred
securities. In the event the trust preferred securities are issued in
certificated form, distributions will be payable, the transfer of the trust
preferred securities will be registrable, and trust preferred securities will be
exchangeable for trust 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. However, payment of any distribution may be made at the
option of the administrative trustees by check mailed to the address of the
persons entitled to payments or by wire transfer. In addition, if the trust
preferred securities are issued in definitive form, the record dates for payment
of distributions will be the 15th day of the month in which the relevant
distribution date occurs.
Upon the issuance of a global trust preferred security, and the deposit of
the global trust preferred security with or on behalf of the depositary, the
depositary will credit, on its book-entry registration and transfer system, the
respective aggregate liquidation amounts of the individual trust preferred
securities represented by the global trust preferred security to persons that
have accounts with the depositary. The accounts will be designated by the
dealers, underwriters or agents regarding the trust preferred securities.
Ownership of beneficial interests in a global trust preferred security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in the global trust 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 and the records of
participants regarding interests of persons who hold through participants. The
laws of some states require that some purchasers of securities in those states
take physical delivery of the securities in certificated form. The limits, under
these laws, may impair the ability to transfer beneficial interests in a global
trust preferred security.
For the time that the depositary for a global trust preferred security, or
its nominee, is the registered owner of the global trust preferred security,
this registered owner will be considered the sole owner or holder of the trust
preferred securities represented by the global trust preferred security for all
purposes under the trust agreement of BVBC Trust. Except as provided below,
owners of beneficial interests in a global trust preferred security will not be
entitled to have any of the individual trust preferred securities represented by
the global trust preferred security registered in their names, will not receive
or be entitled to receive physical delivery of any the trust preferred
securities in certificated form and will not be considered the owners or holders
thereof.
None of Blue Valley, the property trustee, any paying agent, or the
securities registrar for the trust 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 trust
preferred security or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
Blue Valley expects that the depositary, upon receipt of any payment of
the liquidation amount or distributions in respect of a permanent global trust
preferred security, immediately will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interest in the
aggregate liquidation amount of the global trust preferred security as shown on
the records of the depositary or its nominee. Blue Valley also expects that
payments by
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participants to owners of beneficial interests in the global trust preferred
security held through the 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. The payments
will be the responsibility of the participants.
If the depositary for the trust preferred securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by Blue Valley within 90 days, BVBC Trust will issue
individual trust preferred securities in exchange for the global trust preferred
security. In addition, BVBC Trust may at any time in its sole discretion,
subject to any limitations described in this prospectus relating to the trust
preferred securities, determine not to have any trust preferred securities
represented by one or more global trust preferred securities. In this event,
Blue Valley will issue individual trust preferred securities in exchange for the
global trust preferred security or securities representing the trust preferred
securities. Further, if BVBC Trust specifies, an owner of a beneficial interest
in a global trust preferred security representing trust preferred securities may
receive individual trust preferred securities in exchange for the beneficial
interests, subject to any limitations described in this prospectus. In any such
instance, a beneficial interest owner in a global trust preferred security will
be entitled to physical delivery of individual trust preferred securities
represented by the global trust preferred security equal in liquidation amount
to the beneficial interest, and to have the trust preferred securities
registered in its name. Individual trust preferred securities issued will be
issued in denominations, unless otherwise specified by BVBC Trust, of $8 and
integral multiples of $8.
PAYMENT AND PAYING AGENCY
Payments in respect of the trust preferred securities will be made to the
depositary, which will credit the relevant accounts at the depositary on the
applicable distribution dates. However, if any of the trust preferred securities
are not held by the depositary, the payments will be made by check mailed to the
address of the holder as the address appears on the register. The paying agent
will initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to the administrative trustees and Blue Valley.
The paying agent will be permitted to resign as paying agent upon 30 days'
written notice to the administrative trustees, the property trustee and Blue
Valley. In the event that the property trustee is no longer the paying agent,
the administrative trustees will appoint a successor paying agent, which will be
a bank or trust company acceptable to the property trustee and Blue Valley.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
trust preferred securities. Registration of transfers of the trust preferred
securities will be effected without charge by or on behalf of BVBC Trust, but
the registrar may require payment to cover any tax or other governmental charges
that may be imposed in connection with any transfer or exchange. BVBC Trust will
not be required to register or cause to be registered the transfer of the trust
preferred securities after the trust preferred securities have been called for
redemption.
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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 the duties which
are specifically set forth in the trust agreement. After an event of default,
the property trustee must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the property trustee is under no obligation to
exercise any of the powers vested in it by the trust agreement at the request of
any holder of trust preferred securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred. 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 trust preferred securities are entitled under the trust agreement to vote,
then the property trustee will take action as directed by Blue Valley. If the
property trustee is not so directed, it will take action as it deems advisable
and in the best interests of the holders of the trust securities and will have
no liability under the trust agreement 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 BVBC Trust in such a way that BVBC Trust 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 Blue Valley for
United States federal income tax purposes. In this regard, Blue Valley and the
administrative trustees are authorized to take any lawful action not
inconsistent with the certificate of trust of BVBC Trust or the trust agreement,
that they determine in their discretion to be necessary or desirable for these
purposes, as long as the action does not materially adversely affect the
interests of the holders of the related trust preferred securities. Holders of
the trust preferred securities have no preemptive or similar rights.
For so long as the trust securities are outstanding, Blue Valley is
required to fulfill all reporting and filing obligations under the Securities
Exchange Act, as applicable to a company having a class of securities registered
under that Act. The administrative trustees are required to use their best
efforts to maintain the listing of the trust preferred securities on The
American Stock Exchange or another national securities exchange or quotation
system, but this requirement does not prevent BVBC Trust from redeeming all or a
portion of the trust securities in accordance with the trust agreement.
BVBC Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures will be issued under a subordinated
indenture to be entered into between Blue Valley and Wilmington Trust Company,
as the indenture trustee. The following is a summary of the material terms and
provisions of the junior subordinated debentures and the indenture. Prospective
investors are urged to read the indenture, which has been filed as an exhibit to
the registration statement of which this prospectus forms a part. Wherever
particular defined terms of the indenture are referred to but not defined
herein, such defined terms have the same meaning as that in the indenture. The
indenture is qualified under the Trust Indenture Act.
Concurrently with the issuance of the trust preferred securities, BVBC
Trust will invest the proceeds from the sale of the trust preferred securities,
together with the consideration paid by Blue Valley for the common securities,
in junior subordinated debentures issued by Blue Valley. The junior subordinated
debentures will be issued as unsecured debt under the indenture.
GENERAL OVERVIEW
The junior subordinated debentures will bear interest at the rate of % per
year of their principal amount, payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, beginning June 30, 2000, to the
person in whose name each junior subordinated debenture is registered, subject
to minor exceptions, at the close of business on the business day next preceding
the interest payment date. Notwithstanding the above, in the event that either
(1) the junior subordinated debentures are held by the property trustee and the
trust preferred securities are no longer in book-entry only form or (2) the
junior subordinated debentures are not represented by a global subordinated
debenture, the record date for the interest payment will be the 15th day of the
month in which the payment is made. The amount of each interest payment due
regarding the junior subordinated debentures will include amounts accrued and
unpaid through the date the interest payment is due. It is anticipated that,
until the liquidation, if any, of BVBC Trust, each junior subordinated debenture
will be held in the name of the property trustee in trust for the benefit of the
holders of the trust 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 that date will be made on the next business day. If, however, the
business day falls in the next calendar year, the payment will be made on the
immediately preceding business day. Accrued interest that is not paid on the
applicable interest payment date will bear additional interest at the rate per
year of % compounded quarterly. The term interest as used in this prospectus
includes quarterly interest payments, interest on quarterly interest payments
not paid on the applicable interest payment date and additional sums, as defined
below, as applicable.
The junior subordinated debentures will mature on June 30, 2030. This
date, as it may be shortened as described below, is the stated maturity. This
date may be shortened once at any time by Blue Valley before the day which is 90
days before the scheduled maturity date to any date not earlier than June 30,
2005, subject to Blue Valley 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 Blue Valley elects to shorten the stated
maturity of the junior
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subordinated debentures, it will give at least 90 days prior notice to the
registered holders of the junior subordinated debentures, the property trustee
and the indenture trustee. 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, as
defined in the indenture, of Blue Valley. As of February 29, 2000, Blue Valley
had $9.1 million of indebtedness that ranked senior in right of payment to the
junior subordinated debentures. After giving effect to the use of the proceeds
of this offering as described under "Use of Proceeds," as of that date Blue
Valley would have had $1.9 million of indebtedness that ranked senior in right
of payment to the junior subordinated debentures. Because Blue Valley is a
holding company, the right of Blue Valley to participate in any distribution of
assets of the Bank or any other subsidiary, or upon the Bank's or any other
subsidiary's liquidation or reorganization or otherwise, and thus the ability of
holders of the junior subordinated debentures to benefit indirectly from the
distribution, is subject to the prior claims of creditors of that subsidiary,
except to the extent that Blue Valley 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 Blue Valley's
subsidiaries, and holders of junior subordinated debentures should look only to
the assets of Blue Valley for payments on the junior subordinated debentures.
The indenture does not limit the incurrence or issuance of other secured or
unsecured debt of Blue Valley, including senior and subordinated debt, whether
under the indenture or any existing or other indenture that Blue Valley may
enter into in the future or otherwise. See "Subordination" below.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
If no debenture event of default has occurred and is continuing, Blue
Valley has the right under the indenture at any time during the term of the
junior subordinated debentures to defer interest payments at any time for a
period not exceeding 20 consecutive quarters. However, no extension period may
extend beyond the stated maturity of the junior subordinated debentures. At the
end of an extension period, Blue Valley must pay all interest then accrued and
unpaid, together with interest at the rate of % per year, compounded quarterly.
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 "Material Federal Income Tax
Consequences - Interest Income and Original Issue Discount."
During any extension period, Blue Valley may not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment regarding, any of Blue Valley'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 Blue Valley, including other junior
subordinated debentures, that rank equally with or junior in interest to the
junior subordinated debentures or make any trust preferred securities guarantee
payments regarding any trust preferred securities guarantee by Blue Valley of
the debt securities of any subsidiary of Blue Valley if the trust preferred
securities guarantee ranks equally with or junior in interest to the junior
subordinated debentures. These restrictions do not apply to:
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o dividends or distributions in capital stock of Blue Valley;
o any declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under any
plan in the future, or the redemption or repurchase of any rights
pursuant to this type of plan;
o payments under the trust preferred securities guarantee; or
o purchases of common stock for issuance under any contracts, benefit
plans or similar arrangements with or for its directors, officers,
employees or consultants.
Prior to the termination of any extension period, Blue Valley may further
extend the extension period, provided that the extension does not cause the
extension period to exceed 20 consecutive quarters or extend beyond the stated
maturity of the junior subordinated debentures. Upon the termination of any
extension period and the payment of all amounts then due on any interest payment
date, Blue Valley may elect to begin a new extension period subject to the above
requirements. No interest will be due and payable during an extension period,
except at the end of the extension period.
If the property trustee is the only registered holder of the junior
subordinated debentures, Blue Valley must give the property trustee, the
administrative trustees and the indenture trustee notice of its election of any
extension period at least five business days prior to the earlier of (1) the
date the distributions on the trust preferred securities would have been payable
except for the election to begin or extend the extension period or (2) the date
the administrative trustees are required to give notice to the holders of the
trust preferred securities of the record date or the date the distributions are
payable, but in any event not less than five business days prior to the record
date. The indenture trustee will give notice of Blue Valley'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 trust preferred securities. There is no
limitation on the number of times that Blue Valley may elect to begin an
extension period.
ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES
If BVBC Trust or the property trustee is required to pay any additional
taxes, duties, assessments or other governmental charges as a result of a tax
event, Blue Valley will pay as additional amounts on the junior subordinated
debentures any amounts which will be required so that the distributions payable
by BVBC Trust will not be reduced as a result of any additional taxes, duties or
other governmental charges. See "Description of the Trust Preferred Securities -
Redemption - Mandatory and Optional Rights of Blue Valley" for a definition of
tax event.
REDEMPTION
Subject to Blue Valley's 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 Blue Valley (1) beginning June 30, 2005, in whole at
any time or in part from time to time, or (2) at any time in whole, but not in
part, upon the occurrence and during the continuance of a tax event, an
investment
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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
redeemed to the date fixed for redemption, plus 100% of the principal amount of
the junior subordinated debentures. See "Description of the Trust Preferred
Securities - Redemption - Mandatory and Optional Rights of Blue Valley" for
definitions of tax event, investment company event and capital treatment event.
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 the holder's registered address. Unless Blue Valley
defaults in payment of the redemption price, on and after the redemption date
interest will cease to accrue on the junior subordinated debentures or portions
of the junior subordinated debentures called for redemption.
The junior subordinated debentures will not be subject to any sinking
fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Trust Preferred Securities -
Liquidation Distribution upon Termination," under circumstances involving the
dissolution of BVBC Trust, the junior subordinated debentures may be distributed
to the holders of the trust preferred securities and common securities in
liquidation of BVBC Trust after satisfaction of liabilities to creditors of BVBC
Trust. If distributed to holders of the trust 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 trust 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 trust preferred securities. If the junior
subordinated debentures are distributed to the holders of trust preferred
securities upon the dissolution of BVBC Trust, there can be no assurance as to
the market price of any junior subordinated debentures that may be distributed
to the holders of trust preferred securities. If the junior subordinated
debentures are distributed, Blue Valley is required to use its best efforts to
list them on a national securities exchange or quotation system, but this
requirement will not prevent Blue Valley from redeeming any or all of the junior
subordinated debentures.
RESTRICTIONS ON PAYMENTS
Blue Valley has restrictions on paying dividends or making payments
regarding debt that is equal to or junior in rank if:
o there has occurred any event of which Blue Valley 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 Blue Valley shall not have taken reasonable steps
to cure; or
o Blue Valley has given notice of its election of an extension period
as provided in the indenture regarding the junior subordinated
debentures and has not rescinded the notice, or the extension
period, or any extension thereof, is continuing; or
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o while the junior subordinated debentures are held by BVBC Trust,
Blue Valley is in default regarding its payment of any obligation
under the trust preferred securities guarantee.
If any of the events above have occurred, Blue Valley will not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment regarding, any
of Blue Valley's capital stock; or
o make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of Blue Valley,
including other junior subordinated debt, that rank equally with
or junior in interest to the junior subordinated debentures or
make any trust preferred securities guarantee payments regarding
any trust preferred securities guarantee by Blue Valley of the
debt securities of any subsidiary of Blue Valley if the trust
preferred securities guarantee ranks equally or junior in
interest to the junior subordinated debentures.
Provided, however, Blue Valley may (1) declare and pay dividends or
distributions in common stock, (2) make any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under this type of plan in the future or the redemption or
repurchase of any rights under such plan, (3) make payments under the trust
preferred securities guarantee and (4) make purchases of common stock related to
the issuance of common stock or rights under any of Blue Valley's benefit plans
for its directors, officers or employees.
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES TO SENIOR AND SUBORDINATED
DEBT OF BLUE VALLEY
In the indenture, Blue Valley 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 or any bankruptcy, or similar proceedings in connection with
any insolvency or bankruptcy proceeding of Blue Valley, the holders of senior
and subordinated debt will first be entitled to receive payment in full of
principal, interest and premium, if any, on the senior and subordinated debt
before the holders of junior subordinated debentures will be entitled to receive
principal or interest payments 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 upon acceleration will first be entitled to receive payment in full
of all amounts due to them, including any amounts due upon acceleration, before
the holders of junior subordinated debentures will be entitled to receive any
principal or interest payments on the junior subordinated debentures. However,
holders of subordinated debt will not be entitled to receive payment of any of
these amounts to the extent that the subordinated debt is by its terms
subordinated to trade creditors.
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No principal or interest payments on the junior subordinated debentures
may be made if there has occurred and is continuing a default in any payment
regarding senior and subordinated debt or an event of default regarding any
senior and subordinated debt resulting in the acceleration of the maturity of
senior and subordinated debt, or if any judicial proceeding is pending regarding
any of this type of default.
Debt as used in this discussion means regarding any person, whether
recourse is to all or a portion of the assets of the person and whether or not
contingent:
o every obligation of the person for money borrowed;
o every obligation of the person evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses;
o every reimbursement obligation of the person regarding letters of
credit, bankers' acceptances or similar facilities issued for the
account of the person;
o every obligation of the person issued or assumed as the deferred
purchase price of property or services, but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business;
o every capital lease obligation of the person; and
o every obligation of the type referred to in all of the points
immediately above of another person and all dividends of another
person the payment of which, in either case, the person has
guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
Senior and subordinated debt means the principal of and premium, if any,
and interest, if any, on debt of Blue Valley, including interest accruing at the
time of the filing of any petition in bankruptcy or for reorganization relating
to Blue Valley, whether incurred on or prior to the date of the indenture or
thereafter incurred, unless, in the instrument creating or evidencing the debt
or under which the debt is outstanding, it is provided that the obligations are
not superior in right of payment to the junior subordinated debentures or to
other debt which is equal with, or subordinated to, the junior subordinated
debentures.
However, senior and subordinated debt will not be deemed to include:
o any debt of Blue Valley which when incurred and without respect to
any election under section 1111(b) of the United States Bankruptcy
Code was without recourse to Blue Valley;
o any debt to any employee of Blue Valley;
o 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
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made to the holders of the 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 the holders to pay amounts
over to the obligees on the trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result
of subordination provisions to which the debt is subject;
o the trust preferred securities guarantee; and
o any other debt securities issued under the indenture.
The indenture places no limitation on the amount of additional senior and
subordinated debt that may be incurred by Blue Valley. Blue Valley expects from
time to time to incur additional indebtedness constituting senior and
subordinated debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
It is anticipated that, until the liquidation, if any, of BVBC Trust, each
junior subordinated debenture will be held in the name of the property trustee
in trust for the benefit of the holders of the trust preferred securities.
However, in the event of either a tax event, investment company event or capital
treatment event, the junior subordinated debentures in certificated form may be
exchanged and represented by global certificates registered in the name of the
depositary or its nominee. In the event of such an exchange, 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.
Unless and until a global subordinated debenture is exchanged in whole or
in part for the individual junior subordinated debentures, it may not be
transferred except (1) as a whole by the depositary for the global subordinated
debenture to a nominee of the depositary, (2) by the depositary to a successor
depositary selected or approved by Blue Valley or (3) to any nominee of the
successor.
A global security will be exchangeable for junior subordinated debentures
registered in the names of persons other than the depositary or its nominee only
if (1) the depositary notifies Blue Valley that it is unwilling or unable to
continue as a depositary for the global security and no successor depositary has
been appointed, or if at any time the depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 at a time when the
depositary is required to be so registered to act as a depositary or (2) Blue
Valley in its sole discretion determines that the global security will be so
exchangeable. Any global security that is exchangeable under the preceding
sentence will be exchangeable for definitive certificates registered in the
names which the depositary directs. It is expected that the instructions will be
based upon directions received by the depositary from its participants regarding
ownership of beneficial interests in the global security. In the event that
junior subordinated debentures are issued in definitive form, the junior
subordinated debentures will be in denominations of $8 and integral multiples of
$8 and may be transferred or exchanged at the offices described below.
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Payments on junior subordinated debentures represented by a global
security will be made to 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 Blue Valley.
However, interest payments may be made at the option of Blue Valley by check
mailed to the address of the persons entitled to payments or by wire transfer.
In addition, if the junior subordinated debentures are issued in certificated
form, the record dates for interest payments will be the 15th day of the month
in which the payment is to be made.
Blue Valley will appoint the indenture trustee as securities registrar
under the indenture. 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, or a satisfactory written instrument of
transfer, duly executed, at the office of the securities registrar. Blue Valley
may at any time rescind the designation of any registrar or approve a change in
the location through which any registrar acts, provided that Blue Valley
maintains a registrar in the place of payment. Blue Valley may at any time
designate additional registrars regarding the junior subordinated debentures.
In the event of any redemption of less than all of the junior subordinated
debentures, neither Blue Valley nor the indenture trustee will be required to
issue, exchange or register the transfer of less than all of the junior
subordinated debentures during a period beginning at the opening of business 15
days before the day of mailing of a notice of redemption selecting for
redemption less than all of the junior subordinated debentures and ending at the
close of business on the day of mailing of the relevant notice of redemption.
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 Blue Valley 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 to payment as the person's address appears in the securities
register. Payment of any interest on junior subordinated debentures will be made
to the person in whose name the junior subordinated debenture is registered at
the close of business on the regular record date for the interest payment. Blue
Valley may at any time designate additional paying agents or rescind the
designation of any paying agent; however, Blue Valley 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 Blue Valley in trust, for the payment of the principal of or
interest on the junior subordinated debentures that are not applied and remain
unclaimed for two years after the principal or interest has become due and
payable will, at the request of Blue Valley, be repaid to Blue Valley.
Thereafter, the holder of the junior subordinated debenture will look, as a
general unsecured creditor, only to Blue Valley for payment.
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MODIFICATION OF INDENTURE
From time to time Blue Valley 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. These purposes may include,
among other things, curing ambiguities, defects or inconsistencies, provided
that this action does not materially adversely affect the interests of the
holders of the junior subordinated debentures or the trust preferred securities
while they remain outstanding, and qualifying, or maintaining the qualification
of, the indenture under the Trust Indenture Act. The indenture contains
provisions permitting Blue Valley and the indenture trustee, with the consent of
the holders of not less than a majority in aggregate 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, the modification may not, without the consent of the holder of
each outstanding junior subordinated debenture:
o change the stated maturity of the junior subordinated debentures or
extend the time of payment of interest on them, except as described
under "Description of the Junior Subordinated Debentures - General
Overview" and "- Option to Extend Interest Payment Period," or
reduce the principal amount thereof or the rate of interest thereon;
or
o 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.
However, while any of the trust preferred securities remain outstanding,
(1) no modification may be made that adversely affects the holders of the trust
preferred securities in any material respect, (2) no termination of the
indenture may occur, and (3) 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 trust preferred securities, until the principal and interest of
the junior subordinated debentures have been paid in full and other conditions
are satisfied.
CO-TRUSTEES AND SEPARATE TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, at any time, for the purpose of meeting the legal requirements of
any applicable jurisdiction, Blue Valley and the indenture trustee have the
power to appoint one or more persons either to act as (1) a co-trustee, jointly
with the indenture trustee, or (2) a separate trustee under the indenture. In
either case, these trustees will have the powers which may be provided in the
instrument of appointment, and will have vested in them any property, title,
right or power deemed necessary or desirable, subject to the provisions of the
indenture. In case an event of default under the indenture has occurred and is
continuing, the indenture trustee alone will have the power to make the
appointment.
INDENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following described
events regarding the junior subordinated debentures that has occurred and is
continuing constitutes a debenture event of default:
o 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;
o failure to pay any principal on the junior subordinated debentures
when due whether at maturity, upon redemption, by declaration or
otherwise, provided however that a valid extension of any interest
payment period by Blue Valley according to the terms of the
indenture will not constitute a debenture event of default;
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o failure by Blue Valley to observe or perform in any material respect
any of its other covenants or agreements contained in the indenture
for 90 days after written notice to Blue Valley from the indenture
trustee or to Blue Valley and the indenture trustee by the holders
of at least 25% in aggregate outstanding principal amount of the
junior subordinated debentures; or
o events in bankruptcy, insolvency or reorganization of Blue Valley,
including the voluntary commencement of bankruptcy proceedings,
entry of an order for relief against Blue Valley in a bankruptcy
proceeding, appointment of a custodian over substantially all of
Blue Valley's property, a general assignment for the benefit of
creditors, or a court order for liquidation of Blue Valley.
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 rescind and annul the 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 the 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 the declaration and waive the default, the holders of a majority in
aggregate liquidation amount of the trust preferred securities will have the
right to do so. In case a debenture event of default occurs and is continuing,
the property trustee will have the right to declare the principal of and the
interest on the junior subordinated debentures, and any other amounts payable
under the indenture, to be due and payable and to enforce its other rights as a
creditor.
Blue Valley is required to file annually with the indenture trustee a
certificate as to whether Blue Valley is in compliance with all the conditions
and covenants applicable to it under the indenture.
ENFORCEMENT OF RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an event of default under the indenture has occurred and is continuing
and the default is attributable to Blue Valley's failure to pay interest or
principal on the junior subordinated debentures on the due date, a holder of
trust preferred securities may institute a legal proceeding directly against
Blue Valley for payment of principal and interest on the junior subordinated
debentures having a principal amount equal to the aggregate liquidation amount
of the trust preferred securities of the holder. This action is referred to in
this discussion as a direct action. If the right to bring a direct action is
removed, BVBC Trust may become subject to the reporting obligations under the
Securities Exchange Act of 1934. Blue Valley will have the right under the
indenture to set-off any payment made to the holder of trust preferred
securities by Blue Valley in connection with a direct action.
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The holders of the trust preferred securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the junior subordinated debentures unless there has
been an event of default under the trust agreement. See "Description of the
Trust Preferred Securities - Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that Blue Valley will 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 will consolidate with
or merge into Blue Valley or convey, transfer or lease its properties and assets
substantially as an entirety to Blue Valley, unless:
o in case Blue Valley 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 the successor person expressly assumes Blue Valley's
obligations on the junior subordinated debentures issued under the
indenture;
o immediately after giving effect to this type of transaction, no
debenture event of default, and no event which, after notice or
lapse of time or both, would become a debenture event of default,
has occurred and is continuing; and
o 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 Blue Valley that may adversely affect holders of the
junior subordinated debentures.
SATISFACTION AND DISCHARGE
Under the indenture, Blue Valley will have satisfied and discharged the
indenture when all junior subordinated debentures not previously delivered to
the indenture trustee for cancellation (1) have become due and payable or (2)
will become due and payable at their stated maturity within one year, and Blue
Valley deposits in trust with the indenture trustee sufficient funds to pay and
discharge the entire indebtedness on the junior subordinated debentures to the
deposit date or to the stated maturity, as the case may be. This satisfaction
and discharge will not apply to Blue Valley's obligations to pay all other sums
due under the indenture and to provide the officers' certificates and opinions
of counsel described in the indenture.
GOVERNING LAW
The indenture and the junior subordinated debentures will be governed by
and construed in accordance with the laws of the State of Kansas.
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INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee will have and be subject to all the duties and
responsibilities specified for an indenture trustee under the Trust Indenture
Act. Subject to these 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 the holder against the costs, expenses and liabilities which might
be incurred. 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 BLUE VALLEY
Blue Valley will covenant in the indenture, as to the junior subordinated
debentures, that during the time that (1) BVBC Trust is the holder of all junior
subordinated debentures, (2) a tax event in respect of BVBC Trust has occurred
and is continuing and (3) Blue Valley has elected, and has not revoked the
election, to pay additional sums, as defined under "Description of the Trust
Preferred Securities - Redemption - Mandatory and Optional Rights of Blue
Valley," in respect of the trust preferred securities, Blue Valley will pay to
BVBC Trust these additional sums. Blue Valley will also covenant, as to the
junior subordinated debentures:
o to maintain directly or indirectly 100% ownership of the common
securities of BVBC Trust to which junior subordinated debentures have
been issued, provided that successors which are permitted under the
indenture may succeed to Blue Valley's ownership of the common
securities;
o to not voluntarily dissolve BVBC Trust, except upon approval of the
Federal Reserve if then so required, and to use its reasonable efforts
to cause BVBC Trust to remain a business trust, except (a) in
connection with a distribution of junior subordinated debentures to
the holders of the trust preferred securities in liquidation of BVBC
Trust, (b) the redemption of all of the trust securities or (c) in
connection with mergers, consolidations, or amalgamations permitted by
the trust agreement;
o 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; and
o to fulfill all filing and reporting obligations under the Securities
Exchange Act, as applicable to a company having a class of securities
registered under that Act, for so long as the junior subordinated
debentures are outstanding.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE
The trust preferred securities guarantee agreement will be executed and
delivered by Blue Valley and Wilmington Trust Company concurrently with the
issuance of the trust preferred securities. The trust preferred securities
guarantee will be for the benefit of the holders of the trust preferred
securities. Wilmington Trust Company will act as trustee under the trust
preferred securities guarantee for the purposes of compliance with the Trust
Indenture Act, and the trust preferred
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securities guarantee will be qualified under the Trust Indenture Act. The
following is a summary of the material provisions of the trust preferred
securities guarantee. Prospective investors are urged to read the form of the
trust preferred securities guarantee which has been filed as an exhibit to the
registration statement of which this prospectus forms a part. The guarantee
trustee will hold the trust preferred securities guarantee for the benefit of
the holders of the trust preferred securities.
GENERAL OVERVIEW
The trust preferred securities guarantee is an irrevocable guarantee on a
subordinated basis of all of BVBC Trust's obligations to make payments under the
trust preferred securities, but will apply only to the extent that BVBC Trust
has funds sufficient to make the payments, and is not a guarantee of collection.
Blue Valley will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth in this prospectus, the trust
preferred securities guarantee payments, as defined below, to the holders of the
trust preferred securities, as and when due, regardless of any defense, right of
set-off or counterclaim that BVBC Trust may have or assert other than the
defense of payment. The following payments regarding the trust preferred
securities, to the extent not paid by or on behalf of BVBC Trust, will be
subject to the trust preferred securities guarantee of Blue Valley:
o any accrued and unpaid distributions required to be paid on the
trust preferred securities, to the extent that BVBC Trust has
available funds on hand at the time;
o the redemption price regarding any trust preferred securities called
for redemption to the extent that BVBC Trust has available funds on
hand at the time; and
o upon a voluntary or involuntary dissolution of BVBC Trust, unless
the junior subordinated debentures are distributed to holders of the
trust preferred securities.
The amount of the trust preferred securities guarantee will be the lesser
of (a) the liquidation distribution and (b) the amount of assets of BVBC Trust
remaining available for distribution to holders of trust preferred securities.
Blue Valley's obligation to make a trust preferred securities guarantee payment
may be satisfied by direct payment of the required amounts by Blue Valley to the
holders of the trust preferred securities or by causing BVBC Trust to pay these
amounts to the holders.
If Blue Valley does not make interest payments on the junior subordinated
debentures held by BVBC Trust, BVBC Trust will not be able to pay distributions
on the trust preferred securities and will not have funds legally available to
pay distributions. The trust preferred securities guarantee will rank
subordinate and junior in right of payment to all senior and subordinated debt
of Blue Valley. See " -- Status of the Trust Preferred Securities Guarantee"
below. Because Blue Valley is a holding company, the right of Blue Valley to
participate in any distribution of assets of any subsidiary upon the
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent Blue
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Valley may itself be recognized as a creditor of that subsidiary. Accordingly,
Blue Valley's obligations under the trust preferred securities guarantee will be
effectively subordinated to all existing and future liabilities of Blue Valley's
subsidiaries, and claimants should look only to the assets of Blue Valley for
payments under the trust preferred securities guarantee. Except as otherwise
described in this prospectus, the trust preferred securities guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of Blue
Valley, including senior and subordinated debt whether under the indenture, any
other indenture that Blue Valley may enter into in the future, or otherwise.
Blue Valley has, through the trust preferred securities guarantee, the
trust agreement, the junior subordinated debentures, the indenture and the
expense agreement relating to BVBC Trust, taken together, fully, irrevocably and
unconditionally guaranteed on a subordinated basis all of BVBC Trust's
obligations under the trust preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes this trust preferred securities 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 BVBC
Trust's obligations under the trust preferred securities. See "Relationship
Among the Trust Preferred Securities, the Junior Subordinated Debentures and the
Trust Preferred Securities Guarantee."
STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEE
The trust preferred securities guarantee will constitute an unsecured
obligation of Blue Valley 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. As of February 29, 2000, Blue Valley had $9.1 million
of indebtedness that ranked senior in right of payment to its obligations under
the trust preferred securities guarantee. After giving effect to the use of the
proceeds of this offering as described under "Use of Proceeds," as of that date
Blue Valley would have had $1.9 million of indebtedness that ranked senior in
right of payment to its obligations under the trust preferred securities
guarantee.
The trust preferred securities guarantee will constitute a guarantee of
payment and not of collection. The guaranteed party may institute a legal
proceeding directly against Blue Valley to enforce its rights under the trust
preferred securities guarantee without first instituting a legal proceeding
against any other person or entity. The trust preferred securities guarantee
will be held for the benefit of the holders of the trust preferred securities.
The trust preferred securities guarantee does not place a limitation on the
amount of additional senior and subordinated debt that may be incurred by Blue
Valley. Blue Valley expects from time to time to incur additional indebtedness
constituting senior and subordinated debt.
AMENDMENTS AND ASSIGNMENT
Except regarding any changes which do not adversely affect the rights of
holders of the trust preferred securities in a material manner, in which case no
consent will be required, the trust preferred securities guarantee may not be
amended without the prior approval of the holders of not less than a majority of
the aggregate liquidation amount of the outstanding trust preferred securities.
No amendment that affects the rights, powers, duties, obligations or immunities
of the
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guarantee trustee will be effective unless approved by the guarantee trustee.
See "Description of the Trust Preferred Securities - Voting Rights; Amendment of
the Trust Agreement." All guarantees and agreements contained in the trust
preferred securities guarantee will bind the successors, assigns, receivers,
trustees and representatives of Blue Valley and will inure to the benefit of the
holders of the trust preferred securities then outstanding.
EVENTS OF DEFAULT
An event of default under the trust preferred securities guarantee will
occur upon the failure of Blue Valley to perform any of its payment or other
obligations under the trust preferred securities guarantee. The holders of not
less than a majority in aggregate liquidation amount of the trust preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee regarding the trust
preferred securities guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the trust preferred securities
guarantee.
Any holder of trust preferred securities may institute a legal proceeding
directly against Blue Valley to enforce the holder's rights under the trust
preferred securities guarantee without first instituting a legal proceeding
against BVBC Trust, the guarantee trustee or any other person or entity.
Blue Valley, as guarantor, is required to file annually with the guarantee
trustee a certificate as to whether Blue Valley is in compliance with all the
conditions and covenants applicable to it under the trust preferred securities
guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
a default by Blue Valley in performance of the trust preferred securities
guarantee, undertakes to perform only the duties which are specifically set
forth in the trust preferred securities guarantee. After default regarding the
trust preferred securities guarantee, the guarantee trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the guarantee
trustee is under no obligation to exercise any of the rights or powers vested in
it by the trust preferred securities guarantee at the request or direction of
any holder of the trust preferred securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred.
TERMINATION OF THE TRUST PREFERRED SECURITIES GUARANTEE
The trust preferred securities guarantee will terminate and be of no
further force and effect upon full payment of the redemption price of the trust
preferred securities, upon full payment of the amounts payable upon liquidation
of BVBC Trust or upon distribution of junior subordinated debentures to the
holders of the trust preferred securities. The trust preferred securities
guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the trust preferred securities must restore
payment of any sums paid under the trust preferred securities or the trust
preferred securities guarantee.
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GOVERNING LAW
The trust preferred securities guarantee will be governed by and construed
in accordance with the laws of the State of Kansas.
DESCRIPTION OF THE EXPENSE AGREEMENT
Under the agreement as to expenses and liabilities to be entered into by
Blue Valley under the trust agreement, Blue Valley will irrevocably and
unconditionally guarantee to each person or entity to whom BVBC Trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
BVBC Trust, other than obligations of BVBC Trust to pay to the holders of the
trust preferred securities or other similar interests in BVBC Trust of the
amounts due the holders under the terms of the trust preferred securities or the
other similar interests, as the case may be.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES
AND THE TRUST PREFERRED SECURITIES GUARANTEE
FULL AND UNCONDITIONAL TRUST PREFERRED SECURITIES GUARANTEE ON A SUBORDINATED
BASIS
Payments of distributions and other amounts due on the trust preferred
securities, to the extent BVBC Trust has funds available for the payment of the
distributions, are irrevocably guaranteed by Blue Valley as and to the extent
set forth under "Description of the Trust Preferred Securities Guarantee." Taken
together, Blue Valley's obligations under the junior subordinated debentures,
the indenture, the trust agreement, the expense agreement and the trust
preferred securities 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 trust preferred securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes the trust preferred securities 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 BVBC Trust's
obligations under the trust preferred securities. If and to the extent that Blue
Valley does not make payments on the junior subordinated debentures, BVBC Trust
will not pay distributions or other amounts due on the trust preferred
securities. The trust preferred securities guarantee does not cover payment of
distributions when BVBC Trust does not have sufficient funds to pay the
distributions. In this event, the remedy of a holder of the trust preferred
securities is to institute a legal proceeding directly against Blue Valley for
enforcement of payment of the distributions to the holder. The obligations of
Blue Valley under the trust preferred securities 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, the payments will be sufficient to cover
distributions and other payments due on the trust preferred securities,
primarily because:
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o the aggregate principal amount of the junior subordinated debentures
will be equal to the sum of the aggregate liquidation amount of the
trust preferred securities and common securities;
o 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 trust preferred
securities;
o Blue Valley will pay for any and all costs, expenses and liabilities
of BVBC Trust except BVBC Trust's obligations to holders of trust
preferred securities; and
o the trust agreement further provides that BVBC Trust will not engage
in any activity that is not consistent with the limited purposes of
BVBC Trust.
Notwithstanding anything to the contrary in the indenture, Blue Valley may
satisfy any payment it is otherwise required to make to the trust under the
indenture, by and to the extent that it has made, or is concurrently on the date
of the payment required by the indenture making, a payment under the trust
preferred securities guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE TRUST PREFERRED SECURITIES UNDER THE
TRUST PREFERRED SECURITIES GUARANTEE
A holder of any of the trust preferred securities may institute a legal
proceeding directly against Blue Valley to enforce its rights under the trust
preferred securities guarantee without first instituting a legal proceeding
against the guarantee trustee, BVBC Trust 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 the 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.
LIMITED PURPOSE OF BVBC TRUST
The trust preferred securities evidence a beneficial interest in BVBC
Trust, and BVBC Trust exists for the sole purpose of issuing the trust
securities and investing the proceeds from the sale of the trust securities in
the junior subordinated debentures. A principal difference between the rights of
a holder of the trust preferred securities and a holder of a junior subordinated
debenture is that a holder of a junior subordinated debenture is entitled to
receive from Blue Valley the principal amount of and interest accrued on junior
subordinated debentures held, while a holder of the trust preferred securities
is entitled to receive distributions from BVBC Trust, or from Blue Valley under
the trust preferred securities guarantee, if and to the extent BVBC Trust has
funds available for the payment of the distributions.
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RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of BVBC Trust involving the
liquidation of the junior subordinated debentures, the holders of trust
preferred securities will be entitled to receive, out of assets held by BVBC
Trust and available for distribution, the liquidation distribution in cash. See
"Description of the Trust Preferred Securities - Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of
Blue Valley, the property trustee, as holder of the junior subordinated
debentures, would be a subordinated creditor of Blue Valley, 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 shareholders of Blue Valley receive payments or distributions. Since
Blue Valley is the guarantor under the trust preferred securities guarantee and
has agreed to pay for all costs, expenses and liabilities of BVBC Trust, other
than BVBC Trust's obligations to the holders of its trust preferred securities,
the positions of a holder of the trust preferred securities and a holder of
junior subordinated debentures relative to other creditors and to shareholders
of Blue Valley in the event of liquidation or bankruptcy of Blue Valley are
expected to be substantially the same.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Blackwell Sanders Peper Martin LLP, Kansas City, Missouri, as Blue
Valley's special tax counsel ("Tax Counsel"), has given their written legal
opinion that the following discussion correctly describes the material United
States federal income tax consequences of the purchase, ownership and
disposition of trust preferred securities.
The following discussion is general and may not apply to your particular
circumstances for any of the following, or other, reasons:
o This discussion is based on United States federal income tax laws,
including the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations promulgated thereunder and administrative and
judicial interpretations of these authorities, in effect as of the
date of this prospectus. Changes to any of these laws, possibly on a
retroactive basis, after this date may affect the tax consequences
described below.
o This discussion addresses only trust preferred securities acquired at
original issuance at the original offering price and held as capital
assets, within the meaning of United States federal income tax law. It
does not discuss all of the tax consequences that may be relevant to
"Holders," as defined below, of trust preferred securities who are
subject to special rules, such as banks, thrift institutions and
certain other financial institutions, real estate investment trusts,
regulated investment companies, insurance companies, brokers and
dealers in securities or currencies, certain securities traders,
tax-exempt investors, individual retirement accounts and certain
tax-deferred accounts, and foreign investors. This discussion also
does not address tax consequences that may be relevant to a
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Holder in light of the Holder's particular circumstances, such as a
Holder holding a trust preferred security as a position in a
straddle, hedge, conversion or other integrated investment.
o This discussion does not address:
(a) The income tax consequences to stockholders in, or partners
or beneficiaries of, a Holder of trust preferred securities;
(b) the United States alternative minimum tax consequences or
other collateral tax consequences of purchasing, owning and
disposing of trust preferred securities; or
(c) any state, local or foreign tax consequences of purchasing,
owning and disposing of trust preferred securities.
The authorities on which this discussion is based are subject to various
interpretations, and the opinions of Tax Counsel are not binding on the IRS or
the courts, either of which could take a contrary position. Moreover, no rulings
have been or will be sought from the IRS with respect to the transactions
described herein. Accordingly, no assurance can be given to prospective
investors that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge.
WE ADVISE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE TRUST PREFERRED
SECURITIES BASED ON YOUR PARTICULAR CIRCUMSTANCES AND THE RELEVANT TAXING
JURISDICTION.
UNITED STATES HOLDERS
IN GENERAL. For purposes of the following discussion, a United States
Holder (a "Holder") means.
o a citizen or individual resident of the United States;
o a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision;
o an estate the income of which is includible in its gross income
for United States federal income tax purposes without regard to
its source; or
o a trust if a court within the United States is able to exercise
primary supervision over its administration and at least one United
States person has the authority to control all substantial decisions
of the trust.
CHARACTERIZATION OF BVBC TRUST. Tax Counsel has delivered its opinion
that (1) under then current law and based on the representations, facts and
assumptions set forth in this prospectus, (2) assuming full compliance with the
terms of the trust agreement, and other
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relevant documents, and (3) based on assumptions and qualifications contained in
the opinion, BVBC Trust will be characterized 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, a
Holder of a trust preferred security will be considered the beneficial owner of
an undivided interest in the junior subordinated debentures owned by BVBC Trust,
and will be required to include on its United States federal income tax return
all income or gain recognized for United States federal income tax purposes with
respect to its share of the junior subordinated debentures.
CHARACTERIZATION OF THE JUNIOR SUBORDINATED DEBENTURES. Tax Counsel has
delivered its opinion that, under current law, the junior subordinated
debentures are debt of Blue Valley for United States federal income tax
purposes. By acceptance of a beneficial interest in a trust preferred security,
a Holder agrees to treat the junior subordinated debentures as Blue Valley's
debt and the trust preferred securities as evidence of a beneficial ownership
interest in the junior subordinated debentures. This position may be challenged
by the IRS and Tax Counsel cannot give any assurance that a challenge will be
unsuccessful. The remainder of this discussion assumes that the junior
subordinated debentures will be classified as debt for United States federal
income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the terms of the
junior subordinated debentures, Blue Valley has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 20 consecutive quarterly periods, but not beyond the stated
maturity of the junior subordinated debentures. Treasury regulations provide
that debt instruments like the junior subordinated debentures, assuming they
will be issued at face value, will not be considered issued with original issue
discount ("OID"), even if their issuer can defer payments of interest, if the
likelihood of any deferral is "remote."
Blue Valley concluded, and this discussion assumes, that, as of the date
of this prospectus, the likelihood of Blue Valley deferring payments of interest
is "remote" within the meaning of the applicable Treasury regulations. This
conclusion is based in part on the fact that exercising that option would
prevent Blue Valley from declaring dividends on its common stock and would
prevent it from making any payments with respect to debt securities that rank
equally with or junior to the junior subordinated debentures. Therefore, Blue
Valley believes and will take the position that the junior subordinated
debentures will not be treated as issued with OID by reason of the deferral
option alone. Rather, Holders will be taxed on stated interest on the junior
subordinated debentures when it is paid or accrued in accordance with each
Holder's method of accounting for United States federal income tax purposes.
Because this issue has not been addressed in any published rulings or
interpretations issued by the IRS, it is possible that the IRS could take a
position contrary to the position taken by Blue Valley.
If Blue Valley exercises its option to defer payments of interest, the
junior subordinated debentures would be treated as redeemed and reissued for OID
purposes. The sum of the remaining interest payments, and any de minimis OID, on
the junior subordinated debentures will thereafter be treated as OID. The OID
would accrue, and be includible in a Holder's taxable income, on a daily
economic accrual basis, regardless of a Holder's method of accounting for income
tax purposes, over the remaining term of the junior subordinated debentures,
including
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any period of interest deferral, without regard to the timing of payments under
the junior subordinated debentures. Subsequent distributions of interest on the
junior subordinated debentures generally would not be taxable. The amount of OID
that would accrue in any period would approximately equal the amount of interest
that accrued on the junior subordinated debentures in that period at the stated
interest rate. Consequently, during any period of interest deferral, a Holder
will include OID in gross income in advance of the receipt of cash, and if a
Holder disposes of a trust preferred security prior to the record date for
payment of distributions on the junior subordinated debentures following that
deferral period, a Holder will be subject to income tax on OID accrued through
the date of disposition, and not previously included in income, but will not
receive cash from BVBC Trust with respect to the OID.
If the possibility of Blue Valley's exercise of its option to defer
payments of interest is not remote, the junior subordinated debentures would be
treated as initially issued with OID in an amount equal to the aggregate stated
interest, plus any de minimis OID, over the term of the junior subordinated
debentures. A Holder would include that OID in its taxable income, over the term
of the junior subordinated debentures, on a daily economic accrual basis.
CHARACTERIZATION OF INCOME. Because the income underlying the trust
preferred securities will be characterized as interest, not as dividends, for
United States federal income tax purposes, if a Holder is a corporate holder of
the trust preferred securities, it will not be entitled to a dividends-received
deduction for any income it recognizes with respect to the trust preferred
securities.
MARKET DISCOUNT AND BOND PREMIUM. Under some circumstances, a Holder may
be considered to have acquired its undivided interest in the junior subordinated
debentures with market discount or acquisition premium, as each phrase is
defined for United States federal income tax purposes. In this situation, such
Holder needs to contact its own tax advisor to determine its particular tax
consequences.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF
BVBC TRUST. Under the circumstances described above, BVBC Trust may distribute a
pro-rata share of the junior subordinated debentures to Holders in exchange for
their trust preferred securities and in liquidation of BVBC Trust. See
"Description of the Trust Preferred Securities - Distribution of Junior
Subordinated Debentures." Except as discussed below, that type of a distribution
would not be a taxable event for United States federal income tax purposes, and
consequently a Holder (1) would have an aggregate adjusted basis in the junior
subordinated debentures received for United States federal income tax purposes
equal to the Holder's aggregate adjusted basis in the Holder's trust preferred
securities, and (2) would have a holding period in the junior subordinated
debentures received in such a liquidation of BVBC Trust which includes the
period during which the Holder held the trust preferred securities. If, however,
the event causing the liquidation of the BVBC Trust is a tax event, which
results in BVBC Trust being treated as an association taxable as a corporation,
the distribution would constitute a taxable event to a Holder for United States
federal income tax purposes. The Holder would recognize gain or loss as if the
Holder had sold or exchanged its trust preferred securities for the junior
subordinated debentures and received them upon liquidation. See "Sales of Trust
Preferred Securities" below. The Holder would recognize interest income in
respect of the junior subordinated debentures received
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from BVBC Trust in the manner described above under "Interest Income and
Original Issue Discount."
Under circumstances described above, Blue Valley may redeem junior
subordinated debentures for cash and distribute the proceeds of the redemption
to Holders in redemption of their trust preferred securities. See "Description
of the Trust Preferred Securities - Redemption - Mandatory and Optional Rights
of Blue Valley." The redemption would be taxable for United States federal
income tax purposes, and a Holder would recognize gain or loss as if it had sold
the trust preferred securities for cash. See "Sales of Trust Preferred
Securities" below.
SALES OF TRUST PREFERRED SECURITIES. Upon the sale or other taxable
disposition, including a redemption for cash, of the trust preferred securities,
a Holder will recognize gain or loss in an amount equal to the difference
between its adjusted tax basis in the trust preferred securities and the amount
realized in the sale, except to the extent of any amount received in respect to
accrued but unpaid interest or OID not previously included in income. A Holder's
adjusted tax basis in the trust preferred securities generally will be its
initial purchase price, increased by OID, if any, previously includible in a
Holder's gross income to the date of disposition and decreased by payments, if
any, received on the trust preferred securities in respect of OID to the date of
disposition. The gain or loss generally will be a capital gain or loss, and will
be a long-term capital gain or loss if the Holder has held the trust preferred
securities for more than one year prior to the date of disposition.
The trust preferred securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest, or OID, with
respect to the underlying junior subordinated debentures. A Holder who disposes
of its trust preferred securities between record dates for payments of
distributions thereon will be required to include in its taxable income for
United States federal income tax purposes (1) any portion of the amount realized
that is attributable to the accrued but unpaid interest to the extent not
previously included in income or (2) any amount of OID, in either case, that has
accrued on its pro rata share of the underlying junior subordinated debentures
during the taxable year of sale through the date of disposition. Any income
inclusion will increase a Holder's adjusted tax basis in the trust preferred
securities of which it disposes. To the extent that the amount realized in the
sale is less than a Holder's adjusted tax basis, a Holder will recognize a
capital loss. Subject to certain limited exceptions applicable to non-corporate
taxpayers, capital losses cannot be applied to offset ordinary income for United
States federal income tax purposes.
EFFECT OF CHANGES IN TAX LAWS
In recent years there have been several legislative proposals which, if
enacted, could have adversely affected the ability of Blue Valley to deduct
interest paid on the junior subordinated debentures. These proposals, however,
were not enacted. Nevertheless, there can be no assurance that other legislation
enacted in the future after the date hereof will not otherwise adversely affect
the ability of Blue Valley to deduct the interest payable on the junior
subordinated debentures. Legislation affecting the deductibility of such
interest may cause a tax event. Such a tax event would give us the right to
redeem the junior subordinated debentures. See "Description of Junior
Subordinated Debentures - Redemption" and "Description of Trust Preferred
Securities - Redemption - Mandatory and Optional Rights of Blue Valley - Tax
Event
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Redemption, Investment Company Event Redemption, Capital Event Redemption or
Distribution of Junior Subordinated Debentures."
A petition was filed during 1998 in the United States Tax Court as a
result of a challenge by the IRS of a taxpayer's treatment as indebtedness of a
security issued with characteristics similar to the junior subordinated
debentures. The IRS ultimately agreed to dismiss the related adjustments.
Nevertheless, the IRS could assert similar adjustments against other taxpayers.
If adjustments were proposed and the issue litigated resulting in the IRS's
position being sustained, a determination would constitute a tax event resulting
in early redemption of the trust preferred securities. See "Sales of Trust
Preferred Securities" above for the United States federal income tax
consequences of a redemption to a Holder.
NON-UNITED STATES HOLDERS
The following discussion applies to you if you are not a "Holder" as
described above.
Payments of interest, including OID, to a non-United States Holder on a
trust preferred security will generally not be subject to withholding of income
tax, provided that:
o the non-United States Holder did not, directly or indirectly,
actually or constructively, own 10% or more of the total combined
voting power of all classes of Blue Valley stock entitled to vote;
o the non-United States Holder is not a controlled foreign
corporation that is related to Blue Valley through stock
ownership;
o the interest does not constitute contingent interest as described
in Section 871(h)(4) of the Code;
o the non-United States Holder is not a bank receiving interest
described in Section 881(c)(3)(A) of the Code; and
o either (1) the non-United States Holder certifies to BVBC Trust
or its agent under penalties of perjury, that the non-United
States Holder is not a United States Holder and provides its name
and address, or (2) a securities clearing organization, bank or
other financial institution that holds customers' securities in
the ordinary course of its trade or business (a "Financial
Institution"), and holds the trust preferred security in that
capacity, certifies to BVBC Trust or its agent, under penalties
of perjury and in accordance with applicable Treasury
regulations, that it requires and has received the required
statement from the non-United States Holder or another Financial
Institution between it and the holder in the chain of ownership,
and furnishes BVBC Trust or its agent with a copy.
Recently finalized Treasury regulations, that are generally effective
with respect to payments made after December 31, 2000, would provide alternative
methods for satisfying the certification requirements described above.
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As discussed above, it is possible that changes in the law affecting the
income tax consequences of the junior subordinated debentures could adversely
affect Blue Valley's ability to deduct interest payable on the junior
subordinated debentures. These changes could also cause the junior subordinated
debentures to be classified as Blue Valley's equity, rather than our debt, for
United States federal income tax purposes. This might cause the income derived
from the junior subordinated debentures to be characterized as dividends,
generally subject to a 30%, or lower rate under an applicable income tax treaty,
income tax, on a withholding basis, when paid to you if you are not a United
States Holder, rather than as portfolio interest which, as discussed above,
generally is exempt from income tax in the hands of a foreign corporation or
nonresident alien who is not a United States Holder.
If a non-United States Holder holds the trust preferred securities in
connection with the active conduct of a United States trade or business, the
non-United States Holder will be subject to income tax on all income and gains
recognized with respect to its proportionate share of the junior subordinated
debentures.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the trust preferred securities held by a
noncorporate Holder within the United States. In addition, payments made on, and
payments of the proceeds from the sale of, the trust preferred securities to or
through the United States office of a broker are subject to information
reporting unless the Holder certifies as to its non-United States Holder status
or otherwise establish as an exemption from information reporting and backup
withholding. Taxable income on the trust preferred securities for a calendar
year should be reported to United States Holders on the appropriate forms by the
following January 31st.
Payments made on, and proceeds from the sale of, the trust preferred
securities may be subject to a "backup" withholding tax of 31% unless a Holder
complies with various identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against a Holder's income tax liability, or
refunded, provided the required information is provided to the IRS.
In addition, a non-United States Holder will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a trust preferred security.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO PARTICULAR PERSONS OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE TRUST PREFERRED SECURITIES. POTENTIAL PURCHASERS OF THE TRUST PREFERRED
SECURITIES ARE URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR
PARTICULAR TAX CONSEQUENCES.
ERISA CONSIDERATIONS
We and certain of our affiliates may each be considered to be a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a "disqualified person" within the meaning of
Section 4975 of the Code with respect to many
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employee benefit plans that are subject to ERISA. The purchase of the trust
preferred securities by an employee benefit plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975(e)(1) of the Code and with respect to which we, or
any affiliate of ours, is a service provider, or otherwise a party in interest
or a disqualified person, may constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code, unless the trust preferred securities
are acquired pursuant to and in accordance with an applicable exemption. Any
pension or other employee benefit plan proposing to acquire any trust preferred
securities should consult with its counsel.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement between
us, BVBC Trust, and the underwriter, the underwriter has agreed to purchase from
BVBC Trust, and BVBC Trust has agreed to sell to the underwriter, 1,250,000
trust preferred securities.
The obligations of the underwriter to purchase the trust preferred
securities are subject to approval of certain legal matters by its counsel and
to various other conditions. Under the terms and conditions of the underwriting
agreement, the underwriter is committed to accept and pay for all of the trust
preferred securities, other than trust preferred securities covered by the
over-allotment option described below, if any are taken.
The underwriter proposes to offer the trust preferred securities directly
to the public at the public offering price set forth on the cover page of this
prospectus, and to certain securities dealers at this price, less a concession
not in excess of $ per preferred security. The underwriter may allow, and the
selected dealers may reallow, a discount not in excess of $ per preferred
security to certain brokers and dealers. After the trust preferred securities
are released for sale to the public, the offering price and other selling terms
may from time to time be changed by the underwriter.
BVBC Trust has granted to the underwriter an option, exercisable within 30
days after the date of this prospectus, to purchase up to 187,500 additional
trust preferred securities at the same price per trust preferred security to be
paid by the underwriter for the other trust preferred securities being offered
hereby. The underwriter may exercise the option only for the purpose of covering
over-allotments, if any, made in connection with the distribution of the trust
preferred securities being offered hereby.
If the underwriter exercises its option to purchase additional trust
preferred securities, BVBC Trust will issue and sell to us additional common
securities and we will issue and sell to BVBC Trust junior subordinated
debentures in an aggregate principal amount equal to the total aggregate
liquidation amount of the additional trust preferred securities being purchased
under the option and the additional common securities sold to us.
The following table summarizes the price and proceeds on a per security
and aggregate basis. The proceeds to be received by BVBC Trust as shown in the
below do not reflect estimated expenses in connection with this offering of the
trust preferred securities of $800,000 payable by us.
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PER TRUST
PREFERRED SECURITY TOTAL
------------------ -----
Public Offering Price................. $8.00 $10,000,000
Proceeds to BVBC Trust................ $8.00 $10,000,000
In view of that fact that the proceeds of the sale of the trust preferred
securities will be used by BVBC Trust to purchase the junior subordinated
debentures from us, we have agreed to pay the underwriter $ per preferred
security, or a total of $ , as compensation for arranging the investment in the
junior subordinated debentures. Should the underwriter exercise the
over-allotment option, an aggregate of $ will be paid to the underwriter for
arranging the investment in the junior subordinated debentures.
During a period of 30 days from the date of this prospectus, neither BVBC
Trust nor we will, subject to certain exceptions, without the prior written
consent of the underwriter, directly or indirectly, sell, offer to sell, grant
any option for sale of, or otherwise dispose of, any trust preferred securities,
any security convertible into or exchangeable for trust preferred securities or
junior subordinated debentures or any debt securities substantially similar to
the junior subordinated debentures or equity securities substantially similar to
the trust preferred securities, except for junior subordinated debentures and
the trust preferred securities being offered hereby.
Because the National Association of Securities Dealers may view the trust
preferred securities as interests in a direct participation program, the offer
and sale of the trust preferred securities is being made in compliance with the
provisions of Rule 2810 under the NASD Conduct Rules.
Although we have applied to have the trust preferred securities listed on
the American Stock Exchange under the trading symbol " ", we cannot make any
assurances as to the liquidity of the trust preferred securities or that an
active and liquid market will develop or, if developed, that the market will
continue. The offering price and distribution rate for the trust preferred
securities have been determined by negotiations among our representatives and
the underwriter, and the offering price of the trust preferred securities may
not be indicative of their market price following this offering.
Blue Valley and the underwriter have agreed to indemnify, or to contribute
to payments made by, each other against certain civil liabilities, including
certain civil liabilities arising under the Securities Act.
This offering of the trust preferred securities is made for delivery when,
as and if accepted by the underwriter and subject to prior sale and to
withdrawal, cancellation or modification of this offering without notice. The
underwriter reserves the right to reject any order for the purchase of the trust
preferred securities. The underwriter has advised us that it does not intend to
confirm any sales to any accounts over which it exercises discretionary
authority.
In connection with this offering, the underwriter may engage in
transactions that are intended to stabilize, maintain or otherwise affect the
price of the trust preferred securities during and after the offering, such as
the following:
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o the underwriter may over-allot or otherwise create a short position
in the trust preferred securities for their own account by selling
more trust preferred securities than have been sold to them;
o the underwriter may elect to cover any short position by
purchasing trust preferred securities in the open market or by
exercising the over-allotment option;
o the underwriter may stabilize or maintain the price of the trust
preferred securities by bidding; and
o the underwriter may impose penalty bids, under which selling
concessions allowed to syndicate members or broker-dealers
participating in this offering are reclaimed if trust preferred
securities previously distributed in this offering are repurchased
in connection with stabilization transactions or otherwise.
The effect of these transactions may be to stabilize or maintain the
market price at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the trust
preferred securities to the extent that it discourages resales. No
representation is made as to the magnitude or effect of any of these
stabilization or other transactions. These transactions may be effected on the
American Stock Exchange or otherwise and, if commenced, may be discontinued at
any time.
The underwriter has advised us that it does not intend to confirm any
sales to any accounts over which it exercises discretionary authority.
AVAILABLE INFORMATION
We have filed a registration statement on Form S-1 under the Securities
Act with the SEC in connection with the offering described in this prospectus.
This prospectus omits certain information, exhibits and undertakings contained
in the registration statement we filed with the SEC. You may read and copy, upon
payment of a fee set by the SEC, any document that we file with the SEC at its
public reference rooms in Washington, D.C., 450 Fifth Street, N.W., 20549, New
York, New York, Seven World Trade Center, 13th Floor, Suite 1300, 10048, and
Chicago, Illinois, Citicorp Center, 500 West Madison Street, 14th Floor, Suite
1400, 60661. You may also call the SEC at 1-800-432-0330 for more information on
the public reference rooms. Our filings are also available to the public on the
Internet, through the SEC's EDGAR database. You may access the EDGAR database at
the SEC's web site at http://www.sec.gov.
Separate financial statements of BVBC Trust are not included in this
prospectus. We do not believe separate financial statements would be helpful
because:
o BVBC Trust is a subsidiary of Blue Valley, which will file
consolidated financial information under the Exchange Act.
o BVBC Trust does not have any independent operations other than
issuing the preferred and common securities and purchasing the
junior subordinated debentures of Blue Valley.
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o BVBC Trust's only material assets will be the junior subordinated
debentures of Blue Valley when issued.
o The combined obligations of Blue Valley under the junior
subordinated debentures, the guarantee, the trust agreement and
the indenture have the effect of providing a full and
unconditional guarantee of BVBC Trust's obligations under its
trust preferred securities. See "Description of Junior
Subordinated Securities," "Description of the Trust Preferred
Securities," "Description of Trust Preferred Securities
Guarantee" and "Relationship Among the Trust Preferred
Securities, the Junior Subordinated Debentures and the Trust
Preferred Securities Guarantee."
LEGAL MATTERS
The validity of the trust preferred securities and matters relating to
United States federal income tax consequences of this offering, will be passed
upon for us and for BVBC Trust by Blackwell Sanders Peper Martin LLP, Kansas
City, Missouri. Morris, Nichols, Arsht & Tunnell, Delaware, will pass upon
certain matters relating to Delaware law for BVBC Trust. Certain legal matters
will be passed upon for the underwriter by Lewis, Rice & Fingersh, L.C., St.
Louis, Missouri.
EXPERTS
The consolidated financial statements of Blue Valley for each of the years
in the three-year period ended December 31, 1999, included in this prospectus,
have been audited by Baird, Kurtz & Dobson, independent accountants, as stated
in their report appearing herein, and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
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INDEX TO FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF BLUE VALLEY BAN CORP
Independent Accountants' Report.............................................F-2
Consolidated Balance Sheets - December 31, 1999 and 1998....................F-3
Consolidated Statements of Income - years ended December 31, 1999,
1998 and 1997......................................................F-5
Consolidated Statements of Changes in Stockholders' Equity - years ended
December 31, 1999, 1998 and 1997...................................F-6
Consolidated Statements of Cash Flows - years ended December 31, 1999,
1998 and 1997......................................................F-7
Notes to Consolidated Financial Statements - December 31, 1999, 1998
and 1997...........................................................F-8
F-1
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INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Blue Valley Ban Corp
Overland Park, Kansas
We have audited the accompanying consolidated balance sheets of BLUE VALLEY
BAN CORP as of December 31, 1999 and 1998, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1999. These 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 BLUE VALLEY
BAN CORP as of December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles.
/s/ Baird, Kurtz & Dobson
March 1, 2000
Kansas City, Missouri
F-2
<PAGE>
BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(dollars in thousands, except share data)
ASSETS
1999 1998
--------- ----------
Cash and due from banks $ 15,460 $ 8,299
Federal funds sold 8,000 20,700
--------- ---------
Cash and cash equivalents 23,460 28,999
Available-for-sale securities 48,646 53,427
Mortgage loans held for sale 952 1,954
Loans 250,410 161,444
Less allowance for loan losses 3,817 2,341
--------- ---------
Net loans 246,593 159,103
Premises and equipment 5,574 5,422
Foreclosed assets held for sale, net 186 46
Interest receivable 2,039 1,501
Deferred income taxes 1,841 471
Prepaid expenses and other assets 840 584
Federal Home Loan Bank stock 1,034 617
Excess of cost over fair value of net assets acquired,
at amortized cost 1,448 1,600
--------- ---------
Total Assets $ 332,613 $ 253,724
========= =========
[FN]
See Notes to Consolidated Financial Statements
</FN>
F-3
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(dollars in thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
--------- ---------
<S> <C> <C>
LIABILITIES
Demand deposits $ 36,950 $ 33,752
Savings, NOW and money market deposits 126,398 63,215
Time deposits 104,797 112,857
--------- ---------
Total Deposits 268,145 209,824
Securities sold under agreements to repurchase 11,260 8,817
Short-term debt 17,450 3,575
Long-term debt 11,908 12,038
Advances from borrowers for taxes and insurance 2,559 712
Accrued interest and other liabilities 2,422 1,742
--------- ---------
Total Liabilities 313,744 236,708
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock
Common Stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
1999 - 2,137,720 shares; 1998 - 2,130,396 shares 2,138 2,130
Additional paid-in capital 5,230 5,159
Retained earnings 12,458 9,375
Accumulated other comprehensive income
Unrealized appreciation (depreciation) on available-for-sale
securities, net of income taxes of $(638) in
1999 and $235 in 1998 (957) 352
---------- ---------
Total Stockholders' Equity 18,869 17,016
--------- ---------
Total Liabilities and Stockholders' Equity $ 332,613 $ 253,724
========= =========
</TABLE>
[FN]
See Notes to Consolidated Financial Statements
</FN>
F-4
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(dollars in thousands, except per share data)
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 20,422 $ 14,608 $ 12,000
Federal funds sold 431 396 276
Available-for-sale securities 2,755 2,814 2,275
----------- ----------- -----------
Total Interest Income 23,608 17,818 14,551
----------- ----------- -----------
INTEREST EXPENSE
Deposits 9,832 8,232 6,634
Securities sold under repurchase agreements 287 438 167
Long-term debt and advances 1,085 535 457
----------- ----------- -----------
Total Interest Expense 11,204 9,205 7,258
----------- ----------- -----------
NET INTEREST INCOME 12,404 8,613 7,293
PROVISION FOR LOAN LOSSES 2,144 1,061 660
----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,260 7,552 6,633
----------- ----------- -----------
NONINTEREST INCOME
Service fees 2,835 2,084 1,045
Other income 189 562 409
----------- ----------- -----------
Total Noninterest Income 3,024 2,646 1,454
----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 4,578 3,312 2,304
Net occupancy expense 894 748 663
Other operating expense 3,208 1,936 1,689
----------- ----------- -----------
Total Noninterest Expense 8,680 5,996 4,656
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 4,604 4,202 3,431
PROVISION FOR INCOME TAXES 1,521 1,386 1,145
----------- ----------- -----------
NET INCOME $ 3,083 $ 2,816 $ 2,286
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 1.45 $ 1.36 $ 1.24
=========== =========== ===========
DILUTED EARNINGS PER SHARE $ 1.42 $ 1.35 $ 1.22
=========== =========== ===========
</TABLE>
[FN]
See Notes to Consolidated Financial Statements
</FN>
F-5
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999,
1998 AND 1997 (dollars in
thousands, except share data)
Accumulated
Other
Comprehensive
Income
-------------
Unrealized
Appreciation
Additional (Depreciation) on
Comprehensive Common Paid-In Retained Available-for-Sale
Income Stock Capital Earnings Securities, Net Total
------------- ------ ------------- --------- --------------------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 $ 1,841 $ 4,026 $ 4,273 $ (40) $10,100
Issuance of 186,600 shares of
common stock 187 591 778
Net income $ 2,286 2,286 2,286
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income taxes of $200 300 300 300
------- -------- ------------ ------- ------- -------
$ 2,586
=======
BALANCE, DECEMBER 31, 1997 2,028 4,617 6,559 260 13,464
Issuance of 102,336 shares of
common stock 102 542 644
Net income $ 2,816 2,816 2,816
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income taxes of $61 92 92 92
------- -------- -------- ------- ------- -------
$ 2,908
=======
BALANCE, DECEMBER 31, 1998 2,130 5,159 9,375 352 17,016
Issuance of 7,324 shares of
common stock 8 71 79
Net income $ 3,083 3,083 3,083
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income taxes of $(872) (1,309) (1,309) (1,309)
-------- -------- ------- ------- ------- --------
$ 1,774
========
BALANCE, DECEMBER 31, 1999 $ 2,138 $5,230 $ 12,458 $ (957) $18,869
======== ====== ======== ======== =======
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
RECLASSIFICATION DISCLOSURE:
Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes
of $(871), $106 and $203 for 1999, 1998 and 1997, respectively $ (1,307) $ 159 $ 305
Less: reclassification adjustments for appreciation (depreciation) included in net income, net of
income taxes of $1, $45 and $3, for 1999, 1998 and 1997, respectively (2) (67) (5)
--------- --------- ---------
Change in unrealized appreciation (depreciation) on available-for-sale securities, net of
income taxes of $(872), $61 and $200 for 1999, 1998 and 1997, respectively $ (1,309) $ 92 $ 300
========= ======== =========
</TABLE>
[FN]
See Notes to Consolidated Financial Statements
</FN>
F-6
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(dollars in thousands)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,083 $ 2,816 $ 2,286
Items not requiring (providing) cash:
Depreciation and amortization 533 445 388
Amortization (accretion) of premiums and discounts
on securities 50 27
Provision for loan losses 2,144 1,061 660
Deferred income taxes (497) (298) (103)
Provision for losses on foreclosed assets 116
Gain on sales of available-for-sale securities (3) (112) (8)
(Gain) loss on sale of foreclosed assets (78) 45
Changes in:
Accrued interest receivable (538) (141) (204)
Mortgage loans held for sale 1,002 (1,063) 610
Prepaid expenses and other assets (259) 38 212
Accrued interest payable and other liabilities 680 730 283
-------- -------- --------
Net cash provided by operating activities 6,195 3,398 4,312
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net originations of loans (92,460) (38,869) (27,802)
Proceeds from sales of loan participations 2,231 4,394 254
Purchase of premises and equipment (530) (1,203) (286)
Proceeds from the sale of foreclosed assets 455 827 329
Proceeds from sales of available-for-sale securities 2,003 11,115 3,865
Proceeds from maturities of available-for-sale securities 10,105 7,270 4,422
Purchases of available-for-sale securities (9,973) (31,433) (11,947)
--------- --------- ---------
Net cash used in investing activities (88,169) (47,899) (31,165)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, money market,
NOW and savings accounts 66,381 18,861 9,665
Net increase (decrease) in certificates of deposit (8,060) 20,171 21,199
Repayments of long-term debt (130) (120) (112)
Proceeds from long-term debt 10,000
Net proceeds (payments) on short-term debt 13,875 (463) 1,150
Proceeds from sale of common stock 79 644 778
Net increase in other borrowings 2,443 704 2,382
Net increase (decrease) in advances from borrowers
for taxes and insurance 1,847 (1,277) 973
-------- --------- --------
Net cash provided by financing activities 76,435 48,520 36,035
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,539) 4,019 9,182
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 28,999 24,980 15,798
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 23,460 $ 28,999 $ 24,980
======== ======== ========
</TABLE>
[FN]
See Notes to Consolidated Financial Statements
</FN>
F-7
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Company is a holding company for Bank of Blue Valley (the Bank) and Blue
Valley Building Corporation through 100% ownership of each.
The Bank is primarily engaged in providing a full range of banking and
mortgage services to individual and corporate customers in southern Johnson
County. The Bank is subject to competition from other financial institutions.
The Bank also is subject to the regulation of certain federal and state agencies
and undergoes periodic examinations by those regulatory authorities.
The Blue Valley Building Corporation is primarily engaged in leasing real
property at its only facility in Overland Park, Kansas.
OPERATING SEGMENT
The Company provides community banking services through its subsidiary bank,
including such products and services as loans; time deposits, checking and
savings accounts; trust services; and investment services. These activities are
reported as one operating segment.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses and the valuation
of real estate acquired in connection with foreclosures or in satisfaction of
loans. In connection with the determination of the allowance for loan losses and
the valuation of foreclosed assets held for sale, management obtains independent
appraisals for significant properties.
Management believes that the allowances for losses on loans and the
valuation of foreclosed assets held for sale are adequate. While management uses
available information to recognize losses on loans and foreclosed assets held
for sale, changes in economic conditions may necessitate revision of these
estimates in future years. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Company's
allowances for losses on loans and valuation of foreclosed assets held for sale.
Such agencies may require the Company to recognize additional losses based on
their judgements of information available to them at the time of their
examination.
F-8
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Blue Valley
Ban Corp and its 100% owned subsidiaries, Bank of Blue Valley and Blue Valley
Building Corporation. Significant intercompany accounts and transactions have
been eliminated in consolidation.
CASH EQUIVALENTS
The Company considers all liquid investments with original maturities of
three months or less to be cash equivalents. At December 31, 1999 and 1998, cash
equivalents consisted of federal funds sold.
INVESTMENT IN DEBT SECURITIES
Available-for-sale securities, which include any security for which the
Company has no immediate plan to sell, but which may be sold in the future, are
carried at fair value. Realized gains and losses, based on specifically
identified amortized cost of the specific security, are included in other
income. Unrealized gains and losses are recorded, net of related income tax
effects, in stockholders' equity. Premiums and discounts are amortized and
accreted, respectively, to interest income using a method which approximates the
level-yield method over the period to maturity.
Interest on investments in debt securities is included in income when
earned.
OTHER INVESTMENTS
The Company, as a member of the Federal Home Loan Bank (FHLB) system, is
required to maintain an investment in capital stock of the FHLB. No ready market
exists for the FHLB stock, and it has no quoted market value. Such stock is
recorded at cost and reported as other investments in the accompanying
consolidated balance sheets.
MORTGAGE LOANS HELD FOR SALE
Mortgage loans held for sale are carried at the lower of cost or fair value,
determined using an aggregate basis. Write-downs to fair value are recognized as
a charge to earnings at the time the decline in value occurs. Forward
commitments to sell mortgage loans are acquired to reduce market risk on
mortgage loans in the process of origination and mortgage loans held for sale.
Amounts paid to investors to obtain forward commitments are deferred until such
time as the related loans are sold. The fair values of the forward commitments
are not recognized in the financial statements. Gains and losses resulting from
sales of mortgage loans are recognized when the respective loans are sold to
investors. Gains and losses are determined by the difference between the selling
price and the carrying amount of the loans sold, net of discounts collected or
paid, commitment fees paid and considering a normal servicing rate. Fees
received from borrowers to guarantee the funding of mortgage loans held for sale
are recognized as income or expense when the loans are sold or when it becomes
evident that the commitment will not be used.
F-9
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
LOANS
Loans that management has the intent and ability to hold for the foreseeable
future, or until maturity or pay-offs, 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 and unamortized premiums or discounts
on purchased loans.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is increased by provisions charged to expense
and reduced by loans charged off, net of recoveries. The allowance is maintained
at a level considered adequate to provide for potential loan losses, based on
management's evaluation of the loan portfolio, as well as on prevailing and
anticipated economic conditions and historical losses by loan category. General
allowances have been established, based upon the aforementioned factors, and
allocated to the individual loan categories. Allowances are accrued on specific
loans evaluated for impairment for which the basis of each loan, including
accrued interest, exceeds the discounted amount of expected future collections
of interest and principal or, alternatively, the fair value of loan collateral.
A loan is considered impaired when it is probable that the Company will not
receive all amounts due according to the contractual terms of the loan. This
includes loans that are delinquent 90 days or more (nonaccrual loans) and
certain other loans identified by management. Accrual of interest is
discontinued, and interest accrued and unpaid is removed, at the time such
amounts are delinquent 90 days. Interest is recognized for nonaccrual loans only
upon receipt, and only after all principal amounts are current according to the
terms of the contract.
PREMISES AND EQUIPMENT
Depreciable assets are stated at cost less accumulated depreciation.
Depreciation is charged to expense using the straight-line method over the
estimated useful lives of the assets.
FORECLOSED ASSETS HELD FOR SALE
Assets acquired by foreclosure or in settlement of debt and held for sale
are valued at estimated fair value as of the date of foreclosure, and a related
valuation allowance is provided for estimated costs to sell the assets.
Management evaluates the value of foreclosed assets held for sale periodically
and increases the valuation allowance for any subsequent declines in fair value.
Increases in the valuation allowance and gains/losses on sales of foreclosed
assets are included in non-interest expenses, net.
F-10
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED
Unamortized costs in excess of the fair value of underlying net tangible
assets acquired aggregated $1,448,000 and $1,600,000 (originally $2,286,000) at
December 31, 1999 and 1998, respectively, and are being amortized over a 15-year
period using the straight-line method. Amortization expense related to purchased
subsidiaries and acquired deposits was $152,000 for each of the years 1999, 1998
and 1997.
FEE INCOME
Loan origination fees, net of direct origination costs, are recognized as
income using the level-yield method over the term of the loans.
RECLASSIFICATION
Certain reclassifications have been made to the 1998 financial statements to
conform to the 1999 financial statement presentation. These reclassifications
had no effect on net income.
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effect of
differences between the financial statement and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax assets
if it is more likely than not that a deferred tax asset will not be realized.
EARNINGS PER SHARE
Basic earnings per share is computed based on the weighted average number of
shares outstanding during each year. Diluted earnings per share is computed
using the weighted average common shares and all potential dilutive common
shares outstanding during the period.
The computation of per share earnings is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(in thousands, except share and per share data)
<S> <C> <C> <C>
Net income $ 3,083 $ 2,816 $ 2,286
--------- --------- ---------
Average common shares outstanding 2,131,372 2,065,400 1,843,228
Average common share stock options outstanding 34,636 18,688 24,616
--------- --------- ---------
Average diluted common shares 2,166,008 2,084,088 1,867,844
--------- --------- ---------
Basic earnings per share $ 1.45 $ 1.36 $ 1.24
========= ======= ========
Diluted earnings per share $ 1.42 $ 1.35 $ 1.22
======== ====== =======
</TABLE>
F-11
<PAGE>
NOTE 2: INVESTMENT IN DEBT SECURITIES
The amortized cost and approximate fair value of available-for-sale
securities at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Approximate
Cost Gains Losses Fair Value
-------------- ------------ -------------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury $10,012 $20 $ (83) $ 9,949
U.S. Government agencies 25,591 (1,365) 24,226
State and political subdivisions 14,638 33 (200) 14,471
------- --- -------- -------
$50,241 $ 53 $(1,648) $48,646
======= ===== ======== =======
Maturities of available-for-sale debt instruments at December 31, 1999 are
as follows:
Amortized Approximate
Cost Fair Value
---- ----------
(dollars in thousands)
<S> <C> <C>
In one year or less $ 3,262 $ 3,255
After one through five years 15,239 15,025
After five through ten years 31,740 30,366
After ten years -------- --------
$ 50,241 $ 48,646
======== ========
The amortized cost and approximate fair value of available-for-sale
securities at December 31, 1998 are as follows:
Gross Gross
Amortized Unrealized Unrealized Approximate
Cost Gains Losses Fair Value
------------ ----------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury $12,024 $ 198 $ (10) $12,212
U.S. Government agencies 26,660 142 (155) 26,647
State and political subdivisions 14,156 416 (4) 14,568
------- ----- ------- -------
$52,840 $ 756 $ (169) $53,427
======= ===== ======= =======
</TABLE>
F-12
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 2: INVESTMENT IN DEBT SECURITIES (CONTINUED)
The book value of securities pledged as collateral to secure public deposits
amounted to $22,177,000 at December 31, 1999 and $28,231,000 at December 31,
1998. The approximate fair value of pledged securities amounted to $21,597,000
at December 31, 1999 and $28,568,000 at December 31, 1998.
The Company entered into sales of securities under agreements to repurchase.
The amounts deposited under these agreements represent short-term borrowings and
are reflected as a liability in the consolidated balance sheets. The securities
underlying the agreements are book-entry securities. During the period,
securities held in safekeeping were pledged to the depositors under a written
custodial agreement that explicitly recognizes the depositors' interest in the
securities. At December 31, 1999, or at any month end during the period, no
material amount of agreements to repurchase securities sold was outstanding with
any individual dealer. Securities sold under agreements to repurchase averaged
$9,500,000 and $7,042,000 during 1999 and 1998, and the maximum amounts
outstanding at any month-end were $13,056,000 and $8,886,000, respectively. The
book value of securities pledged to secure agreements to repurchase amounted to
$15,110,000, and $10,092,000 at December 31, 1999 and 1998, respectively. The
approximate fair value of these securities was $14,235,000 at December 31, 1999
and $10,012,000 at December 31, 1998.
Gross gains of $3,000, $112,000 and $8,000 were realized at December 31,
1999, 1998 and 1997, respectively, resulting from sales of available-for-sale
securities.
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
Categories of loans at December 31, 1999 and 1998 include the following:
1999 1998
---- ----
(dollars in thousands)
Commercial $ 64,552 $ 52,310
Commercial real estate 26,617 15,457
Construction 41,336 25,834
Residential real estate 33,251 28,367
Leases 30,174 13,765
Personal 44,747 19,751
Home equity 9,820 6,170
--------- ---------
Total loans 250,497 161,654
Less: Unearned discount and fees 87 210
Allowance for loan losses 3,817 2,341
--------- ---------
Net loans $ 246,593 $ 159,103
========= =========
F-13
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Activity in the allowance for loan losses was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(dollars in thousands)
<S> <C> <C> <C>
Balance, beginning of year $ 2,341 $ 1,618 $ 1,275
Provision charged to expense 2,144 1,061 660
Losses charged off, net of recoveries
of $104,000, $48,000 and $142,000
for 1999, 1998 and 1997, respectively (668) (338) (317)
-------- -------- --------
Balance, end of year $ 3,817 $ 2,341 $ 1,618
======= ======= =======
</TABLE>
Impaired loans totaled $5,153,000 and $5,237,000 at December 31, 1999 and
1998, respectively, with related allowances for loan losses of $825,000 and
$747,000, respectively.
Interest of $713,000 and $600,000 was recognized on average impaired loans
of $4,092,000 and $3,496,000 for 1999 and 1998, respectively. Interest of
$140,000 and $85,000 was recognized on impaired loans on a cash basis during
1999 and 1998, respectively.
NOTE 4: PREMISES AND EQUIPMENT
Major classifications of these assets are as follows:
1999 1998
---- ----
(dollars in thousands)
Land $ 1,477 $ 1,477
Building and improvements 3,567 3,405
Furniture and equipment 1,651 1,282
Land improvements, net 230 230
------- -------
6,925 6,394
Less accumulated depreciation 1,351 972
------- -------
Total premises and equipment $ 5,574 $ 5,422
======= =======
F-14
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 5: INTEREST-BEARING DEPOSITS
Interest-bearing deposits in denominations of $100,000 or more were
$34,957,000 on December 31, 1999 and $35,846,000 on December 31, 1998.
At December 31, 1999, the scheduled maturities of certificates of deposit
are as follows:
(dollars in thousands)
2000 $ 66,492
2001 16,192
2002 10,851
2003 7,024
2004 and thereafter 4,238
---------
$ 104,797
=========
NOTE 6: OPERATING LEASES
Blue Valley Building Corp. leases office space to others under
noncancellable operating leases expiring in various years through 2004. Minimum
future rentals receivable under noncancellable operating leases at December 31,
1999 are as follows:
(dollars in thousands)
2000 $ 160
2001 132
2002 133
2003 138
2004 143
-------
Future minimum lease receivable $ 706
=======
NOTE 7: INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(dollars in thousands)
<S> <C> <C> <C>
Taxes currently payable $ 2,018 $ 1,684 $ 1,248
Deferred income taxes (497) (298) (103)
----------- ----------- -----------
$ 1,521 $ 1,386 $ 1,145
========== ========== ==========
</TABLE>
F-15
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 7: INCOME TAXES (CONTINUED)
A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is shown below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(dollars in thousands)
<S> <C> <C> <C>
Computed at the statutory
rate (34%) $1,565 $1,428 $1,167
Increase (decrease) resulting from:
Tax-exempt interest (190) (213) (140)
Stock options (22) (6) (60)
State income taxes 138 139 130
Other 30 38 48
------ ------ ------
Actual tax provision $1,521 $1,386 $1,145
====== ====== ======
</TABLE>
The tax effects of temporary differences related to deferred taxes shown on
the December 31, 1999 and 1998 consolidated balance sheets are as follows:
1999 1998
---- ----
Deferred tax assets: (dollars in thousands)
Allowance for loan losses $ 1,239 $ 739
Accrued compensated absences 50 37
Accumulated depreciation on available-for-
sale securities 638
--------- ------
1,927 776
--------- ------
Deferred tax liabilities:
Accumulated depreciation (41) (49)
Accumulated appreciation on available-for-
sale securities (235)
Other (45) (21)
--------- -------
(86) (305)
--------- -------
Net deferred tax asset $ 1,841 $ 471
========= ======
F-16
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 8: SHORT-TERM DEBT
Short-term debt at December 31, 1999 and 1998 consisted of the following
components:
1999 1998
---- ----
(dollars in thousands)
Note payable to bank (A) $ 7,450 $ 3,575
Line of credit (B) 10,000
----------- -----------
Total short-term debt $ 17,450 $ 3,575
=========== ===========
(A) Due on demand, but no later than July 2000; payable in quarterly
installments of $187,500 plus interest at prime less 1.0%; collateralized
by 258,000 shares of the Bank's capital stock.
(B) Line of credit with the Federal Home Loan Bank. Amount outstanding is a
two-week advance with principal and interest payable at maturity. The line
is collateralized by various assets including mortgage-backed loans and
securities, and U.S. Treasury and Agency securities. The interest rate is
adjusted daily and is tied to the Federal Funds rate. Availability is
determined quarterly; at December 31, 1999 an additional $396,000 was
available.
NOTE 9: LONG-TERM DEBT
Long-term debt at December 31, 1999 and 1998 consisted of the following
components:
1999 1998
---- ----
(dollars in thousands)
Note payable - other (A) $ 1,908 $ 2,038
Federal Home Loan Bank advances (B) 10,000 10,000
----------- -----------
Total long-term debt $ 11,908 $ 12,038
=========== ===========
(A) Due in August 2009; payable in monthly installments of $23,175 including
interest at 7.5%; collateralized by land, building and assignment of future
rents.
(B) Due in 2008; collateralized by various assets including mortgage-backed
loans and securities, and U.S. Treasury and Agency securities. The interest
rates on the advances range from 4.63% to 5.682%.
F-17
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 9: LONG-TERM DEBT (CONTINUED)
Aggregate annual maturities of long-term debt at December 31, 1999 are as
follows:
(dollars in thousands)
2000 $ 140
2001 151
2002 162
2003 175
2004 188
Thereafter 11,092
----------
$ 11,908
==========
NOTE 10: REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital
requirements administered by federal 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 financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance sheet items
as calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgements by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as of December 31,
1999, that the Company and the Bank meet all capital adequacy requirements to
which they are subject.
F-18
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 10: REGULATORY MATTERS (CONTINUED)
As of December 31, 1999, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the 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 the Bank's category.
The Company and the Bank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Under Prompt Corrective
Adequacy Purposes Action Provisions
------------------------ ----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ------- ----------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1999: (dollars in thousands)
Total Capital
(to Risk Weighted Assets)
Consolidated $21,749 8.07% $21,573 8.00% N/A
======= ===== ======= =====
Bank Only $27,396 10.31% $21,256 8.00% $26,570 10.00%
======= ====== ======= ===== ======= ======
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated $18,378 6.82% $10,786 4.00% N/A
======= ===== ======= =====
Bank Only $24,074 9.06% $10,628 4.00% $15,942 6.00%
======= ====== ======= ===== ======= ======
Tier 1 Capital
(to Average Assets)
Consolidated $18,378 5.80% $12,678 4.00% N/A
======= ===== ======= =====
Bank Only $24,074 7.69% $12,525 4.00% $15,656 5.00%
======= ====== ======= ===== ======= ======
AS OF DECEMBER 31, 1998:
Total Capital
(to Risk Weighted Assets)
Consolidated $17,319 9.62% $14,406 8.00% N/A
======= ===== ======= =====
Bank Only $19,012 10.79% $14,100 8.00% $17,625 10.00%
======= ====== ======= ===== ======= ======
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated $15,064 8.37% $ 7,203 4.00% N/A
======= ===== ======= =====
Bank Only $16,809 9.54% $ 7,050 4.00% $10,575 6.00%
======= ====== ======= ===== ======= ======
Tier 1 Capital
(to Average Assets)
Consolidated $15,064 6.13% $ 9,837 4.00% N/A
======= ===== ======= =====
Bank Only $16,809 6.94% $ 9,684 4.00% $12,104 5.00%
======= ====== ======= ===== ======= ======
</TABLE>
The Bank is subject to certain restrictions on the amounts of dividends that
it may declare without prior regulatory approval. At December 31, 1999,
approximately $6,140,000 of retained earnings were available for dividend
declaration without prior regulatory approval.
F-19
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 11: TRANSACTIONS WITH RELATED PARTIES
At December 31, 1999 and 1998, the Company had loans outstanding to
executive officers, directors and to companies in which the Banks' executive
officers or directors were principal owners, in the amounts of $1,384,000 and
$1,713,000, respectively. Related party transactions for 1999 were as follows:
(dollars in thousands)
Balance, beginning of year $ 1,713
New loans 202
Repayments (531)
--------
Balance, end of year $ 1,384
========
In management's opinion, such loans and other extensions of credit and
deposits were made in the ordinary course of business and were made on
substantially the same terms (including interest rates and collateral) as those
prevailing at the time for comparable transactions with other persons. Further,
in management's opinion, these loans did not involve more than the normal risk
of collectibility or present other unfavorable features.
NOTE 12: PROFIT SHARING PLAN
The Company's profit sharing plan covers substantially all employees.
Contributions to the plan are determined annually by the Board of Directors, and
participant interests are vested over a period from two to six years of service.
Employer contributions charged to expense for 1999, 1998 and 1997 were $216,000,
$152,000 and $132,000, respectively.
NOTE 13: STOCK OPTIONS
The Company has a fixed option plan under which the Company may grant
options which vest two years from the date of grant to its employees for shares
of common stock. At December 31, 1999, the Company had 215,284 options available
to be granted (options granted prior to 1998 were subject to an earlier plan
with similar terms). The exercise price of each option is intended to equal the
fair value of the Company's stock on the date of grant, and maximum terms are 10
years.
F-20
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 13: STOCK OPTIONS (CONTINUED)
A summary of the status of the plan at December 31, 1999, 1998 and 1997, and
changes during the years then ended, is presented below:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 101,340 $ 9.18 138,160 $ 6.17 264,260 $ 4.45
Granted 64,000 14.38 65,516 11.02 60,500 7.50
Exercised (7,324) 10.75 (102,336) 6.30 (186,600) 4.17
Forfeited (800)
--------- --------- --------- ------- --------- -------
Outstanding, end of year 157,216 $ 11.21 101,340 $ 9.18 138,160 $ 6.17
========= ======= ========== ======= ========== =======
Options exercisable, end of year 88,860 $ 11.19 68,984 $ 7.34 138,160 $ 6.17
========= ======= ========== ======= ========== =======
</TABLE>
The weighted-average remaining contractual life at December 31, 1999 was
8.86 years. Exercise prices ranged from $3.75 to $14.38.
The Company applies APB Opinion 25 and related Interpretations in accounting
for the plan and no compensation cost has been recognized. No fair value
disclosures with respect to stock options are presented because, in the opinion
of management, such values do not have a material effect.
NOTE 14: ADDITIONAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
NONCASH INVESTING AND FINANCING ACTIVITIES 1999 1998 1997
- ------------------------------------------ ---------- ---------- --------
(dollars in thousands)
<S> <C> <C> <C>
Loans transferred to foreclosed assets held for sale $ 595 $ 82 $ 647
ADDITIONAL CASH PAYMENT INFORMATION
- -----------------------------------
Interest paid 11,411 8,995 7,061
Income taxes paid 1,655 1,551 1,165
</TABLE>
F-21
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 15: OTHER INCOME/EXPENSE
OTHER INCOME/EXPENSE
Other operating expenses consist of the following:
1999 1998 1997
---- ---- ----
(dollars in thousands)
Advertising $ 475 $ 269 $ 119
Data processing 352 266 206
Professional fees 259 154 203
Other expense 2,122 1,247 1,161
-------- -------- --------
Total $ 3,208 $ 1,936 $ 1,689
======== ======== ========
Other income consists of the following:
1999 1998 1997
---- ---- ----
(dollars in thousands)
Rental income $ 143 $ 273 $ 352
Other income 46 289 57
-------- -------- --------
Total $ 189 $ 562 $ 409
======== ======== ========
NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
For these short-term instruments, the carrying amount approximates fair
value.
AVAILABLE-FOR-SALE SECURITIES
Fair values for available-for-sale securities, which also are the amounts
recognized in the consolidated balance sheets, equal quoted market prices, if
available. If quoted market prices are not available, fair values are estimated
based on quoted market prices of similar securities.
MORTGAGE LOANS HELD FOR SALE
For homogeneous categories of loans, such as mortgage loans held for sale,
fair value is estimated using the quoted market prices for securities backed by
similar loans, adjusted for differences in loan characteristics.
F-22
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
LOANS
The fair value of loans is estimated by discounting the future cash flows
using the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities. Loans with similar
characteristics were aggregated for purposes of the calculations. The carrying
amount of accrued interest 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.
ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE
The fair value of advances from borrowers for taxes and insurance is the
amount payable at the reporting date (i.e., their carrying amount).
SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE AND OTHER LIABILITIES
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
NOTES PAYABLE AND LONG-TERM DEBT
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt.
COMMITMENTS TO EXTEND CREDIT, LETTERS OF CREDIT AND LINES OF CREDIT
The fair value of commitments is estimated using the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. 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 and lines of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate or otherwise settle the
obligations with the counterparties at the reporting date.
F-23
<PAGE>
NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COMMITMENTS TO EXTEND CREDIT, LETTERS OF CREDIT AND LINES OF CREDIT (CONTINUED)
The following table presents estimated fair values of the Company's
financial instruments. The fair values of certain of these instruments were
calculated by discounting expected cash flows, which method involves significant
judgements by management and uncertainties. Fair value is the estimated amount
at which financial assets or liabilities could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
Because no market exists for certain of these financial instruments, and because
management does not intend to sell these financial instruments, the Company does
not know whether the fair values shown below represent values at which the
respective financial instrument could be sold individually or in the aggregate.
<TABLE>
<CAPTION>
1999 1998
------------------------------ ----------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Financial assets: (dollars in thousands)
Cash and cash equivalents $ 23,460 $ 23,460 $ 28,999 $ 28,999
Available-for-sale securities 48,646 48,646 53,427 53,427
Mortgage loans held for sale 952 952 1,954 1,954
Interest receivable 2,039 2,039 1,501 1,501
Loans, net of allowance for loan losses 246,593 246,090 159,103 159,160
Financial liabilities:
Deposits 268,145 262,913 209,824 211,219
Advances from borrowers for taxes
and insurance 2,559 2,559 712 712
Securities sold under agreements to
repurchase 11,260 11,260 8,817 8,817
Short-term debt 17,450 17,450 3,575 3,575
Long-term debt 11,908 11,348 12,038 12,002
Interest payable 870 870 976 976
Unrecognized financial instruments
(net of amortization):
Commitments to extend credit 0 0 0 0
Letters of credit 0 0 0 0
Lines of credit 0 0 0 0
Forward commitments 0 0 0 0
</TABLE>
F-24
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 17: COMMITMENTS AND CREDIT RISKS
The Company extends credit for commercial real estate mortgages, residential
mortgages, working capital financing and consumer loans to businesses and
residents principally in southern Johnson County. The Bank also purchases
indirect leases from various leasing companies throughout Kansas and Missouri.
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 a payment of a fee. Since a portion of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Each customer's creditworthiness is
evaluated on a case-by-case basis. The amount of collateral obtained, if deemed
necessary, is based on management's credit evaluation of the counterparty.
Collateral held varies, but may include accounts receivable, inventory,
property, plant and equipment, commercial real estate and residential real
estate.
At December 31, 1999 and 1998, the Company had outstanding commitments to
originate loans aggregating approximately $36,826,000 and $14,518,000,
respectively. The commitments extended over varying periods of time with the
majority being disbursed within a one-year period. Loan commitments at fixed
rates of interest amounted to $2,116,000 and $3,333,000 at December 31, 1999 and
1998, respectively, with the remainder at floating market rates.
Mortgage loans in the process of origination represent amounts which the
Company plans to fund within a normal period of 60 to 90 days and which are
intended for sale to investors in the secondary market. Forward commitments to
sell mortgage loans are obligations to deliver loans at a specified price on or
before a specified future date. The Bank acquires such commitments to reduce
market risk on mortgage loans in the process of origination and mortgage loans
held for sale.
Total mortgage loans in the process of origination amounted to $9,204,000
and $8,858,000 and mortgage loans held for sale amounted to $952,000 and
$1,954,000 at December 31, 1999 and 1998, respectively. Related forward
commitments to sell mortgage loans amounted to approximately $10,156,000 and
$10,812,000 at December 31, 1999 and 1998, respectively. Mortgage loans in the
process of origination represent commitments to originate loans at fixed rates.
Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers.
The Company had total outstanding letters of credit amounting to $4,267,000
and $2,318,000 at December 31, 1999 and 1998, respectively.
F-25
<PAGE>
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 17: COMMITMENTS AND CREDIT RISKS (CONTINUED)
Lines of credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Lines of credit
generally have fixed expiration dates. Since a portion of the line may expire
without being drawn upon, the total unused lines do not necessarily represent
future cash requirements. Each customer's creditworthiness is evaluated on a
case-by-case basis. The amount of collateral obtained, if deemed necessary, is
based on management's credit evaluation of the counterparty. Collateral held
varies, but may include accounts receivable, inventory, property, plant and
equipment, commercial real estate and residential real estate. Management uses
the same credit policies in granting lines of credit as it does for on-balance
sheet instruments.
At December 31, 1999 and 1998, unused lines of credit borrowings aggregated
approximately $75,112,000 and $58,786,000, respectively.
Additionally, the Company periodically has excess funds which are loaned to
other banks as federal funds sold. At December 31, 1999 and 1998, federal funds
sold totaling $8,000,000 and $20,700,000, respectively, were loaned to various
banks, as approved by the Board of Directors, with the largest balance at any
one bank being $5,000,000 and $17,700,000 (Federal Home Loan Bank) at December
31, 1999 and 1998.
NOTE 18: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure of certain
significant estimates and current vulnerabilities due to certain concentrations.
Estimates related to the allowance for loan losses are reflected in the footnote
regarding loans. Current vulnerabilities due to certain concentrations of credit
risk are discussed in the footnote on commitments and credit risk.
NOTE 19: FUTURE CHANGES IN ACCOUNTING PRINCIPLE
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES ("SFAS 133"). This statement, as amended by SFAS No. 137,
requires all derivatives to be recorded on the balance sheet at fair value and
establishes standard accounting methodologies for hedging activities. The
standard will result in the recognition of offsetting changes in value or cash
flows of both the hedge and the hedged item in earnings or comprehensive income
in the same period. The statement is effective for Blue Valley's fiscal year
ending December 31, 2001. Because Blue Valley generally does not hold derivative
instruments, the adoption of this statement is not expected to have a material
impact on the financial statements.
F-26
<PAGE>
NOTE 20: SUBSEQUENT EVENT
Subsequent to year end, the stockholders authorized:
o An increase in the number of authorized shares of the Company's common
stock from 1,000,000 to 15,000,000.
o A reduction in the par value of the Company's common stock from $10.00
to $1.00 per share.
o The issuance of up to 15,000,000 shares of preferred stock in one or
more series with such limitations and restrictions as may be
determined by the Board's sole discretion.
In addition, the Board of Directors authorized a 4-for-1 stock split. All
shares and per share amounts presented in these financial statements have been
restated to give effect to the stock split, retroactively.
NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
1999 1998
---- ----
(In thousands)
ASSETS
Cash and cash equivalents $ 136 $ 318
Investments in subsidiaries:
Bank of Blue Valley 24,565 18,762
Blue Valley Building Corp. 1,425 1,404
Loans 300 200
Other assets 334 202
-------- --------
Total Assets $ 26,760 $ 20,886
======== ========
LIABILITIES
Long-term debt $ 7,450 $ 3,575
Other liabilities 441 295
-------- --------
Total Liabilities 7,891 3,870
-------- --------
STOCKHOLDERS' EQUITY
Common stock 2,138 2,130
Additional paid in capital 5,230 5,159
Undivided profits 12,458 9,375
Unrealized appreciation (depreciation)
on available-for-sale securities,
net of income taxes of $(638) and $235
at 1999 and 1998, respectively (957) 352
----- -------
Total stockholders' equity 18,869 17,016
------ -------
Total Liabilities and Stockholders'
Equity $ 26,760 $ 20,886
======== ========
F-27
<PAGE>
NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Income
Dividends from subsidiaries $ 695 $ 100 $ 445
Other income 5 7 3
-------- -------- --------
700 107 448
Expenses 379 350 250
-------- -------- --------
Income before income taxes and equity in
undistributed net income of subsidiaries 321 (243) 198
Credit for income taxes (128) (118) (84)
--------- -------- --------
Income before equity in undistributed net income
of subsidiaries 449 (125) 282
Equity in undistributed net income of subsidiaries 2,634 2,941 2,004
-------- -------- --------
Net income $ 3,083 $ 2,816 $ 2,286
======== ======== ========
</TABLE>
F-28
<PAGE>
NOTE 21: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997
---- ---- ----
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,083 $ 2,816 $ 2,286
Items not requiring (providing) cash:
Deferred income taxes (128) (198) (4)
Equity in undistributed income of
subsidiaries (2,634) (2,941) (2,004)
Changes in:
Other assets (3)
Other liabilities 146 257 (14)
-------- -------- ---------
Net cash provided by (used in)
operating activities 464 (66) 264
-------- --------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Capital contributed to subsidiary (4,500) (615)
Net originations of loans (100)
-------- ---------
Net cash used in investing activities (4,600) (615)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt (625) (463) (300)
Proceeds from long-term debt 4,500 1,500
Proceeds from sale of common stock 79 644 778
-------- -------- --------
Net cash provided by financing activities 3,954 181 1,978
-------- -------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (182) 115 1,627
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 318 203 76
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 136 $ 318 $ 1,703
======== ======== ========
</TABLE>
F-29
<PAGE>
<TABLE>
<CAPTION>
========================================= ========================================
<S> <C>
TABLE OF CONTENTS
Page
----
Cautionary Note on Forward-Looking
Statements.........................1
Prospectus Summary....................1
Risk Factors.........................10
Use of Proceeds......................20
Market for the Trust Preferred
Securities........................20
Accounting Treatment.................20
Capitalization.......................22 1,250,000 TRUST PREFERRED SECURITIES
Selected Consolidated Financial Data.23 BVBC CAPITAL TRUST I
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.....................25
Business.............................44
Regulation and Supervision...........55 % CUMULATIVE TRUST PREFERRED
Management...........................63 SECURITIES
Security Ownership of Management and
Certain Beneficial Owners.........71
Description of the Trust Preferred
Securities........................72
Description of Junior Subordinated FULLY, IRREVOCABLY AND
Debentures........................89 UNCONDITIONALLY GUARANTEED ON A
Description of the Trust Preferred SUBORDINATED BASIS BY
Securities Guarantee.............101
Description of the Expense
Agreement........................104
Relationship Among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Trust Preferred BLUE VALLEY BAN CORP
Securities Guarantee.............104
Material Federal Income Tax
Consequences.....................106 ___________
Erisa Considerations................113
Underwriting........................113
Available Information...............115
Legal Matters.......................116 ___________
Experts.............................116 PROSPECTUS
Index To Financial Statements.......F-1 , 2000
___________
o We have not authorized anyone to
give you any information that differs
from the information in this
prospectus. If you receive any
different information, you should not
rely on it.
STIFEL, NICOLAUS & COMPANY
o The delivery of this prospectus shall INCORPORATED
not, under any circumstances, create an
implication that Blue Valley Ban Corp is
operating under the same conditions that
it was operating under when this
prospectus was written. Do not assume
that the information contained in this
prospectus is correct at any time past
the date indicated.
o This prospectus does not constitute an
offer to sell, or the solicitation of an
offer to buy, any securities other than
the securities to which it relates.
o This prospectus does not constitute an
offer to sell, or the solicitation of an
offer to buy, the securities to which it
relates in any circumstances in which
such offer or solicitation is unlawful.
o Until , 2000 (25 days after the date of
this prospectus), all dealers that effect
transactions in the trust preferred
securities, whether or not participating
in this offering, may be required to
deliver a prospectus. This is in addition
to the dealers' obligation to deliver a
prospectus when acting as underwriters
and with respect to their unsold
allotments or subscriptions.
========================================= =======================================
</TABLE>
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. (1)
Nature of Expense Amount (3)
- -----------------
-------------
SEC filing fee (2)...................................... $ 3,036
American Stock Exchange listing fee.....................
NASD filing fee......................................... 1,650
Printing, postage and mailing...........................
Legal fees and expenses.................................
Accounting fees and expenses............................
Trustees' fees and expenses.............................
Transfer agent and Registrar fees.......................
Blue Sky fees and expenses..............................
Miscellaneous...........................................
-------------
Total............................................. $
=============
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(1) The amounts set forth above, except for the SEC filing fee, the American
Stock Exchange listing fee and the NASD filing fee are in each case
estimated.
(2) Based upon the sale of 1,437,500 trust preferred securities at $8.00 per
trust preferred security.
(3) To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Articles of Incorporation of the registrant,
together with its Bylaws, provide that the registrant shall indemnify each
person who is or was an officer or director of the registrant, or who is or was
serving at the request of the registrant as a director, officer, employee,
partner, trustee or agent of the registrant to the fullest extent permitted by
applicable law. The laws of the State of Kansas permit, and in some cases
require, corporations to indemnify officers, directors, employees and agents who
are or who have been a party to or are threatened to be made a party to
litigation against judgments, fines, settlements and reasonable expenses under
certain circumstances.
The registrant has also adopted provisions in its Amended and Restated
Articles of Incorporation that limit the liability of its directors to the
fullest extent permitted by the laws of the State of Kansas. Under the
registrant's Amended and Restated Articles of Incorporation, as permitted by the
laws of the State of Kansas, a director is not liable to the registrant or its
stockholders for monetary damages for a breach of fiduciary duty as a director,
except to the extent such exemption from liability, or limitation thereof, is
not permitted under the Kansas General Corporation Code (the "KGCC") as
presently in effect or as the same may hereafter be amended. As of the filing
date of this registration statement, KGCC ss. 17-6002 provides, in
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pertinent part, that corporations "shall not eliminate or limit the liability of
a director (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, policyholders or members, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under the provisions of K.S. 17-6424, and amendments
thereto, or (d) for any transaction from which the director derived an improper
personal benefit." The registrant has agreed to indemnify the underwriter and
the underwriter has agreed to indemnify the registrant against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On January 31, 2000, the registrant effected a 4-for-1 stock split of its
common stock. In connection with such stock split, the registrant issued to its
stockholders of record an aggregate of 1,603,290 shares of common stock. All
common share and per share amounts herein have been retroactively adjusted to
reflect the stock split.
Since December 31, 1996, the registrant has granted options to purchase an
aggregate of 190,016 shares of common stock (after giving effect to the stock
split) under its 1998 Equity Incentive Plan and its 1994 Stock Option Plan
(together, the "Plans"), exercisable at a weighted average price of $11.03 per
share (after giving effect to the stock split). During this same period, options
granted under the Plans to purchase 296,260 shares of the registrant's common
stock were exercised at a weighted average price of $5.07 per share.
No underwriters were involved in the foregoing transactions. The January
31, 2000 stock split was effected in reliance upon the definition of "sale" set
forth in Section 2(a)(3) of the Securities Act. Each of the options granted
under the Plans and the exercises thereof were effected in reliance on Rule 701
under the Securities Act, and are deemed restricted securities for the purposes
of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The following is a complete list of exhibits filed as a part of this
registration statement.
1.1* Draft form of Underwriting Agreement between Blue Valley Ban Corp, BVBC
Capital Trust I and Stifel, Nicolaus & Company, Incorporated
3.1 Amended and Restated Articles of Incorporation of Blue Valley Ban Corp
3.2 Bylaws, as amended, of Blue Valley Ban Corp
4.1 1998 Equity Incentive Plan
4.2 1994 Stock Option Plan
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4.3 Draft form of Indenture of Blue Valley Ban Corp
4.4 Draft form of __% Junior Subordinated Debentures, due June 30, 2030
4.5 Certificate of Trust of BVBC Capital Trust I
4.6 Draft form of Amended and Restated Trust Agreement of BVBC Capital Trust I
4.7 Draft form of ___% Cumulative Preferred Security Certificate for BVBC
Capital Trust I
4.8 Draft form of Trust preferred securities Guarantee Agreement of Blue Valley
Ban Corp relating to the ___% Cumulative Trust preferred securities
4.9 Draft form of Agreement as to Expenses and Liabilities
5.1* Opinion of Blackwell Sanders Peper Martin LLP as to the legality of the
___% junior subordinated debentures, due June 30, 2030 and the Trust
Preferred Securities Guarantee Agreement relating to the ___% Cumulative
Trust preferred securities
5.2 Opinion of Morris, Nichols, Arsht & Tunnell (special Delaware counsel) as
to the legality of the ___% cumulative trust preferred securities to be
issued by BVBC Capital Trust I
8.1 Opinion of Blackwell Sanders Peper Martin LLP as to certain federal income
tax matters.
10.1 Security Agreement of Blue Valley Ban Corp in favor of Boatmen's First
National Bank of Kansas City, dated as of June 7, 1994
10.2 Agreement between Blue Valley Ban Corp, Bank of Blue Valley and Boatmen's
First National Bank of Kansas City, dated as of January 2, 1997
10.3 Amendment of Loan Documents between Blue Valley Ban Corp, Bank of Blue
Valley and NationsBank, N.A. (successor to Boatmen's First National Bank of
Kansas City), dated as of December 26, 1997
10.4 Second Amendment of Loan Documents between Blue Valley Ban Corp, Bank of
Blue Valley and NationsBank, N.A., dated as of January 31, 1999
10.5 Third Amendment of Loan Documents between Blue Valley Ban Corp, Bank of
Blue Valley and NationsBank, N.A., dated as of June 21, 1999
10.6 Fourth Amendment of Loan Documents between Blue Valley Ban Corp, Bank of
Blue Valley and NationsBank, N.A., dated as of December 30, 1999
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10.7 Amended and Restated Promissory Note of Blue Valley Ban Corp, dated
December 30, 1999
10.8 Promissory Note of Blue Valley Building, dated July 15, 1994
10.9 Mortgage, Assignment of Leases and Rents and Security Agreement between
Blue Valley Building and Businessmen's Assurance Company of America, dated
July 15, 1994
10.10 Assignment of Leases and Rents between Blue Valley Building and
Businessmen's Assurance Company of America, dated July 15, 1994
10.11 Lease Agreement between Bank of Blue Valley and CMI, Inc., dated
January 18, 1999
12.1 Statements re: computations of ratios
21.1 Subsidiaries of Blue Valley Ban Corp
23.1 Consent of Blackwell Sanders Peper Martin LLP (see exhibits 5.1 and 8.1)
23.2 Consent of Morris, Nichols, Arsht & Tunnell (special Delaware counsel) (see
exhibit 5.2)
23.3 Consent of Baird, Kurtz & Dobson
24.1 Power of attorney (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 Indenture
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Amended and Restated Trust Agreement
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Trust Preferred Securities Guaranty Agreement
27 Financial Data Schedule
* To be filed by amendment
(b) Financial Statement Schedules
No financial statement schedules are applicable.
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ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to officers, directors and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the 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 the 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, the
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.
(c) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(d) 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Overland Park, State of
Kansas, on April 5, 2000.
BLUE VALLEY BAN CORP
By: /s/ Robert D. Regnier
Robert D. Regnier, President and
Chief Executive Officer
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Overland Park, State of
Kansas, on April 5, 2000.
BVBC CAPITAL TRUST I
By: /s/ Robert D. Regnier
Robert D. Regnier, Administrative
Trustee
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SIGNATURES
Each individual whose signature appears below hereby designates and
appoints Robert D. Regnier, Mark A. Fortino and John K. Doull, and each of them,
any one of whom may act without the joinder of the other, as such person's true
and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full power
of substitution and re-substitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make changes in this Registration Statement as either
Attorney-in-Fact deems appropriate, and registration statements relating to the
same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, the Securities and Exchange Commission, granting unto such
Attorneys-in-Fact and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that such Attorneys-in-Fact or
either of them, or their substitution or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Robert D. Regnier President, Chief Executive April 5, 2000
Robert D. Regnier Officer & Director
/s/ Donald H. Alexander Director April 5, 2000
Donald H. Alexander
/s/ Wayne A. Henry, Jr. Director April 5, 2000
Wayne A. Henry, Jr.
/s/ C. Ted McCarter Director April 4, 2000
C. Ted McCarter
/s/ Thomas A. McDonnell Director April 3, 2000
Thomas A. McDonnell
/s/ Mark A. Fortino Treasurer and Principal April 4, 2000
Mark A. Fortino Finance and Accounting Officer
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SIGNATURES
Each individual whose signature appears below hereby designates and
appoints Robert D. Regnier, Mark A. Fortino and John K. Doull, and each of them,
any one of whom may act without the joinder of the other, as such person's true
and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full power
of substitution and re-substitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make changes in this Registration Statement as either
Attorney-in-Fact deems appropriate, and registration statements relating to the
same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, the Securities and Exchange Commission, granting unto such
Attorneys-in-Fact and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that such Attorneys-in-Fact or
either of them, or their substitution or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Robert D. Regnier Administrative Trustee April 5, 2000
Robert D. Regnier
/s/ Mark A. Fortino Administrative Trustee April 5, 2000
Mark A. Fortino
II-9
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
BLUE VALLEY BAN CORP.
A CORPORATION ORIGINALLY INCORPORATED IN THE
STATE OF KANSAS ON JUNE 21, 1989
ARTICLE ONE
NAME OF CORPORATION
The name of the corporation is Blue Valley Ban Corp. (the
"Corporation").
ARTICLE TWO
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of Kansas
is 11935 Riley, Overland Park, Johnson County, Kansas 66213. The name of its
registered agent at such address is Robert D. Regnier.
ARTICLE THREE
GENERAL NATURE OF BUSINESS
The purpose of the Corporation is to engage in any lawful conduct or
activity for which corporations may be organized under the Kansas General
Corporation Code.
ARTICLE FOUR
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE FIVE
CAPITAL STOCK
AUTHORIZED SHARES
1. The total number of shares of stock the Corporation has authority to
issue shall be 30,000,000 shares, of which 15,000,000 shares shall be designated
Preferred Stock (the
<PAGE>
"Preferred Stock") and 15,000,000 shares shall be designated Common Stock, par
value $1.00 per share (the "Common Stock").
2. The relative rights, voting power, preferences and restrictions of the
shares of each class of stock that are fixed by the Articles of Incorporation,
and the express grant of authority to the Board of Directors of the Corporation
to fix by resolution or resolutions certain rights, voting power, preferences
and restrictions, are as follows:
PREFERRED STOCK
3. Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration as the Board of Directors may
determine. Each such series shall be given a distinguishing designation. All
shares of any one series shall have preferences, limitations and relative rights
identical with those of other shares of the same series and, except to the
extent otherwise provided in the description of such series, with those of other
shares of Preferred Stock.
4. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(a) The distinguishing designation and number of shares constituting
that series, which number may (except where otherwise provided by the Board
of Directors in creating such series) be increased or decreased from time
to time by action of the Board of Directors;
(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares
of that series over shares of any other series or over the Common Stock;
(c) The voting rights, if any, that shares of that series shall have,
and the terms of such voting rights;
(d) Whether the shares of that series shall be convertible into or
exchangeable for cash, shares of stock of any other class or any other
series, indebtedness or other property or rights, including securities of
another corporation, and, if so, the terms and conditions of such exchange
or conversion, including the rate or rates of conversion, and whether such
rate shall be a designated amount or an amount determined in accordance
with a designated formula or by reference to extrinsic data or events, the
date or dates upon or after which they shall be convertible or
exchangeable, the duration for which they shall be convertible or
exchangeable, the event or events upon or after which they shall be
convertible or exchangeable, and whether they shall be convertible or
exchangeable at the option of the Corporation, the shareholder or another
person, and the method (if any) of adjusting the rate of conversion or
exchange in the event of a stock split, stock dividend, combination of
shares or similar event;
(e) Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which
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the shares of that series shall be redeemable, whether they shall be
redeemable at the option of the Corporation, the shareholder or another
person, the amount per share payable in the event of redemption (which
amount may vary under different conditions and at different redemption
dates), whether such amount shall be a designated amount or an amount
determined in accordance with a designated formula or by reference to
extrinsic data or events, and whether such amount shall be paid in cash,
indebtedness, securities or other property or rights, including securities
of any other corporation;
(f) Whether that series shall have a retirement or sinking fund for
the purchase or redemption of shares of that series, and, if so, the terms
and amount payable into such fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of that
series over shares of any other series or over the Common Stock;
(h) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series; and
(i) Any other preferences, powers, privileges, and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of that series, as the
Board of Directors may deem advisable and as shall not be inconsistent with
these Articles of Incorporation or the Kansas General Corporation Code.
COMMON STOCK
5. The holders of Common Stock shall be entitled to one vote per share on
all matters to be voted on by the stockholders of the Corporation.
6. To the extent permitted under the Kansas General Corporation Code and
subject to the provisions of the Preferred Stock, the holders of Common Stock
shall be entitled to participate ratably on a per share basis in the payment of
dividends, whether in cash, property or securities of the Corporation, when and
as declared thereon by the Board of Directors.
7. Subject to the provisions of the Preferred Stock, the holders of Common
Stock shall be entitled to participate ratably on a per share basis in all
distributions to the holders of Common Stock in any liquidation, dissolution or
winding up of the Corporation.
ARTICLE SIX
ACTION BY STOCKHOLDERS
1. Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the
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Corporation and may not be effected by any consent in writing by such
stockholders. Meetings of stockholders may be held within or without the State
of Kansas, as the bylaws of the Corporation may provide. Election of Directors
need not be by written ballot.
2. The books of the Corporation may be kept outside the State of Kansas at
such place or places as may be designated from time to time by the Board of
Directors or in the bylaws of the Corporation. Stockholders shall have the right
to inspect the books and records of the Corporation to the extent and in the
manner provided by Kansas law, subject to reasonable restrictions as may be
determined by the Board of Directors or the officers of the Corporation, from
time to time with respect to any request for such inspection.
3. Except as otherwise required by law and subject to the right of holders
of Preferred Stock then outstanding, special meetings of stockholders may be
called by the President of the Corporation or by or at the direction of a
majority of the Board of Directors, and shall be called by the Chairman of the
Board, the President or the Secretary upon the written request of the holders of
not less than twenty percent (20 %) of all of the outstanding shares of the
Corporation entitled to vote at the meeting. The business transacted at a
special meeting of stockholders shall be limited to that stated in the notice of
such meeting or in a duly executed waiver thereof.
4. Except as otherwise provided by these Articles of Incorporation or as
otherwise required by any applicable law, and subject to the rights of the
holders of any Preferred Stock then outstanding, all of the shares of the
capital stock of the Corporation entitled to vote on a matter shall vote on such
matter together as a single class.
5. The holders of capital stock of the Corporation shall not be entitled to
use cumulative voting on any matter.
6. Except as may otherwise be required by applicable law or regulation or
be expressly authorized by the entire Board of Directors, a stockholder may make
a nomination or nominations for Director of the Corporation at an annual meeting
of stockholders or may bring up any other matter for consideration and action by
the stockholders at an annual meeting of stockholders, only if the provisions of
subsections A, B, C and D hereto shall have been satisfied. If such provisions
shall not have been satisfied, any nomination sought to be made or other
business sought to be presented by a stockholder for consideration and action by
the stockholders at such a meeting shall be deemed not properly brought before
the meeting, shall be ruled by the Chairman of the meeting to be out of order,
and shall not be presented or acted upon at the meeting.
A. The stockholder must be a stockholder of record on the record date
for such annual meeting, must continue to be a stockholder of record
at the time of such meeting, and must be entitled to vote thereat.
B. The stockholder must deliver or cause to be delivered a written
notice to the secretary of the Corporation. Such notice must be
received by the secretary no less than one hundred twenty (120)
days prior to the day corresponding to the date on which the
Corporation released its proxy statement in connection with the
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previous year's annual meeting; provided, however, that if the
date of the annual meeting has been changed by more than thirty
(30) days from the date of the previous year's annual meeting,
such notice must be received by the secretary a reasonable time
prior to the time at which notice of such meeting is delivered to
the stockholders. The notice shall specify (a) the name and
address of the stockholder as they appear on the books of the
Corporation, (b) the class and number of shares of the
Corporation which are beneficially owned by the stockholder; (c)
any material interest of the stockholder in the proposed business
described in the notice; (d) if such business is a nomination for
director, each nomination sought to be made, together with the
reasons for each nomination, a description of the qualifications
and business or professional experience of each proposed nominee
and a statement signed by each nominee indicating his or her
willingness to serve if elected, and disclosing the information
about him or her that is required by the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and
regulations promulgated thereunder to be disclosed in the proxy
materials for the meeting involved if he or she were a nominee of
the Corporation for election as one of its directors; (e) if such
business is other than a nomination for director, the nature of
the business, the reasons why it is sought to be raised and
submitted for a vote of the stockholders and if and why it is
deemed by the stockholder to be beneficial to the Corporation,
and (f) if so requested by the Corporation, all other information
that would be required to be filed with the Securities and
Exchange Commission if, with respect to the business proposed to
be brought before the meeting, the person proposing such business
was a participant in a solicitation subject to Section 14 of the
1934 Act.
C. Notwithstanding satisfaction of the provisions of subsection A
and subsection B, the proposed business described in the notice
may be deemed not to be properly brought before the meeting if,
pursuant to state law or to any rule or regulation of the
Securities and Exchange Commission, it was offered as a
stockholder proposal and was omitted, or had it been so offered,
it could have been omitted, from the notice of, and proxy
material for, the meeting (or any supplement thereto) authorized
by the Board of Directors.
D. In the event such notice is timely given pursuant to subsection B
and the business described therein is not disqualified pursuant to
subsection C, such business may be presented by, and only by, the
stockholder who shall have given the notice required by subsection A
or a representative of such stockholder who is qualified under the
law of the State of Kansas to present the proposal on the
stockholder's behalf at the meeting.
ARTICLE SEVEN
NUMBER, CLASSIFICATION AND ELECTION OF DIRECTORS; VACANCIES
1. The number of Directors constituting the entire Board of Directors shall
be neither less than three (3) nor more than twelve (12). Subject to the rights
of the holders of any Preferred Stock then outstanding, the specific number of
Directors within such minimum and
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maximum shall be authorized from time to time by, and only by, resolution duly
adopted by a majority of the total number of Directors then constituting the
entire Board of Directors.
2. At the first annual meeting of stockholders following the filing of
these Amended and Restated Articles of Incorporation with the Secretary of State
of the State of Kansas after being adopted by the stockholders of the
Corporation, the Board of Directors shall be divided into three (3) classes,
designated Class I, Class II and Class III. Each class shall consist, as nearly
as possible, of one-third of the total number of Directors then constituting the
entire Board of Directors. At such first annual meeting, Directors will be
elected to serve staggered terms of either one, two or three years. The length
of each Director's term shall depend upon the initial classification of the
Director. Directors elected to Class I shall serve a one year term. Directors
elected to Class II shall serve a two year term. Directors elected to Class III
shall serve a three year term.
At each annual stockholders' meeting thereafter, Directors elected to
succeed the Directors whose terms expire at such meeting shall be elected for a
full three year term. Initially, the number of Directors shall be five. If the
number of Directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain or attain, to the extent possible, the
equality of the number of Directors in each class. In no case shall a decrease
in the number of Directors shorten the term of any incumbent Director. A
Director shall hold office until the annual meeting for the year in which such
Director's term expires and until a successor shall be duly elected and
qualified, or until such Director's earlier death, resignation or removal.
3. Subject to the rights of the holders of any Preferred Stock then
outstanding, any vacancies existing on the Board of Directors for any reason,
including by reason of any increase in the number of Directors, shall be filled
only by the Board of Directors, acting by the affirmative vote of a majority of
the Directors then in office. The term of a Director elected to fill a vacancy
shall expire upon the expiration of the term of office of the class in which
such vacancy occurred.
4. The Board of Directors may authorize the appointment of a Chairman of
the Board of Directors, who may, but need not be, the President of the
Corporation.
ARTICLE EIGHT
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any Preferred Stock then
outstanding, (i) any Director, or the entire Board of Directors, may be removed
from office at any time by the affirmative vote of the holders of record of
outstanding shares representing at least sixty-six and two-thirds percent (66
2/3 %) of the voting power of all the shares of capital stock of the Corporation
then entitled to vote generally in the election of Directors, voting together as
a single class, and (ii) to the extent permitted by law, any Director may be
removed from office at any time, but only for Cause, by the affirmative vote of
a majority of the entire Board of Directors. As used in these Articles of
Incorporation, the term "Cause" means (i) conviction of the Director of a
felony; (ii) declaration by order of a court that the Director is of unsound
mind; or (iii) gross
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abuse of trust that is proven by clear and convincing evidence to have been
committed in bad faith.
ARTICLE NINE
INDEMNIFICATION OF OFFICERS, DIRECTORS AND ADVISORY DIRECTORS
The Corporation shall indemnify each officer, Director and advisory
Director of the Corporation to the fullest extent permitted by applicable law.
The modification or repeal of this ARTICLE NINE shall not adversely affect the
right to indemnification of an officer, Director or advisory Director hereunder
with respect to any act or omission occurring prior to such modification or
repeal.
ARTICLE TEN
LIMITATION ON PERSONAL LIABILITY OF DIRECTORS AND ADVISORY DIRECTORS
No Director or advisory Director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a Director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Kansas General Corporation Code as
presently in effect or as the same may hereafter be amended. Any repeal or
modification of this ARTICLE TEN shall not adversely affect any right or
protection of a Director or advisory Director of the Corporation existing at the
time of such repeal modification.
ARTICLE ELEVEN
CONTROL SHARE ACQUISITIONS
The Corporation expressly elects to be governed by ss.ss. 17-1286 et seq.
of the Kansas General Corporation Code to the same extent as if such provisions,
as amended from time to time, were restated in their entirety herein.
ARTICLE TWELVE
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
The Corporation expressly elects to be governed by ss.ss. 17-12, 100 et
seq. of the Kansas General Corporation Code to the same extent as if such
provisions, as amended from time to time, were restated in their entirety
herein.
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ARTICLE THIRTEEN
AMENDMENT OF BYLAWS
The Board of Directors is hereby authorized to make, amend, alter or
repeal the bylaws of the Corporation, subject to the power of the stockholders
as described below to make, amend, alter or repeal the bylaws of the
Corporation. Notwithstanding the foregoing or any other provisions of these
Amended and Restated Articles of Incorporation or of the bylaws of the
Corporation, the affirmative vote of at least sixty-six and two-thirds percent
(66 2/3%) of the then outstanding capital stock of the Corporation, voting
together as a single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with, ARTICLE TWO, ARTICLE THREE and ARTICLE EIGHT of
the bylaws of the Corporation.
ARTICLE FOURTEEN
AMENDMENT OF ARTICLES
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Kansas, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
Notwithstanding the above provision or any other provisions of the Articles of
Incorporation or the bylaws of the Corporation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3 %) of the voting
power of the shares of the then outstanding voting stock of the Corporation,
voting together as a single class, shall be required to amend or repeal, or
adopt any provisions inconsistent with, ARTICLES SIX, SEVEN, EIGHT, NINE, TEN,
ELEVEN, TWELVE, THIRTEEN or this ARTICLE FOURTEEN of these Articles of
Incorporation.
These Amended and Restated Articles of Incorporation were proposed by the
Board of Directors of the Corporation and adopted by the Corporation's
stockholders in accordance with the provisions of K.S.A. 17-6605 and K.S.A.
17-6602.
Dated January 12,2000. BLUE VALLEY BAN CORP.
By: /s/ Robert D. Regnier
Robert D. Regnier
President
ATTEST:
/s/ Patricia L. Day
Patricia L. Day, Secretary
BYLAWS
OF
BLUE VALLEY BAN CORP.
Article I
OFFICES
Section 1. Principal Office. The principal office shall be located at
corporation's principal place of business at 11935 Riley in the City of Overland
Park, County of Johnson, State of Kansas.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Kansas as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
Article II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the Stockholders shall be held
at such place either within or without the State of Kansas as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof. In the event that
the Board of Directors shall fail to fix the place for a meeting of
Stockholders, such meeting shall be held at the Corporation's principal office.
Section 2. Annual Meeting. Annual meetings of Stockholders shall be held at
10:00 a.m. on the fifteenth day in January of each fiscal year (unless otherwise
designated by the Board of Directors), or if that day be a legal holiday, on the
next succeeding day not a legal holiday. At such annual meeting the Stockholders
shall elect a Board of Directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of the Stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation, may be called by the President of the Corporation, a majority
of the Board of Directors, or upon the written request of Stockholders owning
not less than twenty percent (20%) of the outstanding stock entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting, as
described in Section 4 of this Article II. Business transacted at any special
meeting of Stockholders shall be limited to the purposes stated in the notice.
Section 4. Notice. Written notice of each meeting of Stockholders stating
the place, date and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered or
given to each Stockholder entitled to vote at such meeting not less than ten
(10) nor more than sixty (60) days before the date of the meeting. If mailed,
notice shall be deemed to have been given when deposited in the United States
mail,
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postage prepaid, directed to the Stockholder at his address as it appears
on the records of the Corporation. Attendance of a Stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when the Stockholder
attends a meeting for the express and exclusive purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened. An affidavit of the Secretary or Assistant
Secretary or of the transfer agent of the Corporation that notice has been given
shall be prima facie evidence of the facts stated therein in the absence of
fraud.
Section 5. Stockholders' List. The officer, or any person designated by the
Corporation, who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten (10) days before every meeting of Stockholders, a
complete list of the Stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the addresses of each Stockholder and the number
of shares registered in the name of each Stockholder. Such list shall be open to
the examination of any Stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any Stockholder who is present.
Section 6. Quorum. The holders of one-half (1/2) of the stock issued and
outstanding and entitled to vote at any meeting, represented in person or by
proxy, shall constitute a quorum at all meetings of the Stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the Stockholders, the Stockholders entitled to
vote at any meeting, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented; provided,
however, if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Stockholder of record entitled to
vote at the meeting. At such adjourned meeting any business may be transacted
that might have been transacted at the meeting as originally notified, so long
as a quorum shall be present or represented.
Section 7. Action by Stockholders. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one requiring a different vote by express
provision of the statutes or of the Articles of Incorporation, in which case,
such express provision shall govern and control the decision on such question.
Section 8. Voting of Shares. Each holder of common stock of the Corporation
shall at every meeting of the Stockholders be entitled to vote in person or by
proxy for each share of the capital stock having voting power held by such
Stockholder, but no proxy shall be voted on after three (3) years from its date,
unless the proxy provides for a longer period.
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Section 9. Informal Action by Stockholders. Any action required to be taken
at any annual or special meeting of Stockholders of the Corporation, or any
action that may be taken at any annual or special meeting of such Stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by all
the Stockholders entitled to vote with respect to the subject matter thereof.
Such agreement or consent shall be filed by the Secretary in the Minute Book of
the Corporation.
Article III
DIRECTORS
Section 1. Management of Corporation. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. The
Board may exercise all such powers of the Corporation and do all such lawful
acts and things that are not otherwise required by statute, by the Articles of
Incorporation, or by these Bylaws to be done by the Stockholders.
Section 2. Number. The number of Directors constituting the entire Board of
Directors shall be neither less than three (3) nor more than twelve (12).
Subject to the rights of any holders of Preferred Stock then outstanding, the
specific number of Directors within such minimum and maximum shall be authorized
from time to time by, and only by, resolutions duly adopted by a majority of the
total number of Directors then constituting the entire Board of Directors. The
Directors shall be elected at the annual meeting of the Stockholders, except as
provided in Section 13 of this Article, and each Director elected shall hold
office until his resignation, his removal, or his successor is elected and
qualified, whichever shall occur first. Directors need not be Stockholders.
Section 3. Meetings of the Newly Elected Board; Notice. The first annual
meeting of the members of each newly elected Board of Directors shall be held
(i) at such time and place either within or without the State of Kansas
immediately after the meeting of Stockholders at which such newly elected Board
was elected, and no notice of such meeting shall be necessary to the newly
elected Directors in order to legally hold such meeting, provided a quorum shall
be present, or (ii) if a quorum shall not be present, at such time and place as
shall be consented to in writing by a majority of the newly elected Directors,
provided that written notice of such meeting shall be given to each of the other
Directors in the same manner as provided in Section 6 of this Article III with
respect to the giving of notice for special meetings of the Board except that it
shall not be necessary to state the purpose of the meeting in such notice, or
(iii) at such time and place as shall be consented to in writing by all of the
newly elected Directors.
Every Director of the Corporation, upon his election, shall qualify by
accepting the office of Director, and his attendance at, or his written approval
of the minutes of, any meeting of the Board subsequent to his election shall
constitute his acceptance of such office; or he may execute such acceptance by a
separate writing. Such writing shall be placed in the Minute Book of the
Corporation.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held without notice at the principal office of the Corporation on the
fifteenth of every January, April, July, and October at 10:00 a.m. or, with
notice, at such time and at such place, either
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within or without the State of Kansas, as shall from time to time be determined
by the Board and in any manner, including by means of telephone conference or
similar communications as provided in Section 7 of Article III of these Bylaws,
permitted under the Kansas General Corporation Code of 1972, as amended.
Section 5. Special Meetings. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board, the President, any Vice
President, the Secretary, or by any one (1) or more of the Directors. The place
may be within or without the State of Kansas as designated in the notice, as
described in Section 6 of this Article III.
Section 6. Notice of Special Meetings. Written notice of each special
meeting of the Board, stating the place, day and hour of the meeting and the
purpose or purposes thereof, shall be mailed to each Director addressed to him
at his residence or usual place of business at least three (3) days before the
day on which the meeting is to be held, or shall be sent to him by telegram, or
delivered to him personally, at least two (2) days before the day on which the
meeting is to be held. If mailed, such notice shall be deemed to be delivered
when it is deposited in the United States mail with postage thereon addressed to
the Director at his residence or usual place of business. If given by telegraph,
such notice shall be deemed to be delivered when it is delivered to the
telegraph company. The notice may be given by any officer having authority to
call the meeting. Any meeting of the Board of Directors shall be a legal meeting
without any notice thereof having been given if all Directors shall be present
or if all those not present shall waive notice of the meeting.
Section 7. Meetings by Telephone Conference or Similar Communications
Equipment. Unless otherwise restricted by the Articles of Incorporation, members
of the Board of Directors, or any committee designated by the Board, may
participate in a meeting of the Board or committee by means of telephone
conference or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant hereto shall constitute presence in person at such meeting. All actions
agreed upon by the Board using telephone or similar communications equipment
shall be valid corporate actions provided a quorum of Directors participate in
such telephone or similar conference.
Section 8. Quorum. At all meetings of the Board a majority of the Directors
shall constitute a quorum, except that when a Board of one Director is
authorized under the provisions of Kansas General Corporation Code Section
17-6301, then one Director shall constitute a quorum, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Informal Action by Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
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Section 10. Designation of Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the Directors. The Board
may designate one or more Directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, 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 absent or
disqualified member. Any such committee, to the extent expressly provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require such seal; but no such committee shall
have the power or authority in reference to amending the Articles of
Incorporation, except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Kansas General Corporation Code Section
17-6401, and amendments thereto, fix the designations and any of the preferences
or rights of such shares relating to dividends, redemption, dissolutions, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series, adopting an agreement of merger or
consolidation, recommending to the Stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the Stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation; and, unless the
resolution so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Kansas General Corporation Code
Section 17-6703 and amendment thereto. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 11. Minutes of Committee Meetings. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 12. Compensation of Directors. The Board of Directors shall have
the authority to fix the compensation of Directors. The Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as Director. No such payments shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 13. Vacancies. Any vacancies, however created, and newly created
directorships resulting from any increase in the authorized number of Directors
may be filled by a majority of the Directors then in office, even if less than a
quorum, or by a sole remaining Director. The Directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and qualified, unless sooner displaced. If there are no Directors in
office, then an election of Directors may be held in the manner provided by
statute. If, at the
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time of filling any vacancy or any newly created directorship, the Directors
then in office shall constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), the District Court of the
State of Kansas, upon application of one or more Stockholders holding at least
ten percent (10%) of the total number of the outstanding shares at the time,
having the right to vote for such Directors, may summarily order an election to
be held to fill any such vacancies or newly created directorships, or to replace
the Directors chosen by the Directors then in office.
Section 14. Removal of Director. One or more Directors, whether elected by
the Stockholders or appointed by the Directors, may be removed from office, with
or without cause, at any time by the holders of a majority of the shares of
stock then entitled to vote at an election of Directors, except as may be
otherwise specifically provided by statute or by the Articles of Incorporation,
in which case, such express provision shall govern and control the removal of
Directors.
Section 15. Resignations. Any Director may resign at any time upon written
notice to the Corporation. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, shall take effect upon
receipt thereof by the Corporation, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Article IV
OFFICERS
Section 1. Manner of Selection; Authorized Officers. The Board of Directors
shall elect such officers and give such officers any titles designated by the
Board. Each office shall have the duties prescribed in Section 6 of this
Article.
Section 2. Time for Selection of Officers. Officers of the Corporation
shall be elected by the Board of Directors at each of its annual meetings,
immediately following the annual meeting of Stockholders, or at such other time
as the Board deems necessary or appropriate to fill vacancies as provided by
Article IV, Section 5.
Section 3. Appointment of Agents. The Board of Directors may appoint such
other agents as it shall deem necessary or advisable to exercise such powers and
perform such duties as shall be determined from time to time by the Directors.
Section 4. Compensation. The compensation of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. Term. Each officer of the Corporation shall hold office until
his resignation, his removal, or his successor is duly elected and qualified,
whichever first occurs. Any officer elected or appointed by the Board of
Directors may be removed at any time, with or without cause, by the affirmative
vote of a majority of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors.
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Section 6. Duties. The officers of the Corporation shall have the following
duties:
The Chairman of the Board of Directors
The Board of Directors may authorize the appointment of a Chairman of the
Board of Directors. The Chairman may, but need not be, the President of the
Corporation. In the event the Board elects to authorize the appointment of a
Chairman, such Chairman shall possess general executive powers and duties of
supervision and management of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. The Chairman of the Board of Directors shall also
preside at all meetings of the Stockholders and Directors at which he may be
present and shall have such other duties, powers and authority as may be
prescribed elsewhere in these Bylaws.
The President
The President shall be the chief operating officer of the Corporation and
shall perform such duties and have such powers as the Board of Directors may
from time to time prescribe or which the Chairman of the Board may from time to
time delegate. In the absence of the Chairman of the Board of Directors, or in
the event of his inability or refusal to act, the President shall preside at all
meetings of the Stockholders and Directors, except that if the President is not
available to preside at a meeting of the Board of Directors, the President shall
designate a member of the Board to so preside.
The Vice-President
The Vice-President or Vice-Presidents shall perform such duties and have
such powers as the Board of Directors may from time to time prescribe or which
the Chairman of the Board of Directors or which the President may from time to
time delegate. In the absence of the President or in the event of his inability
or refusal to act, the Vice-President (or in the event there be more than one
Vice-President, the Vice-Presidents in the order designated, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the President in his capacity as an officer (and not as a Director) of
the Corporation, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President.
The Secretary and Assistant Secretary
The Secretary or Assistant Secretary shall record all proceedings of the
meetings of the Board of Directors and all meetings of the Stockholders in a
book to be kept for that purpose and shall perform like duties for the standing
committees when required. The Secretary may also give, or cause to be given,
notice of all meetings of the Stockholders and special meetings of the Board of
Directors, and shall keep, or cause to be kept, an account of the stock
registered and transferred, and shall perform such other duties as may be
prescribed by the Board of Directors or which the Chairman of the Board of
Directors or which the President may from time to time delegate. The Secretary,
or such person as the Corporation designates, shall have custody of the
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corporate seal of the Corporation and he, or such designated person, shall have
authority to affix the corporate seal to any instrument requiring it. When so
affixed, such instrument may be attested by the signature of the Secretary or
the signature of an Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe, or which the Chairman of the Board of Directors or which the
President may from time to time delegate.
The Treasurer and Assistant Treasurer
The Treasurer shall have the custody of the Corporation's funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.
Subject to the provisions of Article VI, Section 3, the Treasurer shall
disburse the funds of the Corporation, keeping appropriate record of such
disbursements, and shall render to the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer, or any Assistant
Treasurer, shall give the Corporation a bond (which shall be renewed at least
every six (6) years, unless sooner required by the Board of Directors) in such
sum and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Treasurer or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe, or which the Chairman of the Board of Directors or the President
may from time to time delegate.
Article V
CERTIFICATES OF STOCK
Section 1. Certificate for Shares. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by the Chairman of the Board of
Directors or the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the Corporation. If
the Corporation shall be authorized to issue more than one class of stock or
more
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than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof, and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate that the Corporation shall issue to represent such
class or series of stock; provided that, except as otherwise provided in Section
17-6426 of the Kansas General Corporation Code of 1972, as amended, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate that the Corporation shall issue to represent such class or series
of stock, a statement that the Corporation will furnish without charge to each
Stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 2. Legends. All certificates or instruments evidencing securities
of any kind or nature issued by the Corporation shall bear the following legend
unless the offer and sale thereof by the Corporation has been registered under
the Securities Act of 1933 and all applicable state and other securities laws:
THE OFFER AND SALE OF THE SECURITIES EVIDENCED BY THIS INSTRUMENT
("SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("ACT"), NOR UNDER ANY APPLICABLE STATE OR OTHER SECURITIES
LAWS, IN RELIANCE UPON EXEMPTIONS THEREFROM. NEITHER THE SECURITIES NOR
ANY INTEREST IN THE SECURITIES MAY BE ASSIGNED, SOLD OR OTHERWISE
TRANSFERRED EXCEPT EITHER (A) UPON COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE ACT AND ALL APPLICABLE STATE OR OTHER SECURITIES LAWS,
OR (B) UPON FURNISHING AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
CONTENT SATISFACTORY TO THE CORPORATION THAT ANY SUCH ASSIGNMENT, SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND ALL APPLICABLE
STATE OR OTHER SECURITIES LAWS.
Section 3. Facsimile Signatures. Where a certificate is countersigned by a
transfer agent or registrar who is not an officer or employee of the
Corporation, any other signature on the certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and to give the Corporation an indemnification or a bond in
such
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sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 5. Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation or to any person designated by the
Corporation, of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, together with
evidence in form, substance and content satisfactory to counsel for the
Corporation establishing compliance with all applicable state and federal
securities laws or other laws or agreements restricting the transfer of such
shares, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 6. Fixing Record Date. In order that the Corporation may determine
the Stockholders entitled to notice of or to vote at any meeting of Stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, that shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. A
determination of Stockholders of record entitled to notice of or to vote at a
meeting of Stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 7. Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, to vote as such owner, and to exercise such
other rights as are conferred upon the Corporation's Stockholders by statute,
the Corporation's Articles of Incorporation or the Bylaws. The Corporation shall
not be bound to recognize any equitable or other claim to or interest in any
such share or shares on the part of any other person who is not registered as
the owner thereof on the Corporation's books, whether or not the Corporation
shall have express or other notice thereof, except as otherwise provided by the
laws of Kansas.
Article VI
GENERAL PROVISIONS
Section 1. Payment of Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Articles of Incorporation.
Section 2. Special Purpose Reserves. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Directors shall think conducive to
the interest of
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the Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by the Treasurer or such officer or officers or such
other person or persons as the Board of Directors may from time to time
authorize.
Article VII
SEAL
The corporate seal, if any, shall have inscribed thereon the name of the
Corporation and the words "KANSAS" and "CORPORATE SEAL". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Article VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES & AGENTS
Section 1. General. In addition to and without limiting the rights to
indemnification and advancement of expenses specifically provided for in the
other sections of this Article, the Corporation shall indemnify and advance
expenses to each person who is or was an officer or Director of the Corporation,
or who is or was serving at the request of the Corporation as a Director,
officer, employee, partner, trustee or agent of any Other Enterprise (as
hereinafter defined), to the full extent permitted by the laws of the State of
Kansas as in effect on the date of the adoption of this Article and as may
hereafter be amended.
Section 2. Indemnification Generally. The Corporation shall indemnify each
person who has been or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was an
officer or Director of the Corporation or is or was serving at the request of
the Corporation as a Director, officer, employee, partner, trustee or agent of
any Other Enterprise, against all liabilities and expenses, including, without
limitation, judgments, amounts paid in settlement, attorneys' fees, ERISA excise
taxes or penalties, fines and other expenses actually and reasonably incurred by
such person in connection with such action, suit or proceeding, if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; provided, however, that the Corporation shall not be required to
indemnify or advance expenses to any person in connection with an action, suit
or proceeding initiated by such person (other than an action, suit or proceeding
initiated by such person to enforce his right to indemnification and advancement
of expenses pursuant to Section 7 hereof) unless the initiation of such action,
suit or proceeding was authorized in advance by the Board of Directors of the
Corporation.
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Section 3. Indemnification in Derivative Actions. The Corporation shall
indemnify each person who has been or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
the person is or was a Director or officer of the Corporation or is or was
serving at the request of the Corporation as a Director, officer, employee,
partner, trustee or agent of any Other Enterprise, against all liabilities and
expenses, including, without limitation, amounts paid in settlement, attorneys'
fees and other expenses actually and reasonably incurred by such person in
connection with such action or suit, if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the court
shall deem proper.
Section 4. Mandatory Indemnification. To the extent that a person referred
to in Sections 1, 2 or 3 of this Article has been successful in the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
1, 2 or 3 of this Article, or in defense of any claim, issue or matter therein,
such person shall be indemnified against all expenses actually and reasonably
incurred in connection therewith, including attorneys' fees.
Section 5. Standards for Discretionary Indemnification. Except as otherwise
provided in Section 4 of this Article, or unless the indemnification is ordered
by a court, any indemnification of a person by the Corporation pursuant to
Sections 1, 2 and 3 of this Article shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
person is proper in the circumstances because the person has met the applicable
standard of conduct set forth in Sections 1, 2 or 3 of this Article. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of Directors who were not parties to such action or
proceeding, or (ii) if such a quorum is not attainable, or even if attainable,
should a quorum of disinterested Directors so direct, by independent legal
counsel in a written opinion or (iii) by the Stockholders. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
under a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that such person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe his conduct was unlawful.
Section 6. Advancement of Expenses. Expenses (including attorneys' fees)
actually and reasonably incurred by a person who may be entitled to
indemnification hereunder in connection with the defense of a civil or criminal
action, suit or proceeding or in connection with the initiation of an action,
suit or proceeding by such person to enforce his right to indemnification and
advancement of expenses pursuant to this Section shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation. The Board of Directors
12
<PAGE>
may, in each individual case, impose any additional terms and conditions as they
shall deem appropriate.
Section 7. Enforcement of Indemnification and Advancement of Expenses.
Notwithstanding any other provision of this Article, including without
limitation Sections 2 and 3 hereof, in the event the Corporation refuses to
indemnify or advance expenses to any person or persons who may be entitled to be
indemnified or to have expenses advanced hereunder, then, to the extent
permitted by law, such person or persons shall have the right to maintain an
action in any court of competent jurisdiction against the Corporation to
determine whether or not such person has met the requisite standard of conduct
and is entitled to such indemnification or advancement of expenses hereunder. If
such court action is successful and the person or persons is determined to be
entitled to such indemnification, such person or persons shall be reimbursed by
the Corporation for all fees and expenses reasonably and actually incurred in
connection therewith (including, without limitation, the fees and expenses
reasonably and actually incurred in connection with the investigation, defense,
settlement or appeal of such action).
Section 8. Non-Exclusivity. The indemnification and the advancement of
expenses provided by this Article shall not be exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any statute, the Articles of Incorporation, Bylaws or any agreement, vote
of Stockholders or disinterested Directors, policy of insurance or otherwise,
both as to action in their official capacity and as to action in another
capacity while holding their respective offices, and shall not limit in any way
any right which the Corporation may have to make additional indemnifications
with respect to the same or different persons or classes of persons. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article shall continue as to any person who has ceased to hold any position
with the Corporation or any Other Enterprise, and shall inure to the benefit of
the heirs, executors, administrators and estate of such person.
Section 9. Insurance. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who 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,
partner, trustee or agent of any Other Enterprise, against any liability
asserted against him and incurred by him in such 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 this Article.
Section 10. Vesting of Rights. The rights granted by this Article shall be
vested in each person entitled to indemnification hereunder as a bargained-for,
contractual condition of such person's acceptance of his position as a Director
or officer of the Corporation, and while this Article may be amended or
repealed, no such amendment or repeal shall release, terminate or adversely
affect the rights of such person under this Article with respect to any act
taken or the failure to take any act by such person prior to such amendment or
repeal or with respect to any action, suit or proceeding with respect to such
act or failure to act filed after such amendment or repeal.
13
<PAGE>
Section 11. Definitions. For the purpose of this Article, references to:
(1) "Other Enterprises" or "Other Enterprise" shall include without
limitation any bank, corporation, partnership, joint venture, trust,
employee benefit plan or other venture;
(2) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;
(3) "defense" shall include investigations of any threatened, pending
or completed action, suit or proceeding as well as appeals thereof and
shall also include any defensive assertion of a cross-claim or a
counterclaim;
(4) "serving at the request of the Corporation" shall include any
service as a Director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such Director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries;
(5) "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify
its Directors, officers and employees or agents, so that any person who is
or was a Director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a Director, officer, employee, partner, trustee or agent of
any Other Enterprise, shall stand in the same position under this Article
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued.
As referred to in this Article, a person acting in good faith and in a manner he
reasonably believed to be in the interests of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation." For the purpose of this
Article, unless the Board of Directors of the Corporation shall determine
otherwise, any Director or officer of the Corporation who shall serve as an
officer, Director, employee, partner, trustee or agent of any Other Enterprise
of which the Corporation, directly or indirectly, is a Stockholder or creditor,
or in which the Corporation is in any way interested, shall be presumed to be
serving in such a capacity at the request of the Corporation. In all other
instances where any person shall serve as a Director, officer, employee,
partner, trustee or agent of any Other Enterprise, if it is not otherwise
established that such person is or was serving in such a capacity at the request
of the Corporation, the Board of Directors of the Corporation shall determine
whether such person is or was serving at the request of the Corporation, and it
shall not be necessary to show any actual or prior request for such service,
which determination shall be final and binding on the Corporation and the person
seeking indemnification.
Section 12. Severability. If any provision of this Article or the
application of any such provision to any person or circumstance is held invalid,
illegal or unenforceable for any reason whatsoever, the remaining provisions of
this Article and the application of such provision to
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<PAGE>
other persons or circumstances shall not be affected thereby and to the fullest
extent possible the court finding such provision invalid, illegal or
unenforceable shall modify and construe the provision so as to render it valid
and enforceable as against all persons or entities and to give the maximum
possible protection to persons subject to indemnification hereby within the
bounds of validity, legality and enforceability. Without limiting the generality
of the foregoing, if an officer or Director of the Corporation or any person who
is or was serving at the Corporation's request as a Director, officer, employee,
partner, trustee or agent of any Other Enterprise, is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the judgments, amounts paid in settlement, attorneys' fees, ERISA
excise taxes or penalties, fines or other expenses actually and reasonably
incurred by any such person in connection with any threatened, pending or
completed action, suit or proceeding (including without limitation the
investigation, defense, settlement or appeal of such action, suit or
proceeding), but not, however, for all of the total amount thereof, the
Corporation shall nevertheless indemnify such person for the portion thereof to
which such person is entitled.
Section 13. Personal Right. The right of any person to indemnification from
the Corporation under the provisions of this Article shall be a personal right,
and the Corporation shall have no liability hereunder to any insurer, Other
Enterprise or other person (other than the heirs, executors, administrators, or
estate of a person entitled thereto pursuant to Section 8 hereof) by reason of
subrogation, assignment or succession by any other means to the claim of any
person to indemnification from the Corporation hereunder.
Section 14. Regulatory Actions. Notwithstanding any other provision of this
Article, in no event shall the Corporation indemnify any person against
liabilities, penalties, or expenses incurred in connection with an
administrative proceeding or action instituted by a bank regulatory agency,
which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by such person or persons in the form
of payments to the Corporation or any Other Enterprise.
Article IX
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted as provided in the Articles of Incorporation.
Article X
MISCELLANEOUS
Section 1. Construction. The titles of the paragraphs and subparagraphs
have been inserted as a matter of convenience and reference only, and shall not
control or affect the meaning or construction of these Bylaws. Use of the
masculine gender shall also be deemed to refer to the feminine gender and neuter
gender and the singular to the plural unless the context clearly requires
otherwise.
15
BLUE VALLEY BAN CORP.
1998 EQUITY INCENTIVE PLAN
<PAGE>
Table of Contents
Article 1. Establishment, Effective Date, Objectives and Duration............1
1.1 ESTABLISHMENT OF THE PLAN.............................................1
1.2 OBJECTIVES OF THE PLAN................................................1
1.3 DURATION OF THE PLAN..................................................1
Article 2. Definitions.......................................................1
2.1 ARTICLE...............................................................1
2.2 AWARD.................................................................1
2.3 AWARD AGREEMENT.......................................................1
2.4 BOARD.................................................................1
2.5 CAUSE.................................................................1
2.6 CODE..................................................................2
2.7 COMMITTEE.............................................................2
2.8 COMMON STOCK..........................................................2
2.9 COMPANY...............................................................2
2.10 COVERED EMPLOY.......................................................2
2.11 DEFERRED SHARE UNITS.................................................2
2.12 DISABILITY...........................................................2
2.13 DISQUALIFYING DISPOSITION............................................2
2.14 ELIGIBLE PERSON......................................................2
2.15 EXCHANGE ACT.........................................................3
2.16 FAIR MARKET VALUE....................................................3
2.17 GRANT DATE...........................................................3
2.18 GRANTEE..............................................................3
2.19 INCENTIVE STOCK OPTION...............................................3
2.20 INCLUDING............................................................3
2.21 MATURE SHARES........................................................3
2.22 MINIMUM CONSIDERATION................................................3
2.23 OPTION...............................................................3
2.24 OPTION PRICE.........................................................3
<PAGE>
2.25 OPTION TERM..........................................................3
2.26 PERFORMANCE-BASED EXCEPTION..........................................4
2.27 PERIOD OF RESTRICTION................................................4
2.28 PERSON...............................................................4
2.29 PLAN.................................................................4
2.30 RELOAD OPTION........................................................4
2.31 REQUIRED WITHHOLDING.................................................4
2.32 RESTRICTED SHARES....................................................4
2.33 RULE 16B-3...........................................................4
2.34 SEC..................................................................4
2.35 SECTION..............................................................4
2.36 SHARE................................................................4
2.37 SUBSIDIARY...........................................................4
2.38 TERMINATION OF AFFILIATION...........................................4
2.39 10% OWNER............................................................5
Article 3. Administration....................................................5
3.1 COMMITTEE.............................................................5
3.2 POWERS OF COMMITTEE...................................................5
Article 4. Shares Subject to the Plan and Maximum Awards.....................6
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS.................................6
4.2 ADJUSTMENTS IN AUTHORIZED SHARES......................................7
Article 5. Eligibility and General Conditions of Awards......................7
5.1 ELIGIBILITY...........................................................7
5.2 GRANT DATE............................................................7
5.3 MAXIMUM TERM..........................................................7
5.4 AWARD AGREEMENT.......................................................7
5.5 RESTRICTIONS ON SHARE TRANSFERABILITY.................................7
5.6 TERMINATION OF AFFILIATION............................................8
5.7 NONTRANSFERABILITY OF AWARDS..........................................9
5.8 CANCELLATION AND RESCISSION OF AWARDS.................................9
5.9 LOANS AND GUARANTEES..................................................9
<PAGE>
Article 6. Stock Options....................................................10
6.1 GRANT OF OPTIONS.....................................................10
6.2 AWARD AGREEMENT......................................................10
6.3 OPTION PRICE.........................................................10
6.4 GRANT OF INCENTIVE STOCK OPTIONS.....................................10
6.5 GRANT OF RELOAD OPTIONS..............................................11
6.6 CONDITIONS ON RELOAD OPTIONS.........................................12
6.7 PAYMENT..............................................................12
Article 7. Restricted Shares................................................13
7.1 GRANT OF RESTRICTED SHARES...........................................13
7.2 AWARD AGREEMENT......................................................13
7.3 CONSIDERATION........................................................13
7.4 EFFECT OF FORFEITURE.................................................13
7.5 ESCROW; LEGENDS......................................................13
Article 8. Beneficiary Designation..........................................13
Article 9. Deferred Share Units/Deferrals...................................14
9.1 DEFERRED SHARE UNITS.................................................14
9.2 DEFERRALS............................................................14
Article 10. Rights of Employees/Directors...................................14
10.1 EMPLOYMENT..........................................................14
10.2 PARTICIPATION.......................................................14
Article 11. Amendment, Modification, and Termination........................14
11.1 AMENDMENT, MODIFICATION, AND TERMINATION............................14
11.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR .......
NONRECURRING EVENTS...................................................14
11.3 AWARDS PREVIOUSLY GRANTED...........................................15
Article 12. Withholding.....................................................15
12.1 WITHHOLDING.........................................................15
12.2 NOTIFICATION UNDER CODE SECTION 83(B)...............................16
Article 13. Successors......................................................16
<PAGE>
Article 14. Additional Provisions...........................................16
14.1 GENDER AND NUMBER...................................................16
14.2 SEVERABILITY........................................................16
14.3 REQUIREMENTS OF LAW.................................................16
14.4 SECURITIES LAW COMPLIANCE...........................................17
14.5 NO RIGHTS AS A STOCKHOLDER..........................................17
14.6 NATURE OF PAYMENT...................................................17
14.7 GOVERNING LAW.......................................................18
EXHIBIT A..................................................................19
Sample STOCK OPTION AGREEMENT..............................................21
<PAGE>
Blue Valley Ban Corp.
1998 Equity Incentive Plan
Article 1. Establishment, Effective Date, Objectives and Duration
1.1 Establishment of the Plan. Blue Valley Ban Corp., a Kansas corporation
(the "Company"), hereby establishes an incentive compensation plan to be known
as the "Blue Valley Ban Corp. 1998 Equity Incentive Plan" (the "Plan"). The Plan
has been adopted by the Board of Directors of the Company (the "Board") and
approved by the shareholders of the Company. The Plan shall be effective as of
April 9 , 1998 (the "Effective Date").
1.2 Objectives of the Plan. The Plan is intended to allow selected
employees and directors of the Company and its Subsidiaries to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Subsidiaries in attracting new
employees and directors and retaining existing employees and directors. The Plan
is also intended to optimize the profitability and growth of the Company through
incentives which are consistent with the Company's goals; to provide employees
and directors with an incentive for excellence in individual performance; and to
promote teamwork among employees and directors.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Board to amend or terminate
the Plan at any time pursuant to Article 11 hereof, until all Shares subject to
it shall have been purchased or acquired according to the Plan's provisions.
However, in no event may an Incentive Stock Option be granted under the Plan on
or after the date 10 years following the earlier of (i) the date the Plan was
adopted and (ii) the date the Plan was approved by the shareholders of the
Company.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below:
2.1 "Article" means an Article of the Plan.
2.2 "Award" means Options (including Incentive Stock Options), Restricted
Shares or Deferred Share Units granted under the Plan.
2.3 "Award Agreement" means the written agreement by which an Award shall
be evidenced.
2.4 "Board" has the meaning set forth in Section 1.1.
2.5 "Cause" means, unless otherwise defined in an Award Agreement, any one
or more of the following, as determined by the Committee:
<PAGE>
(i) a Grantee's commission of a crime which, in the judgment of
the Committee, is likely to result in injury to the Company or a
Subsidiary;
(ii) the material violation by the Grantee of written policies of
the Company or a Subsidiary;
(iii) the habitual neglect by the Grantee in the performance of
his or her duties to the Company or a Subsidiary; or
(iv) action or inaction by the Grantee in connection with his or
her duties to the Company or a Subsidiary resulting, in the judgment
of the Committee, in a material injury to the Company or a Subsidiary.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and regulations and rulings thereunder. References to a particular section
of the Code include references to successor provisions.
2.7 "Committee" has the meaning set forth in Article 3.
2.8 "Common Stock" means the common stock, $10.00 par Value, of the
Company.
2.9 "Company" has the meaning set forth in Section 1.1.
2.10 "Covered Employ" means a Grantee who, as of the date that the value of
an Award is recognizable as income, is one of the group of "covered employees,"
within the meaning of Code Section 162(m).
2.11 "Deferred Share Units" means units granted under Section 9.1 of the
Plan.
2.12 "Disability" means, unless otherwise defined in an Award Agreement,
for purposes of the exercise of an Incentive Stock Option after Termination of
Affiliation, a disability within the meaning of Section 22(e)(3) of the Code,
and for all other purposes, a mental or physical condition which, in the
judgment of the Committee, renders a Grantee unable to perform any of the
principal job responsibilities which such Grantee held or the tasks to which
such Grantee was assigned at the time the disability was incurred, and which
condition is expected to be permanent or for an indefinite duration exceeding
two years.
2.13 "Disqualifying Disposition" has the meaning set forth in Section 6.4.
2.14 "Eligible Person" means (i) any employee (including any officer) of
the Company or any Subsidiary, including any such employee who is on an approved
leave of absence, layoff, or has been subject to a disability which does not
qualify as a Disability and (ii) any director of the Company or any Subsidiary.
2
<PAGE>
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to a particular section of the Exchange Act
include references to successor provisions.
2.16 "Fair Market Value" means (A) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee, and (B)
with respect to Shares, unless otherwise determined in the good faith discretion
of the Committee, as of any date, (i) the closing price on the date of
determination on the New York Stock Exchange (or, if no sale of Shares was
reported for such date, on the next preceding date on which a sale of Shares was
reported), (ii) if the Shares are not listed on the New York Stock Exchange, the
closing price of the Shares on such other national exchange on which the Shares
are principally traded or as reported by the National Market System, or similar
organization, or if no such quotations are available, the average of the high
bid and low asked quotations in the over-the-counter market as reported by the
National Quotation Bureau Incorporated or similar organizations; or (iii) in the
event that there shall be no public market for the Shares, the fair market value
of the Shares as determined (which determination shall be conclusive) in good
faith by the Committee.
2.17 "Grant Date" has the meaning set forth in Section 5.2.
2.18 "Grantee" means an individual who has been granted an Award.
2.19 "Incentive Stock Option" means an option granted under Article 6 of
the Plan that is intended to meet the requirements of Section 422 of the Code or
any successor provisions thereto.
2.20 "including" or "includes" means "including, without limitation," or
"includes, without limitation", respectively.
2.21 "Mature Shares" means Shares for which the holder thereof has good
title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six months or (ii) has purchased on the open
market.
2.22 "Minimum Consideration" means $.01 per Share or such other amount that
is from time to time considered to be capital under applicable law.
2.23 "Option" means an option granted under Article 6 of the Plan.
2.24 "Option Price" means the price at which a Share may be purchased by a
Grantee pursuant to an Option.
2.25 "Option Term" means the period beginning on the Grant Date of an
Option and ending on the expiration date of such Option, as specified in the
Award Agreement for such Option and as may, in the discretion of the Committee
and consistent with the provisions of the Plan, be extended from time to time
prior to the expiration date of such Option then in effect.
3
<PAGE>
2.26 "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.27 "Period of Restriction" means the period during which the transfer of
Restricted Shares is limited in some way (the length of the period being based
on the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, in its discretion),
and the Shares are subject to a substantial risk of forfeiture, as provided in
Article 7.
2.28 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.29 "Plan" has the meaning set forth in Section 1.1.
2.30 "Reload Option" has the meaning set forth in Section 6.5.
2.31 "Required Withholding" has the meaning set forth in Article 12.
2.32 "Restricted Shares" means Shares that are subject to forfeiture if the
Grantee does not satisfy the conditions, if any, specified in the Award
Agreement applicable to such Shares.
2.33 "Rule 16b-3 " means Rule 16b-3 promulgated by the SEC under the
Exchange Act, as amended from time to time, together with any successor rule, as
in effect from time to time.
2.34 "SEC" means the United States Securities and Exchange Commission, or
any successor thereto.
2.35 "Section" means, unless the context otherwise requires, a Section of
the Plan.
2.36 "Share" means a share of Common Stock.
2.37 "Subsidiary" means, for purposes of grants of Incentive Stock Options,
a corporation as defined in Section 424(f) of the Code (with the Company being
treated as the employer corporation for purposes of this definition) and, for
all other purposes, a United States or foreign corporation with respect to which
the Company owns, directly or indirectly, 50% or more of the thenoutstanding
common stock.
2.38 "Termination of Affiliation" occurs on the first day on which an
individual is for any reason no longer providing services to the Company or any
Subsidiary in the capacity of an employee or director, or with respect to an
individual who is an employee or director of a Subsidiary, the first day on
which the Company no longer owns, directly or indirectly, voting securities
possessing at least 50% of the combined voting power of the thenoutstanding
securities entitled to vote generally in the election of directors of such
Subsidiary.
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2.39 "10% Owner" means a person who owns capital stock (including stock
treated as owned under Section 424(d) of the Code) possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company
or any Subsidiary.
Article 3. Administration
3.1 Committee. Subject to Article 11, and to Section 3.2, the Plan shall be
administered by the Board, or a committee appointed by the Board to administer
the Plan. Any references herein to "Committee" are references to the Board, or a
committee established by the Board, as applicable. To the extent the Board
considers it desirable to comply with or qualify under Rule 16b-3 or meet the
Performance-Based Exception, the Committee shall consist of two or more
directors of the Company, all of whom qualify as "outside directors" as defined
for purposes of the regulations under Code Section 162(m) and "non-employee
directors" within the meaning of Rule 16b-3. The number of members of the
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 and the Performance-Based Exception as then in effect.
3.2 Powers of Committee. Subject to the express provisions of the Plan, the
Committee has full and final authority and sole discretion as follows:
(i) to determine when, to whom and in what types and amounts
Awards should be granted and the terms and conditions applicable to
each Award, and whether or not specific Awards shall be granted in
connection with other specific Awards, and if so whether they shall be
exercisable cumulatively with., or alternatively to, such other
specific Awards;
(ii) to determine the amount, if any, that a Grantee shall pay
for Restricted Shares, whether to permit or require the payment of
cash dividends thereon to be deferred and the terms related thereto,
when Restricted Shares (including Restricted Shares acquired upon the
exercise of an Option) shall be forfeited and whether such shares
shall be held in escrow;
(iii) to construe and interpret the Plan and to make all
determinations necessary or advisable for the administration of the
Plan;
(iv) to make, amend, and rescind rules relating to the Plan,
including rules with respect to the exercisability and non
forfeitability of Awards upon the Termination of Affiliation of a
Grantee;
(v) to determine the terms and conditions of all Award Agreements
(which need not be identical) and, with the consent of the Grantee, to
amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan;
provided that the consent of the Grantee shall not be required for any
amendment which (A) does not adversely affect the rights of the
Grantee, or (B) is necessary or
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advisable (as determined by the Committee) to carry out the purpose of
the Award as a result of any new or change in existing applicable law;
(vi) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;
(vii) to accelerate the exercisability (including exercisability
within a period of less than six months after the Grant Date) of, and
to accelerate or waive any or all of the terms and conditions
applicable to, any Award or any group of Awards for any reason and at
any time, including in connection with a Termination of Affiliation;
(viii) subject to Sections 1.3 and 5.3, to extend the time during
which any Award or group of Awards may be exercised;
(ix) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are advisable to fulfill
the purposes of the Plan;
(x) to impose such additional terms and conditions upon the
grant, exercise or retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate, including
limiting the percentage of Awards which may from time to time be
exercised by a Grantee; and
(xi) to take any other action with respect to any matters
relating to the Plan for which it is responsible.
The determination of the Committee on all matters relating to the Plan or
any Award Agreement shall be final, conclusive and binding on all Persons. No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Award.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2, the number of Shares hereby reserved for issuance under
the Plan shall be 50,000, and the number of Shares for which Awards may be
granted to any Grantee in any calendar year shall not exceed 15,000. If
anyShares subject to an Award granted hereunder are forfeited or such Award
otherwise terminates without the issuance of such Shares or of other
consideration in lieu of such Shares, the Shares subject to such Award, to the
extent of any such forfeiture or termination shall again be available for grant
under the Plan. If any Shares subject to an Award granted hereunder are
withheld, applied as payment, or sold and the proceeds thereof applied as
payment in connection with the exercise of an Award or the withholding or
payment of taxes related thereto, such Shares, to the extent of any such
withholding or payment, shall again be available for grant under the Plan. The
Committee shall from time to time determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan. Shares issued
pursuant to the Plan may be treasury Shares or newly issued Shares.
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4.2 Adjustments in Authorized Shares. In the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split,
reverse stock split, subdivision, consolidation or reduction of capital,
reorganization, merger, scheme of arrangement, split-up, spin-off or combination
involving the Company or repurchase or exchange of Shares or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that any adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable, adjust
any or all of (i) the number and type of Shares (or other securities or
property) with respect to which Awards may be granted, (ii) the number and type
of Shares (or other securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, in each case that with respect to Awards of Incentive Stock
Options no such adjustment shall be authorized to the extent that such authority
would cause the Plan to violate Section 422(b)(1) of the Code or any successor
provision thereto; and provided further, that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.
Article 5. Eligibility and General Conditions of Awards
5.1 Eligibility. The Committee may in its discretion grant Awards to any
Eligible Person, whether or not he or she has previously received an Award.
5.2 Grant Date. The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by the
Committee.
5.3 Maximum Term. Any provision of the Plan to the contrary
notwithstanding, the Option Term or other period during which an Award may be
outstanding shall under no circumstances extend more than 10 years after the
Grant Date, and shall be subject to earlier termination as herein provided.
5.4 Award Agreement. To the extent not set forth in the Plan, the terms and
conditions of each Award (which need not be the same for each grant or for each
Grantee) shall be set forth in an Award Agreement.
5.5 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise or vesting of an
Award as it may deem advisable, including restrictions under applicable federal
securities laws. Except as otherwise provided by the Committee in an Award
Agreement, all Shares acquired pursuant to the exercise or vesting of an Award
shall be subject to (i) the option right by the Company to purchase such Shares
set forth in Article V of the Company's Articles of Incorporation (as the same
may be amended from time to time), (ii) the right of the Company to purchase,
and to require a Grantee to sell. to the Company, such Shares at any time within
sixty (60) days following such Grantee's Termination of Affiliation (or, if
later, following the Grantee's acquisition of such Shares pursuant to exercise
or vesting of an Award) at a purchase price
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payable in cash equal to the Fair Market Value of the shares on the date of
purchase, and (iii) in the event of a transaction pursuant to which the holders
of more than 50% of the then-outstanding Shares agree to sell their Shares to
any Person, the right of the Company to require the Grantee to sell to such
Person, on the same terms and conditions applicable to the sale by such other
shareholders, any or, all Shares acquired pursuant to the exercise or vesting of
an Award.
5.6 Termination of Affiliation. Except as otherwise provided by the
Committee in an Award Agreement, the extent to which the Grantee shall have the
right to exercise, vest in, or receive payment in respect of an Award following
Termination of Affiliation shall be determined in accordance with the following
provisions of this Section 5.6.
(a) For Cause. Except as otherwise provided by the Committee in an
Award Agreement, if a Grantee has a Termination of Affiliation for Cause,
(i) the Grantee's Restricted Shares and Deferred Share Units that are
forfeitable shall thereupon be forfeited, subject to the provisions of
Section 7.4 regarding repayment of certain amounts to the Grantee; and (ii)
any unexercised Option shall terminate effective immediately upon such
Termination of Affiliation.
(b) On Account of Death. Except as otherwise provided by the Committee
in an Award Agreement, if a Grantee has a Termination of Affiliation on
account of death, then:
(i) the Grantee's Restricted Shares and Deferred Share Units that
were forfeitable shall thereupon become nonforfeitable; and .
(ii) any unexercised Option, whether or not exercisable on the
date of such Termination of Affiliation, may be exercised, in whole or
in part, within the first 12 months after such Termination of
Affiliation (but only during the Option Term) by (A) the Grantee's
personal representative or the person to whom the Option is
transferred by will or the applicable laws of descent and
distribution, or (B) the Grantee's beneficiary designated in
accordance with Article 8.
(c) On Account of Disability. Except as otherwise provided by the
Committee in an Award Agreement, if a Grantee has a Termination of
Affiliation on account of Disability, then:
(i) the Grantee's Restricted Shares and Deferred Share Units that
were forfeitable shall thereupon become nonforfeitable; and
(ii) any unexercised Option, whether or not exercisable on the
date of such Termination of Affiliation, may be exercised, in whole or
in part, within the first 12 months after such Termination of
Affiliation (but only during the Option Term) by the Grantee or, after
his or her death, by (A) his or her personal representative or the
person to whom the Option is transferred by will or the applicable
laws of descent and distribution, or (B) the Grantee's beneficiary
designated in accordance with Article 8.
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(d) Any Other Reason. Except as otherwise provided by the Committee in
an Award Agreement, if a Grantee has a Termination of Affiliation for any
reason other than for Cause, Death, or Disability, then:
(i) the Grantee's Restricted Shares and Deferred Share Units, to
the extent forfeitable on the date of the Grantee's Termination of
Affiliation, shall be forfeited on such date; and
(ii) any unexercised Option, to the extent exercisable
immediately before the Grantee's Termination of Affiliation, may be
exercised in whole or in part, not later than three months after such
Termination of Affiliation (but only during the Option Term) by the
Grantee, or, after his or her death, by (A) his or her personal
representative or the person to whom the Option is transferred by will
or the applicable laws of descent and distribution, or (B) the
Grantee's beneficiary designated in accordance with Article 8.
5.7 Nontransferability of Awards.
(a) Each Award, and each right under any Award, shall be exercisable
only by the Grantee during the Grantee's lifetime, or, if permissible under
applicable law, by the Grantee's guardian or legal representative or by a
transferee receiving such Award pursuant to a qualified domestic relations
order (a "QDRO") as defined in the Code or Title I of the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"), or the rules
thereunder.
(b) No Award (prior to the time, if applicable, Shares are issued in
respect of such Award), and no right under any Award, may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered
by a Grantee otherwise than by will or by the laws of descent and
distribution (or in the case of Restricted Shares, to the Company) or
pursuant to a QDRO, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Subsidiary; provided, that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.
5.8 Cancellation and Rescission of Awards. Unless the Award Agreement
specifies otherwise, the Committee may cancel, rescind, suspend, withhold, or
otherwise limit or restrict any unexercised Award at any Lime if the Grantee is
not in compliance with all applicable provisions of the Award Agreement and the
Plan or if the Grantee has a Termination of Affiliation for Cause.
5.9 Loans and Guarantees. The Committee may in its discretion, and subject
to applicable law, (i) allow a Grantee to defer payment to the Company of all or
any portion of the Option Price of an Option, (ii) allow a Grantee to defer
payment to the Company of all or any portion of the purchase price of Restricted
Shares, or (iii) cause the Company to loan to the Grantee all or any portion of
any taxes associated with the exercise, nonforfeitability of, or payment of
benefits in connection with, an Award, or cause the Company to guarantee a loan
from a third party to the Grantee, in an amount equal to all or any portion of
such Option Price, purchase price of Restricted Shares or any related taxes. Any
such payment deferral, loan
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or guarantee by the Company shall be on such terms and conditions as the
Committee may determine.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to any Eligible Person in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the Option Term, the number of
shares to which the Option pertains, the time or times at which such Option
shall be exercisable and such other provisions as the Committee shall determine.
6.3 Option Price. The Option Price of an Option under this Plan shall be
determined in the sole discretion of the Committee, and may be less than, equal
to, or more than 100% of the Fair Market Value of a Share on the Grant Date;
provided, however, that the Option Price of an Incentive Stock Option shall be
at least equal to 100% of the Fair Market Value of a Share on the Grant Date.
6.4 Grant of Incentive Stock Options. At the time of the grant of any
Option, the Committee may in its discretion designate that such Option shall be
made subject to additional restrictions to permit it to qualify as an "incentive
stock option" under the requirements of Section 422 of the Code. Any Option
designated as an Incentive Stock Option:
(i) shall, if granted to a 10% Owner, have an Option Price not
less than 110% of the Fair Market Value of a Share on its Grant Date;
(ii) shall be for a period of not more than 10 years (five years
in the case of an Incentive Stock Option granted to a 10% Owner) from
its Grant Date, and shall be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (as of the
Grant Date of each Incentive Stock Option) of the Shares with respect
to which Incentive Stock Options (whether granted under the Plan or
any other stock option plan of the Grantee's employer or any parent or
Subsidiary thereof ("Other Plans")) are exercisable for the first time
by such Grantee during any calendar year, determined in accordance
with the provisions of Section 422 of the Code, which exceeds $100,000
(the 1100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of the Shares
(determined on the Grant Date) with respect to the portion of such
grant which is exercisable for the first time during any calendar year
("Current Grant") and all Incentive Stock Options previously granted
under the Plan and any Other Plans which are exercisable for the first
time during a calendar year ("Prior Grants") would exceed the $100,000
Limit, be exercisable as follows:
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(A) the portion of the Current Grant which would, when added
to any Prior Grants, be exercisable with respect to Shares which
would have an aggregate Fair Market Value (determined as of the
respective Grant Date for such options) in excess of tile
$100,000 Limit shall, notwithstanding the terms of the Current
Grant, be exercisable for the first time by the Grantee in the
first subsequent calendar year or years in which it could be
exercisable for the first time by the Grantee when added to all
Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
preceding provisions of this Section during any calendar year
commencing with the calendar yew in which it is first exercisable
through and including the last calendar you in which it may by
its terms be exercised, such portion of the Current Grant shall
not be an Incentive Stock Option, but shall be exercisable as a
separate option at such date or dates as are provided in the
Current Grant;
(v) shall be granted within 10 years from the earlier of the date
the Plan is adopted or the date the Plan is approved by the
stockholders of the Company;
(vi) shall require the Grantee to notify the Committee of any
disposition of any Shares issued pursuant to the exercise of the
Incentive Stock Option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions)
(any such circumstance, a "Disqualifying Disposition"), within 10 days
of such Disqualifying Disposition; and
(vii) shall by its terms not be assignable or transferable other
than by will or the laws of descent and distribution and may be
exercised, during the Grantee's lifetime, only by the Grantee;
PROVIDED, HOWEVER, that the Grantee may, to the extent provided in the
Plan in any manner specified by the Committee, designate in writing a
beneficiary to exercise his or her Incentive Stock, Option after the
Grantee's death.
Notwithstanding the foregoing and Section 3.2(v), the Committee may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an Incentive Stock Option), take any action necessary to prevent
such Option from being treated as an Incentive Stock Option.
6.5 Grant of Reload Options. The Committee may in connection with the grant
of an Option or thereafter provide that a Grantee who (i) is an Eligible Person
when he or she exercises an Option, (ii) exercises such Option for Shares which
have a Fair Market Value equal to not less than 120% of the Option Price for
such Option ("Exercised Option") and (iii) satisfies the Option Price or
Required Withholding applicable thereto with Shares shall automatically be
granted, subject to Article 4, an additional option ("Reload Option") in an
amount equal to the sum ("Reload Number") of the number of Shares tendered to
exercise the Exercised Option plus, if so provided by the Committee, the number
of Shares, if any, retained by the Company in connection with the exercise of
the Exercised Option to satisfy any federal, state or local tax withholding
requirements; provided that no Reload Option shall be granted in connection with
the exercise of an Option that has been transferred by the initial Grantee
thereof.
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6.6 Conditions on Reload Options. Reload Options shall be subject to the
following terms and conditions:
(a) the Grant Date for each Reload Option shall be the date of
exercise of the Exercised Option to which it relates;
(b) subject to Section 6.6(c), the Reload Option may be exercised at
any time during the Option Term of the Exercised Option (subject to earlier
termination thereof as provided in the Plan or in the applicable Award
Agreement); and
(c) the terms of the Reload Option shall be the same as the terms of
the Exercised Option to which it relates, except that, unless otherwise
provided in the Award Agreement, the Option Price for the Reload Option
shall be 100% of the Fair Market Value of a Share on the Grant Date of the
Reload Option.
6.7 Payment. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares made by any one or more of the
following means subject to the approval of the Committee:
(A) cash, personal check or wire transfer;
(B) Mature Shares, valued at their Fair Market Value on the date
of exercise;
(C) with the approval of the Committee, Restricted Shares held by
the Grantee, for at least six months prior to the exercise of the
Option, each such share valued at the Fair Market Value of a Share on
the date of exercise;
(D) subject to applicable law, pursuant to procedures previously
approved by the Company, through the sale of the Shares acquired on
exercise of the Option through a broker-dealer to whom the Grantee has
submitted an irrevocable notice of exercise and irrevocable
instructions to deliver promptly to the Company the amount of sale or
loan proceeds sufficient to pay for such Shares, together with, if
requested by the Company, the amount of federal, state, local or
foreign withholding taxes payable by Grantee by reason of such
exercise; or
(E) in the discretion of the Committee, payment may also be made
in accordance with Section 5.9.
The Committee may in its discretion specify that, if any Restricted Shares
("Tendered Restricted Shares") are used to pay the Option Price, (x) all the
Shares acquired on exercise of the Option shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option, or (y) a number of Shares acquired on exercise of the
Option
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equal to the number of Tendered Restricted Shares shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option.
Article 7. Restricted Shares
7.1 Grant of Restricted Shares. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Restricted
Shares to any Eligible Person in such amounts as the Committee shall determine.
7.2 Award Agreement. Each grant of Restricted Shares shall be evidenced by
an Award Agreement that shall specify the Period(s) of Restriction, the number
of Restricted Shares granted, and such other provisions as the Committee shall
determine. The Committee may impose such conditions and/or restrictions on any
Restricted Shares granted pursuant to the Plan as it may deem advisable,
including restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable securities laws. The Committee may also grant Restricted Shares
without any performance, time-based or other restrictions which shall be
nonforfeitable upon grant.
7.3 Consideration. The Committee shall determine the amount, if any, that a
Grantee shall pay for Restricted Shares, subject to the following sentence.
Except with respect to Restricted Shares that are treasury shares, for which no
payment need be required, the Committee shall require the Grantee to pay at
least the Minimum Consideration for each Restricted Share. Such payment shall be
made in full by the Grantee before the delivery of the shares and in any event
no later than 10 business days after the Grant Date for such shares.
7.4 Effect of Forfeiture. If Restricted Shares are forfeited, and if the
Grantee was required to pay for such shares or acquired such Restricted Shares
upon the exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (Y) the Fair Market
Value of such Restricted Shares on the date of such forfeiture. The Company
shall pay to the Grantee the required amount as soon as is administratively
practical. Such Restricted Shares shall cease to be outstanding, and shall no
longer confer on the Grantee thereof any rights as a stockholder of the Company,
from and after the date of the event causing the forfeiture, whether or not the
Grantee accepts the Company's tender of payment for such Restricted Shares.
7.5 Escrow; Legends. The Committee may provide that the certificates for
any Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited or (y) shall bear an
appropriate legend restricting the transfer of such Restricted Shares.
Article 8. Beneficiary Designation
Each Grantee under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the
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Plan is to be paid in case of his or her death before he or she receives any or
ail of such benefit. Each such designation shall revoke all prior designations
by the same Grantee, shall be in a form prescribed by the Company, and will be
effective only when filed by the Grantee in writing with the Company during the
Grantee's lifetime. In the absence of any such designation, benefits remaining
unpaid at the Grantee's death shall be paid to the Grantee's estate.
Article 9. Deferred Share Units/Deferrals
9.1 Deferred Share Units. Subject to the terms and provisions of the Plan,
Deferred Share Units may be granted to any Eligible Person in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee. Except as otherwise provided in an Award Agreement, each
Deferred Share Unit shall have an initial value equal to the Fair Market Value
of a Share on the date of grant. The Committee may impose such conditions and/or
restrictions on any Deferred Share Units granted pursuant to the Plan as it may
deem advisable, including time-vesting restrictions and deferred payment
features. Except as otherwise provided in an Award Agreement, payment to the
Grantee of the value or increase in value, as applicable, of Deferred Share
Units shall be made upon the Grantee's Termination of Affiliation.
9.2 Deferrals. The Committee may permit or require a Grantee to defer
receipt of the delivery of Shares that would otherwise be due by virtue of the
exercise of an Option or the lapse or waiver of restrictions with respect to
Restricted Shares. If any such deferral is required or permitted, the Committee
shall, in its sole discretion, establish rules and procedures for such
deferrals. Except as otherwise provided in an Award Agreement, any Shares that
are subject to such deferral shall be delivered to the Grantee upon the earlier
of (i) the first day on which Shares are traded in a public market or (ii) the
Grantee's Termination of Affiliation.
Article 10. Rights of Employees/Directors
10.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Grantee's employment or
directorship at any time, nor confer upon any Grantee the right to continue in
the employ or as a director of the Company.
10.2 Participation. No employee or director shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.
Article 11. Amendment, Modification, and Termination
11.1 Amendment, Modification, and Termination. Subject to the terms of the
Plan, the Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part without the approval of the Company's
stockholders.
11.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including the events described in Section 4.2) affecting
the Company or the financial statements of the Company or of
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changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of the Performance-Based Exception.
11.3 Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary, no termination, amendment, or modification of the Plan
shall adversely affect in any material way any Award previously granted under
the Plan, without the written consent of the Grantee of such Award.
Article 12. Withholding
12.1 Withholding
(a) Mandatory Tax Withholding.
(1) Whenever under the Plan, Shares are to be delivered upon
exercise or payment of an Award or upon Restricted Shares becoming
nonforfeitable, or any other event with respect to rights and benefits
hereunder, the Company shall be entitled to require (i) that the
Grantee remit an amount in cash, or in the Committee's discretion,
Mature Shares, sufficient to satisfy all federal, state, and local tax
withholding requirements related thereto ("Required Withholding"),
(ii) the withholding of such Required Withholding from compensation
otherwise due to the Grantee or from any Shares due to the Grantee
under the Plan or (iii) any combination of the foregoing.
(2) Any Grantee who makes a Disqualifying Disposition or an
election under Section 83(b) of the Code shall remit to the Company an
amount sufficient to satisfy all resulting Required Withholding;
provided that, in lieu of or in addition to the foregoing, the Company
shall have the right to withhold such Required Withholding from
compensation otherwise due to the Grantee or from any Shares or other
payment due to the Grantee under the Plan.
(b) Elective Share Withholding.
(1) Subject to the following subsection, a Grantee may elect the
withholding ("Share Withholding") by the Company of a portion of the
Shares otherwise deliverable to such Grantee upon the exercise of an
Award or upon Restricted Shares becoming non-forfeitable (each, a
"Taxable Event") having a Fair Market Value equal to (i) the minimum
amount necessary to satisfy Required Withholding liability
attributable to the Taxable Event; or (ii) with the Committee's prior
approval, a greater amount, not to exceed the estimated total amount
of such Grantee's tax liability with respect to the Taxable Event.
15
<PAGE>
(2) Each Share Withholding election shall be subject to
the following conditions:
(i) any Grantee's election shall be subject to the
Committee's discretion to revoke the Grantee's right to elect
Share Withholding at any time before the Grantee's election if
the Committee has reserved the right to do so in the Award
Agreement;
(ii) the Grantee's election must be made before the date
(the "Tax Date") on which the amount of tax to be withheld is
determined; and
(iii) the Grantee's election shall be irrevocable.
12.2 Notification under Code Section 83(b). If the Grantee, in connection
with the exercise of any Option, or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company of such election within 10
days of filing the notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) of the Code. The Committee may, in connection with the grant
of an Award or at any time thereafter, prohibit a Grantee from making the
election described above.
Article 13. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder .shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise of all or substantially all of the business
and/or assets of the Company.
Article 14. Additional Provisions
14.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
14.2 Severability. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
14.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company shall not be obligated to deliver any Shares or
deliver benefits to a Grantee, if such exercise or delivery would constitute a
violation by the Grantee or the Company of any applicable law or regulation.
16
<PAGE>
14.4 Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any applicable
securities law, or the requirements of any stock exchange upon which Shares
may be listed, the Committee may impose any restriction on Shares acquired
pursuant to Awards under the Plan as it may deem advisable. All
certificates for Shares delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the SEC, any stock exchange upon
which Shares are then listed, any applicable securities law, and the
Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions. If so requested by the
Company, the Grantee shall make a written representation to the Company
that he or she will not sell or offer to sell any Shares unless a
registration statement shall be in effect with respect to such Shares under
the Securities Act of 1993, as amended, and any applicable state securities
law or unless he or she shall have furnished to the Company, in form and
substance satisfactory to the Company, that such registration is not
required.
(b) If the Committee determines that the exercise or non
forfeitability of, or delivery of benefits pursuant to, any Award would
violate any applicable provision of securities laws or the listing
requirements of any national securities exchange or national market system
.on which are listed any of the Company's equity securities, then the
Committee may postpone any such exercise, nonforfeitability or delivery, as
applicable, but the Company shall use all reasonable efforts to cause such
exercise, nonforfeitability or delivery to comply with all such provisions
at the earliest practicable date.
14.5 No Rights as a Stockholder. A Grantee shall not have any rights as a
stockholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the
Committee may require the payment of cash dividends thereon to be deferred and,
if the Committee so determines, reinvested in additional Restricted Shares.
Stock dividends and deferred cash dividends issued with respect to Restricted
Shares shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.
14.6 Nature of Payment. Awards shall be special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for purposes of determining any pension, retirement,
death or other benefit under (a) any pension, retirement, profit-sharing, bonus,
insurance or other employee benefit plan of the Company or any Subsidiary or (b)
any agreement between (i) the Company or any Subsidiary and (ii) the Grantee,
except as such plan or agreement shall otherwise expressly provide.
17
<PAGE>
14.7 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Kansas,
other than its laws respecting choice of law.
18
STOCK OPTION PLAN
OF
BLUE VALLEY BAN CORP.
This Stock Option Plan, is adopted this 14th day of December, 1994, by
BLUE VALLEY BAN CORP., a Kansas corporation (the "Company") for the benefit of
the optionees (herein referred to as the "Optionee" or "Optionees" as the
context requires). Any person who from time-to-time becomes an Optionee shall be
added to the list of Optionees on Exhibit A hereto. Exhibit A shall at all times
be incorporated herein by this reference. An Optionee shall be a director and/or
employee of the Company or Bank of Blue Valley, a Kansas corporation (the
"Bank").
The Stock Option Plan is as follows:
1. Grant and Designation of Option. Pursuant to this Stock Option Plan (the
"Plan"), the Company's Board of, Directors may from time-to-time grant to an
Optionee, a nonqualified stock option (the "Option") to purchase shares of the
Company's common stock (the "Optioned shares"). The date the Board of Directors
approves an Option shall be known herein as the "Grant Date". The number of
Optioned Shares and Grant Date approved by the Board of Directors shall be added
to the listing of Optionees on Exhibit A hereto.
2. Option Price. The price per share of the Optioned Shares (the "Option
Price") shall be determined as of the Grant Date by the Board of Directors
and shall be specified on Exhibit A hereto.
3. Term of Option. Any Option granted as of the date of this Plan or later shall
expire at the end of ten (10) years from the Grant Date, subject to earlier
termination as provided hereinafter. Any Option granted prior to the date of
this Plan shall have the term specified for such Option in Exhibit A hereto.
4. Exercising Options.
a. Notice of Exercise. The option shall be exercised by delivering notice
to the Company which: (i) states the Optionee's election to exercise the Option;
(ii) states the total number of shares that are being exercised; and (iii) is
accompanied by the full Option Price of the shares. For purposes of this
Paragraph 4, the date the Company receives such notice and purchase price shall
be the "Exercise Date". To the extent the Optionee has been granted more than
one Option under this Plan, the first-in-first-out rule will apply in
determining which option has been exercised. If the Option is exercised as
permitted herein by any person or persons other than the Optionee, such notice
shall be accompanied by such documentation as the Company may reasonably
require, including without limitation, evidence of the authority of such person
or persons to exercise the Option and evidence satisfactory to the Company that
any death taxes payable with respect to such shares have been paid or adequately
reserved,
b. Payment of Purchase Price. The purchase price shall be paid with: (i)
cash or a check payable to the Company, and/or (ii) a properly endorsed
certificate(s) with signatures
<PAGE>
guaranteed (unless such signature guarantee is waived by an officer of the
Company), representing shares of the Company's common stock which are fully paid
and free and clear from all liens and encumbrances. If, at the Exercise Date,
the shares surrendered by the Optionee are restricted under any federal or state
securities laws, then an equivalent number of newly issued shares equal to the
restricted shares surrendered shall continue to be so restricted. See Paragraph
5 below for purposes of determining the fair market value of the Company's
common stock exchanged by an Optionee as all or part of the purchase price of an
option on any Exercise Date.
c. Delivery of Certificates. The Company shall deliver a certificate or
certificates representing the shares as to which the Option has been exercised
as soon as practicable after receipt of the notice, payment of the full purchase
price, satisfaction of any withholding requirements set forth in Paragraph 9 of
this Plan, and receipt of any other documentation that the Company may
reasonably request.
5. Fair Market Value Determination. As of any Exercise Date, the fair market
value per share of the Company's common stock shall be equal to eighty percent
(80%) of the net book value of the Company's stock based on the consolidated
financial statements of the Company as of the June 30 or December 31 ending on
or preceding the Exercise Date (i.e., if June 29 is the Exercise Date, then the
previous December 31 financial statements will be used, if June 30 is the
Exercise Date, then that June 30 financial statements will be used). The
Company's determination of fair market value shall be binding on all Optionees
and option holders.
6. Limited Transferability. This option shall be transferable only as follows:
(i) by option holder's will; (ii) by the laws of descent and distribution
governing the option holder's estate; (iii) at anytime to option holder's
spouse, lineal ascendants (including brothers and sisters), and lineal
descendants; or (iv) to a trust or court-appointed fiduciary for the benefit of
the option holder or any of the family members specified previously in (iii) of
this sentence. Any options granted hereunder which are transferred because of
the death of the option holder shall lapse if not exercised by the successor
option holder within one (1 ) year after the date of the option holder's death.
During the lifetime of the option holder, the Option may be exercised only by
the following: the option holder; the option holder's legal guardian or
representative; or under a Power of Attorney from the option holder to some
other person or entity. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof and the levy of any execution, attachment or similar process upon the
Option shall be null and void and without effect. The terms and provisions of
this Plan are intended to apply not only to the original Optionee, but to any
subsequent option holder. Use of the term Optionee in this Plan shall also be
deemed to include any option holder as the context requires. The Optionee
acknowledges that the stock is subject to certain rights of first refusal on any
subsequent sale of the stock to outside parties.
7. Stock Adjustments. If the Company determines that any stock dividend, stock
split, reverse stock split, merger, reorganization, consolidation,
recapitalization, split-up, spin-off, repurchase, exchange of shares, issuance
of warrants or any other rights to purchase the Company's securities, or other
event affects the Company's common stock, adjustments shall be made in the
maximum number and/or class of shares and/or Option Price as the Company
determines to be appropriate in order to prevent the dilution or enlargement of
<PAGE>
benefits or potential benefits under this Plan.
8. Compliance With certain Laws and Regulations. If the Company determines that
the consent or approval of any governmental regulatory body, or that the
listing, registration or qualification of the shares subject to any Option upon
any securities exchange or under any law or regulation, is necessary or
desirable in connection with the granting or exercising of an option or the
acquisition of shares thereunder, the option holder shall supply the Company
with such certificates, representations and information as the Company may
request and shall otherwise cooperate with the Company in obtaining any such
listing, registration, qualification, consent or approval.
The Optionee acknowledges that the Company makes no representation that
any of the foregoing conditions exist, and undertakes no obligation to assure
that any such conditions exist at the time of exercise.
9. Tax Withholding.
a. Whenever the Company issues common stock under this Plan, the Company
shall have the right to require the option holder to remit to the Company
amounts sufficient to satisfy all applicable federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. If such certificate or certificates have been
delivered prior to the time a withholding obligation arises, the company shall
have the right to require the Optionee (or his guardian, legal representative ,
power of attorney, or successor) to remit to the Company amounts sufficient to
satisfy all federal, state and local withholding tax requirements at the time
such obligation arises and to withhold, as necessary, from any of the option
holder's accounts at the Bank or from any other amounts (including payroll)
payable to the optionee or option holder by the Company or the Bank. Whenever
the Company makes cash payments under this Plan, the Company shall have the
right to make such payments net of an amount sufficient to satisfy all federal,
state and local withholding tax requirements.
b. When permitted by the Company, the option holder may irrevocably elect
in writing, as to each option and on or prior to the date as of which income is
realized by the Optionee, in connection with such Option, to satisfy the
withholding obligation, in whole or in part, by complying with one of the
following alternatives at the Exercise Date: (i) request the Company to withhold
shares of common stock of the Company which would otherwise be issuable upon
such exercise; or (ii) deliver to the Company shares of common stock of the
Company owned by Optionee, having an aggregate fair market value, together with
cash for any fractional amount, equal to the amount required to be withheld for
such taxes. Any certificates delivered to the Company shall be properly endorsed
with signatures guaranteed (unless such signature guarantee is waived by an
officer of the Company), representing shares of the Company's common stock which
are fully paid and free and clear from all liens and encumbrances.
10. General.
a. Transfer Taxes. The Company shall pay all original issue and
transfer taxes and
<PAGE>
all other fees and expenses necessarily incurred by the Company in connection
with the issue and transfer of shares by the Company to the option holder
pursuant to this Plan.
b. Privilege of Stock Ownership. The option holder shall no have any
rights of a stockholder with respect to the Optioned Shares until the Option has
been duly exercised and the shares have been transferred to the option holder on
the books and records of Company.
c. Construction and No Waiver. Notwithstanding any provision of this Plan,
every option granted and exercised pursuant to this Plan are subject to the
provisions of this Plan. The failure of the Company in any instance to exercise
any of its rights granted under this Plan shall not constitute a waiver of any
subsequent identical rights or any other rights that may arise under this Plan.
d. Notices. Any notice required to be given or delivered to the Company or
the Optionee under the terms of this Plan shall be in writing and addressed to
the Company at the Bank's main corporate offices and to the optionee at the
address indicated on Exhibit A. Either party may designate another address by
sending a written notice to the other party. All notices shall be sent by U.S.
certified mail, with return receipt requested, or by actual delivery, if a
signed receipt is obtained.
e. Sole and Absolute Discretion. The Company shall have sole and
absolute discretion as to any action or determination of the Company pursuant
to this Plan.
f . Governing Law. This Plan shall be governed by and construed in
accordance with the laws of Kansas without reference to its principles of
conflicts of law. Venue for any litigation shall be in Johnson County, Kansas.
This Stock Option Plan has been duly executed, as of the day and year
first above written.
BLUE VALLEY BAN CORP.
[SEAL]
By: /s/ Robert D. Regnier
Robert D. Regnier, President
------------------------------------------------------
SUBORDINATED INDENTURE
BLUE VALLEY BAN CORP.,
as Issuer
to
WILMINGTON TRUST COMPANY,
as Trustee
_____% Junior Subordinated Debentures
Dated as of ________________, 2000
------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.....................................................................1
1.01 DEFINITIONS...........................................................1
ARTICLE II....................................................................8
2.01 DESIGNATION AND PRINCIPAL AMOUNT......................................8
2.02 MATURITY..............................................................9
2.03 FORM AND PAYMENT......................................................9
2.04 GLOBAL SUBORDINATED DEBENTURE.........................................9
2.05 INTEREST.............................................................11
2.06 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.......................12
2.07 REGISTRATION AND TRANSFER............................................12
2.08 MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR
SUBORDINATED DEBENTURES.........................................13
ARTICLE III..................................................................14
3.01 REDEMPTION...........................................................14
3.02 SPECIAL EVENT REDEMPTION.............................................14
3.03 OPTIONAL REDEMPTION BY COMPANY.......................................14
3.04 NOTICE OF REDEMPTION.................................................15
3.05 PAYMENT UPON REDEMPTION..............................................16
3.06 NO SINKING FUND......................................................17
ARTICLE IV...................................................................17
4.01 EXTENSION OF INTEREST PAYMENT PERIOD.................................17
4.02 NOTICE OF EXTENSION..................................................17
4.03 LIMITATION OF TRANSACTIONS DURING EXTENSION..........................18
ARTICLE V....................................................................18
5.01 PAYMENT OF PRINCIPAL AND INTEREST....................................18
5.02 MAINTENANCE OF AGENCY................................................18
5.03 PAYING AGENTS........................................................19
5.04 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.....................20
i
<PAGE>
5.05 COMPLIANCE WITH CONSOLIDATION PROVISIONS.............................20
5.06 RESTRICTIONS ON CERTAIN PAYMENTS.....................................20
5.07 COVENANTS AS TO THE TRUST............................................20
ARTICLE VI...................................................................21
6.01 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS.................................................21
6.02 PRESERVATION OF INFORMATION; COMMUNICATIONS WITH
SECURITYHOLDERS.................................................21
6.03 REPORTS BY THE COMPANY...............................................21
6.04 REPORTS BY THE TRUSTEE...............................................22
ARTICLE VII..................................................................22
7.01 EVENTS OF DEFAULT....................................................22
7.02 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE......................................................24
7.03 APPLICATION OF MONEYS COLLECTED......................................26
7.04 LIMITATION ON SUITS..................................................26
7.05 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER...........................................................27
7.06 CONTROL BY SECURITYHOLDERS...........................................27
7.07 UNDERTAKING TO PAY COSTS.............................................28
ARTICLE VIII.................................................................28
8.01 FORM OF JUNIOR SUBORDINATED DEBENTURE................................28
8.02 ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES.....................28
ARTICLE IX...................................................................29
9.01 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE...................29
9.02 CERTAIN RIGHTS OF TRUSTEE............................................30
9.03 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
THE JUNIOR SUBORDINATED DEBENTURES..............................31
9.04 MAY HOLD JUNIOR SUBORDINATED DEBENTURES..............................32
9.05 MONEYS HELD IN TRUST.................................................32
9.06 COMPENSATION AND REIMBURSEMENT.......................................32
9.07 RELIANCE ON OFFICERS' CERTIFICATE....................................33
9.08 DISQUALIFICATION; CONFLICTING INTERESTS..............................33
ii
<PAGE>
9.09 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..............................33
9.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR....................33
9.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...............................34
9.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS........................................................35
9.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
COMPANY.........................................................35
9.14 APPOINTMENT OF AUTHENTICATING AGENT..................................35
9.15 CO-TRUSTEES AND SEPARATE TRUSTEES....................................37
ARTICLE X....................................................................38
10.01 EVIDENCE OF ACTION BY SECURITYHOLDERS...............................38
10.02 PROOF OF EXECUTION BY SECURITYHOLDERS...............................39
10.03 WHO MAY BE DEEMED OWNERS............................................39
10.04 CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY
COMPANY DISREGARDED..........................................39
10.05 ACTIONS BINDING ON FUTURE SECURITYHOLDERS...........................40
ARTICLE XI...................................................................40
11.01 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
SECURITYHOLDERS..............................................40
11.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF
SECURITYHOLDERS..............................................41
11.03 EFFECT OF SUPPLEMENTAL INDENTURES...................................41
11.04 JUNIOR SUBORDINATED DEBENTURES AFFECTED BY
SUPPLEMENTAL INDENTURES......................................41
11.05 EXECUTION OF SUPPLEMENTAL INDENTURES................................42
ARTICLE XII..................................................................42
12.01 COMPANY MAY CONSOLIDATE, ETC........................................42
12.02 SUCCESSOR SUBSTITUTED...............................................43
12.03 EVIDENCE OF CONSOLIDATTION, ETC., TO TRUSTEE........................43
ARTICLE XIII.................................................................43
13.01 SATISFACTION AND DISCHARGE OF INDENTURE.............................43
13.02 DISCHARGE OF OBLIGATIONS............................................44
13.03 DEPOSITED MONEYS TO BE HELD IN TRUST................................44
iii
<PAGE>
13.04 PAYMENT OF MONEYS HELD BY PAYING AGENTS.............................44
13.05 REPAYMENT TO COMPANY................................................44
ARTICLE XIV..................................................................45
14.01 NO RECOURSE.........................................................45
ARTICLE XV...................................................................45
15.01 EFFECT ON SUCCESSORS AND ASSIGNS....................................45
15.02 ACTIONS BY SUCCESSOR................................................45
15.03 SURRENDER OF COMPANY POWERS.........................................45
15.04 NOTICES.............................................................45
15.05 GOVERNING LAW.......................................................46
15.06 TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT.................46
15.07 COMPLIANCE CERTIFICATES AND OPINIONS................................46
15.08 PAYMENTS ON BUSINESS DAYS...........................................46
15.09 CONFLICT WITH TRUST INDENTURE ACT...................................47
15.10 COUNTERPARTS........................................................47
15.11 SEPARABILITY........................................................47
15.12 ASSIGNMENT..........................................................47
15.13 ACKNOWLEDGMENT OF RIGHTS............................................47
ARTICLE XVI..................................................................47
16.01 AGREEMENT TO SUBORDINATE............................................47
16.02 DEFAULT ON SENIOR AND SUBORDINATED DEBT.............................48
16.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY................................48
16.04 SUBROGATION.........................................................49
16.05 TRUSTEE TO EFFECTUATE SUBORDINATION.................................50
16.06 NOTICE BY THE COMPANY...............................................50
16.07 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR AND
SUBORDINATED DEBT............................................51
16.08 SUBORDINATION MAY NOT BE IMPAIRED...................................51
EXHIBIT A....................................................................54
iv
<PAGE>
BLUE VALLEY BAN CORP.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939,
AS AMENDED, AND SUBORDINATED INDENTURE,
DATED AS OF _______________, 2000
TRUST INDENTURE ACT SECTION SUBORDINATED INDENTURE SECTION
Section 310 .......................................................... 15.09
Section 310(b) ............................................................9.08
Section 311 ...........................................................15.09
Section 311(a) ............................................................9.13
(b) ............................................................9.13
Section 312 ...........................................................15.09
Section 312(b) ............................................................6.02
Section 313 ...........................................................15.09
Section 313(a) ............................................................6.04
(b) ............................................................6.04
(c) ............................................................6.04
Section 314 ...........................................................15.09
Section 315 ...........................................................15.09
Section 316 ...........................................................15.09
Section 317 ...........................................................15.09
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Subordinated Indenture.
v
<PAGE>
SUBORDINATED INDENTURE
SUBORDINATED INDENTURE (the "Indenture"), dated as of ________________,
2000, between BLUE VALLEY BAN CORP., a Kansas 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 June 30,
2030 (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, BVBC Capital Trust I, a Delaware statutory business trust (the
"Trust"), has offered to the public up to $11,500,000 aggregate liquidation
amount of its _____% Cumulative Trust 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 up to $355,672
aggregate liquidation amount of its _____% Common Securities, in $11,855,672
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
1.01 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
<PAGE>
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 2.02, the date selected by the Company
which is prior to the Scheduled Maturity Date, but is after June 30, 2005.
"Additional Sums" shall have the meaning set forth in Section 2.05(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 Kansas or Delaware 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 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 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 for purposes
of any then applicable capital adequacy guidelines of the Federal Reserve, as
then in effect and
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applicable to the Company; provided, however, that the inability of the
Company to treat all or any portion of the Liquidation Amount of the Preferred
Securities as Tier 1 Capital shall not constitute the basis for a Capital
Treatment Event if such inability results from the Company having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the Federal Reserve now or may hereafter
accord Tier 1 Capital treatment in excess of the amount which may qualify for
treatment as Tier 1 Capital under applicable capital adequacy guidelines of the
Federal Reserve; provided, further, however, that the distribution of Junior
Subordinated Debentures in connection with the dissolution of the Trust shall
not in and of itself constitute a Capital Treatment Event.
"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
15.07.
"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.
"Company" means Blue Valley Ban Corp., a corporation duly organized and
existing under the laws of the State of Kansas, and, subject to the provisions
of Article XII, shall also include its successors and assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.01.
"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 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.05(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, (a) every
obligation of such Person for money borrowed; (b) 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; (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (d) every obligation of such Person issued or
assumed as the deferred purchase price of property
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or services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (e) every capital lease obligation of such
Person; and (f) every obligation of the type referred to in clauses (a) through
(e) 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 4.01.
"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 Exchange Act, or other applicable statute or regulation, which, in
each case, shall be designated by the Company pursuant to either Section 2.01 or
2.04.
"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 7.01, 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 4.01.
"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 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 (a) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (b) 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
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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 2030 authenticated and delivered under this Indenture.
"Liquidation Amount" means the stated amount of $8.00 per Trust
Security.
"Maturity Date" shall have the meaning set forth in Section 2.02.
"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.04(a).
"Officers' Certificate" means a certificate signed by the Chief Executive
Officer, 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 15.07, 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 15.07, if and to the extent required by the
provisions thereof.
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"Outstanding," when used with reference to Junior Subordinated Debentures
means, subject to the provisions of Section 10.04, 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
III, 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 2.08.
"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 2.08 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 any Vice
President or any corporate trust officer with direct responsibility for the
administration of this Indenture or any other officer or assistant officer of
the Trustee customarily performing functions similar to
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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 June 30, 2030.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 2.07.
"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.
"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 (a) 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,
(b) any Debt to any employee of the Company, (c) any Debt which by its terms is
subordinated to any trade accounts payable or accrued liabilities arising in the
ordinary course of business but only 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, (d) the Preferred
Securities Guarantee, and (e) 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, (a) 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, (b) 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 (c) 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
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(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 (a)
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, (b) 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 (c) 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 BVBC Capital Trust 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 _______________, 2000, of the Trust.
"Trustee" means Wilmington Trust Company and, subject to the provisions of
Article IX, 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 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.
"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
2.01 DESIGNATION AND PRINCIPAL AMOUNT. There is hereby authorized a series
of Securities designated the "_____% Junior Subordinated Debentures due 2030,"
limited in aggregate principal amount to $11,855,672, 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 8.02 of this
Indenture.
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2.02 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 2.02(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, but in no
case shall such Accelerated Maturity Date be a date before June 30, 2005.
(c) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.02(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.
2.03 FORM AND PAYMENT. Except as provided in Section 2.04, 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 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.
2.04 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
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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.
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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 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.
2.05 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
IV) quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, an "Interest Payment Date"), commencing on June 30,
2000, 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 (A) the Junior Subordinated
Debentures are held by the Property Trustee and the Preferred Securities
are no longer in book-entry only form or (B) the Junior Subordinated
Debentures are not represented by a Global Subordinated Debenture, the
record date for such interest installment shall be the 15th 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 payable.
(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,
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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.
2.06 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Junior
Subordinated Debentures shall be executed on behalf of the Company by its Chief
Executive Officer, 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.
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 provided in this Indenture and not
otherwise.
Upon the initial issuance, each Junior Subordinated Debenture shall be
dated ________________, 2000, 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.
2.07 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 5.02 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"
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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
5.02 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 III
and ending at the close of business on the day of such mailing.
2.08 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.
If there shall be delivered to the Company and the Trustee (a) evidence to
their satisfaction of the destruction, loss or theft of any Junior Subordinated
Debenture and (b) 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 protected
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.
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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
3.01 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 III.
3.02 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 3.03, 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., Overland Park, Kansas 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, Overland Park, Kansas time, on the date such
Redemption Price is to be paid.
3.03 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 June 30, 2005, at the
Redemption Price. Any redemption
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pursuant to this Section 3.03 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 3.03, 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., Overland Park, Kansas
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, Overland Park,
Kansas 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 national securities exchange
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.
3.04 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 Property Trustee in Wilmington,
Delaware 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
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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 portions (equal to eight dollars U.S. ($8) 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 Chief Executive Officer, 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.
3.05 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
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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 2.05(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.
3.06 NO SINKING FUND. The Junior Subordinated Debentures are not entitled
to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
4.01 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 4.01, 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 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.
4.02 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
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Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days 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 five Business Days 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 five Business Days 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 4.02 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period
permitted under Section 4.01.
4.03 LIMITATION OF TRANSACTIONS DURING EXTENSION. If (a) the Company shall
exercise its right to defer payment of interest as provided in Section 4.01; or
(b) there shall have occurred any Event of Default, then the Company shall be
subject to the restrictions on payments set forth under Section 5.06.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
5.01 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.
5.02 MAINTENANCE OF AGENCY. So long as any Junior Subordinated Debentures
remain Outstanding, the Company agrees to maintain an office or agency in
Wilmington, Delaware, or at such other location or locations as may be
designated as provided in this Section 5.02, where (a) Junior Subordinated
Debentures may be presented for payment, (b) Junior Subordinated Debentures may
be presented as hereinabove authorized for registration of transfer and
exchange, and (c) 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 Chief Executive Officer, 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 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.
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5.03 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 13.05, 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.
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5.04 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.
5.05 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 XII hereof
are complied with.
5.06 RESTRICTIONS ON CERTAIN PAYMENTS. If at any time (a) there shall have
occurred any event of which the Company has actual knowledge that (i) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default and (ii) in respect to which the Company shall not have taken reasonable
steps to cure, or (b) 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 (c) 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 (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 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).
5.07 COVENANTS AS TO THE TRUST. For so long as the Trust Securities of the
Trust remain outstanding, the Company will (a) 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, (b) use its reasonable efforts to
cause the Trust (i) 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 (ii) to otherwise
continue not to be treated as an association taxable as a corporation or
partnership for United States federal income tax purposes and (c) to use its
reasonable efforts to cause each Holder of Trust Securities to be treated as
owning an individual undivided beneficial interest in the Junior Subordinated
Debentures.
If the Junior Subordinated Debentures are issued in connection with the
distribution of the Junior Subordinated Debentures to the holders of the
Preferred Securities issued by the Trust
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upon a Dissolution Event, the Company will use its best efforts to list such
Junior Subordinated Debentures on The American Stock Exchange LLC or on such
other exchange as the Preferred Securities may then be listed; provided,
however, that any redemption of the junior subordinated debentures, in whole or
in part, effected in accordance with this Indenture shall not cause or result in
a violation of this Section 5.07.
For so long as the Junior Subordinated Debentures shall remain Outstanding,
the Company shall fulfill all reporting and filing obligations under the
Securities Exchange Act of 1934, as amended, as applicable to companies having a
class of securities registered under Section 12(b) or 12(g) thereunder.
ARTICLE VI
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
6.01 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 2.05(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.
6.02 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
6.01 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 6.01 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.
6.03 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
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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
time 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 overnight 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.
6.04 REPORTS BY THE TRUSTEE.
(a) Beginning July 31, 2001, on or before July 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.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
7.01 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
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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 (A) commences a voluntary case, (B) consents to the
entry of an order for relief against it in an involuntary case, (C)
consents to the appointment of a custodian of it or for all or
substantially all of its property or (D) makes a general assignment
for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (A) is for relief against the Company in an
involuntary case, (B) appoints a custodian of the Company for all or
substantially all of its property, or (C) 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 (A) the distribution of
Junior Subordinated Debentures to holders of Trust Securities in
liquidation of their interests in the Trust, (B) the redemption of all
of the outstanding Trust Securities of the Trust or (C) 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,
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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 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
9.06, 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 7.06. 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.
7.02 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
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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 9.06.
(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 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 9.06; 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 9.06.
(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 9.06, 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
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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.
7.03 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 9.06;
SECOND, to the payment of all Senior and Subordinated Debt of the
Company if and to the extent required by Article XVI; 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.
7.04 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 (a) such Holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof; (b) 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; (c) 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 (d) the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding; and (e) 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
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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.
7.05 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER.
(a) Except as otherwise provided in Section 7.02, 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 7.04, 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.
7.06 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 10.04, 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 9.01, 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 10.04, 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 (a) 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 7.01(c)), (b) a default in
the covenants contained in Section 5.06 or (c) in respect of a covenant or
provision hereof which under Article XI cannot be
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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 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.
7.07 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
8.01 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.
8.02 ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES. Junior Subordinated
Debentures in the aggregate principal amount of $10,309,280 may, upon execution
of this Indenture, be executed by the Company and delivered to the Trustee for
authentication. If the Underwriter exercises its Option and there is an Option
Closing Date (as such terms are defined in the Trust Agreement), then, on such
Option Closing Date, Junior Subordinated Debentures in the aggregate principal
amount of up to $1,546,392 may be executed by the Company and delivered to the
Trustee for authentication. In either such event, 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
Chief Executive Officer, its President or any Vice President, without any
further action by the Company.
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ARTICLE IX
CONCERNING THE TRUSTEE
9.01 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) and is known to the Trustee, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his 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:
(A) the duties and obligations of the Trustee shall be
determined solely by the express 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
(B) 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
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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.
(c) Within 90 days after actual knowledge by a Responsible Officer of
the Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of
Securities, as their names and addresses appear in the Securities Register,
notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of Securities. For the
purpose of this Section 9.01, the term "default" means any event that is,
or after notice or lapse of time or both would become, an Event of Default
with respect to the Securities.
9.02 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section
9.01:
(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 Chief Executive
Officer, 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
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shall, however, relieve the Trustee of the obligation, upon the occurrence
of an Event of Default (that has not been cured or waived) known to the
Trustee, 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 person 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;
(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 10.04); 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;
(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; and
(h) the Trustee shall not be charged with knowledge of any default or
Event of Default hereunder unless a Responsible Officer of the Trustee
shall have knowledge of the default or Event of Default.
9.03 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.
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9.04 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.
9.05 MONEYS HELD IN TRUST. Subject to the provisions of Section 13.05, 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.
9.06 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, 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.
(c) The additional indebtedness described in Section 9.06(b) 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.
(d) When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 7.01(iv), (v) or (vi) occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under the Bankruptcy Reform Act of 1978 or any
successor statute.
(e) The provisions of Section 9.06(a), (b) and (d) shall survive the
termination of this Indenture.
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9.07 RELIANCE ON OFFICERS' CERTIFICATE. Except as otherwise provided in
Section 9.01, 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.
9.08 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.
9.09 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. No Affiliate of the Company may 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 7.07, on 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.
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(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 9.08 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 9.09 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 7.07, 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
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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.
(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 IX, 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 2.08, 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
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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 $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of 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 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 9.06.
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 8.01, a certificate of authentication in the
following form:
"This is one of the Junior Subordinated Debentures described in the within
mentioned Indenture."
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_______________________________,
as Trustee
_______________________________
By_____________________________
as Authenticating Agent
_______________________________
By_____________________________
Authorized Signature
9.15 CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the
purpose of meeting the legal requirements of any applicable jurisdiction, the
Company and the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 25% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding, the Company shall
for such purpose join with the Trustee in the execution and delivery of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
or to act as separate trustee, 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 9.15. If
the Company does not join in such appointment within 15 days after the receipt
by it of a request so to do, or if an Event of Default shall have occurred and
be continuing, the Trustee alone shall have power to make such appointment.
Should any written instrument or instruments from the Company be required
by any co-trustee or separate trustee so appointed to more fully confirm 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 Company.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following conditions:
(a) the Junior Subordinated Debentures shall be authenticated 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 Trustee hereunder,
shall be exercised solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
either by the Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the
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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 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 Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Company, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this Section
9.15, and, if an Event of Default shall have occurred and be continuing,
the Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Company.
Upon the written request of the Trustee, the Company shall join with the
Trustee in the execution and delivery of all instruments and agreements,
necessary or proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee, or any other such
trustee hereunder; and
(e) any notice from the Holders of Junior Subordinated Debentures
delivered to the Trustee shall be deemed to have been delivered to each
such co-trustee and separate trustee.
ARTICLE X
CONCERNING THE SECURITYHOLDERS
10.01 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
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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.
10.02 PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of
Section 6.01, 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.
10.03 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 2.03) 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.
10.04 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 a Responsible Officer of 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
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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.
10.05 ACTIONS BINDING ON FUTURE SECURITYHOLDERS. At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 10.01, 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 10.02, 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.
ARTICLE XI
SUPPLEMENTAL INDENTURES
11.01 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 XII;
(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
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(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 11.02.
11.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the
consent (evidenced as provided in Section 10.01) 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 11.01 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, (a) change (except as expressly provided herein
pursuant to Section 2.02) 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 4.01) the time of
payment of interest thereon; or (b) 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 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.
11.03 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article or of Section
12.01, this Indenture shall be and be deemed to be modified and amended in
accordance therewith.
11.04 JUNIOR SUBORDINATED DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.
Junior Subordinated Debentures, affected by a
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supplemental indenture, authenticated and delivered after the execution of such
supplemental indenture pursuant to the provisions of this Article or of Section
12.01, 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.
11.05 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 9.01, 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 Company
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 Company 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
12.01 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 (a) 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; (b) 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 (c) 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.
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12.02 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.
12.03 EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE. The Trustee, subject to
the provisions of Section 9.01, 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
13.01 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 2.08) 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 13.05); 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 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03 and 9.10, that
shall survive until the date of maturity or redemption date, as the case may be,
and Sections 9.06 and 13.05, that shall
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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.
13.02 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 13.01 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 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 2.02, 2.03, 2.04, 2.05, 4.01, 4.02,
4.03, 9.06, 9.10 and 13.05 hereof that shall survive until such Junior
Subordinated Debentures shall mature and be paid. Thereafter, Sections 9.06 and
13.05 shall survive.
13.03 DEPOSITED MONEYS TO BE HELD IN TRUST. All moneys or Governmental
Obligations deposited with the Trustee pursuant to Sections 13.01 or 13.02 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.
13.04 PAYMENT OF MONEYS 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.
13.05 REPAYMENT TO COMPANY. Any moneys 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 the
second annual anniversary of when such payment was originally due 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.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
14.01 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
15.01 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.
15.02 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.
15.03 SURRENDER OF COMPANY POWERS. The Company by instrument in writing
executed by authority of 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.
15.04 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
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(until another address is filed in writing by the Company with the Trustee), as
follows: c/o Blue Valley Ban Corp., 11935 Riley, Overland Park, Kansas
66225-6128, Attention: Chief Executive Officer. 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.
15.05 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
Kansas 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.
15.06 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.
15.07 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
(i) a statement that the Person making such certificate or opinion has read
such covenant or condition; (ii) 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; (iii) 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 (iv) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied with.
15.08 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 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.
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15.09 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
16.01 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 XVI; and
each Holder, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
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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 XVI shall prevent the occurrence of any
default or Event of Default hereunder.
16.02 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 16.02, subject to Section 16.06, 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.
16.03 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 XVI, 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
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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,
subject to Section 16.06, 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 XVI, 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 XVI 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 (a) such Senior and Subordinated Debt is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(b) 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 XII of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 16.03 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article XII
of this Indenture. Nothing in Section 16.02 or in this Section 16.03 shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 9.06 of
this Indenture.
16.04 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 XVI, and no payment over pursuant to the
provisions of this Article XVI 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
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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 XVI 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 XVI 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 XVI 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 XVI, the Trustee, subject to the provisions of Section 9.01, 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 XVI.
16.05 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 XVI and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
16.06 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 moneys to or by the Trustee in
respect of the Junior Subordinated Debentures pursuant to the provisions of this
Article XVI. Notwithstanding the provisions of this Article XVI 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
moneys to or by the Trustee in respect of the Junior Subordinated Debentures
pursuant to the
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provisions of this Article XVI, 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 9.01, 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 16.06 at least five 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 it was
received, and shall not be affected by any notice to the contrary that may be
received by it within five Business Days prior to such date.
The Trustee, subject to the provisions of Section 9.01, 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 XVI, 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 XVI, 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.
16.07 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 XVI 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 XVI, 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 9.01, 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 XVI or
otherwise.
16.08 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
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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 Junior Subordinated Debentures and without impairing or releasing
the subordination provided in this Article XVI 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: (a) 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; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior and Subordinated Debt; (c)
release any Person liable in any manner for the collection of such Senior and
Subordinated Debt; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
BLUE VALLEY BAN CORP.
By:________________________________
Robert D. Regnier
Chief Executive Officer
Attest:
_____________________________
_____________________________
Secretary
WILMINGTON TRUST COMPANY, as Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
Attest:
_______________________________
EXHIBIT A
(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)
Registered Principal Amount
Registered No. _______________ $__________
CUSIP No. 096065 AA 5
BLUE VALLEY BAN CORP.
____% JUNIOR SUBORDINATED DEBENTURE
DUE JUNE 30, 2030
BLUE VALLEY BAN CORP., a Kansas corporation (the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to WILMINGTON TRUST COMPANY as
Property Trustee of BVBC Capital Trust I or registered assigns, the principal
sum of _________________________ Dollars ($__________) on June 30, 2030 (which
date may be shortened as provided in the Indenture, the "Stated Maturity"), and
to pay interest on said principal sum from ________________, 2000, 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 March 31, June 30, September 30 and
December 31 of each year commencing June 30, 2000, 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 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
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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 June 30, 2005, 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: _______________
BLUE VALLEY BAN CORP.
By:________________________________
________________________________
Chief Executive Officer
Attest:
By: _________________________
_____________, Secretary
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
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
<PAGE>
[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 ________________, 2000 (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. Overland Park, Kansas 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 June 30, 2005, 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
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<PAGE>
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 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 (a) there shall have occurred
any event of which the Company has actual knowledge that (i) with the giving of
notice or the lapse of time, or both, would constitute an Event of Default and
(ii) in respect to which the Company shall not have taken reasonable steps to
cure, or (b) 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 (c) 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
(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 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.
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 $8 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.
CERTIFICATE OF TRUST
OF
BVBC CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I (the "Trust"), dated as
of March 30, 2000, is being duly executed and filed by WILMINGTON TRUST COMPANY,
a Delaware banking corporation, as Delaware trustee, and Robert D. Regnier and
Mark A. Fortino, each an individual, as administrative trustees, to form a
business trust under the Delaware Business Trust Act (12 Del. C. ss.ss.
3801 et seq.)
1. NAME. The name of the business trust formed hereby is BVBC
Capital Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware are Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, New Castle County,
Delaware 19890-0001, Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective
upon the date and timing of filing.
4. COUNTERPARTS. This Certificate of Trust may be executed in one
or more counterparts.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
as Delaware trustee
/s/ Kathleen A. Pedelini
Name: Kathleen A. Pedelini
Title: Administrative Account Manager
/s/ Robert D. Regnier
Robert D. Regnier, Administrative Trustee
/s/ Mark A. Fortino
Mark A. Fortino, Administrative Trustee
----------------------------------------------------------------
BVBC CAPITAL TRUST I
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
BLUE VALLEY BAN CORP., AS DEPOSITOR
WILMINGTON TRUST COMPANY, AS PROPERTY TRUSTEE
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF _______________, 2000
----------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I....................................................................1
1.01 DEFINITIONS..........................................................1
ARTICLE II...................................................................9
2.01 NAME.................................................................9
2.02 OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS..........9
2.03 INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES......9
2.04 ISSUANCE OF THE PREFERRED SECURITIES................................10
2.05 ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF JUNIOR
SUBORDINATED DEBENTURES.............................................10
2.06 DECLARATION OF TRUST................................................11
2.07 AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS....................11
2.08 ASSETS OF TRUST.....................................................15
2.09 TITLE TO TRUST PROPERTY.............................................15
ARTICLE III.................................................................15
3.01 PAYMENT ACCOUNT.....................................................15
ARTICLE IV..................................................................15
4.01 DISTRIBUTIONS.......................................................15
4.02 REDEMPTION..........................................................16
4.03 SUBORDINATION OF COMMON SECURITIES..................................18
4.04 PAYMENT PROCEDURES..................................................19
4.05 TAX RETURNS AND REPORTS.............................................19
4.06 PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.........................20
4.07 PAYMENTS UNDER INDENTURE............................................20
ARTICLE V...................................................................20
5.01 INITIAL OWNERSHIP...................................................20
5.02 THE TRUST SECURITIES CERTIFICATES...................................20
5.03 EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.............20
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5.04 REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES...................................................... 20
5.05 MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES CERTIFICATES..21
5.06 PERSONS DEEMED SECURITYHOLDERS......................................22
5.07 ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES..............22
5.08 MAINTENANCE OF OFFICE OR AGENCY.....................................22
5.09 APPOINTMENT OF PAYING AGENT.........................................22
5.10 OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.........................23
5.11 BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES
CERTIFICATE.........................................................23
5.12 NOTICES TO CLEARING AGENCY..........................................24
5.13 DEFINITIVE PREFERRED SECURITIES CERTIFICATES........................24
5.14 RIGHTS OF SECURITYHOLDERS...........................................25
ARTICLE VI..................................................................26
6.01 LIMITATIONS ON VOTING RIGHTS........................................26
6.02 NOTICE OF MEETINGS..................................................27
6.03 MEETINGS OF HOLDERS OF PREFERRED SECURITIES.........................27
6.04 VOTING RIGHTS.......................................................27
6.05 PROXIES, ETC........................................................27
6.06 SECURITYHOLDER ACTION BY WRITTEN CONSENT............................28
6.07 RECORD DATE FOR VOTING AND OTHER PURPOSES...........................28
6.08 ACTS OF SECURITYHOLDERS.............................................28
6.09 INSPECTION OF RECORDS...............................................29
ARTICLE VII.................................................................29
7.01 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY
AND THE PROPERTY TRUSTEE............................................29
7.02 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE DELAWARE
TRUSTEE.............................................................30
7.03 REPRESENTATION AND WARRANTIES OF DEPOSITOR..........................31
ARTICLE VIII................................................................31
8.01 CERTAIN DUTIES AND RESPONSIBILITIES.................................31
8.02 CERTAIN NOTICES.....................................................33
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8.03 CERTAIN RIGHTS OF PROPERTY TRUSTEE..................................33
8.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES..............35
8.05 MAY HOLD SECURITIES.................................................35
8.06 COMPENSATION; INDEMNITY; FEES.......................................35
8.07 CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES........36
8.08 CONFLICTING INTERESTS...............................................37
8.09 CO-TRUSTEES AND SEPARATE TRUSTEE....................................37
8.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...................38
8.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..............................40
8.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.........40
8.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST........40
8.14 REPORTS BY PROPERTY TRUSTEE.........................................40
8.15 REPORTS TO THE PROPERTY TRUSTEE.....................................41
8.16 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT....................41
8.17 NUMBER OF TRUSTEES..................................................41
8.18 DELEGATION OF POWER.................................................42
8.19 VOTING..............................................................42
8.20 MAINTENANCE OF LISTING..............................................42
ARTICLE IX..................................................................42
9.01 DISSOLUTION UPON EXPIRATION DATE....................................42
9.02 EARLY DISSOLUTION...................................................42
9.03 TERMINATION.........................................................43
9.04 LIQUIDATION.........................................................43
9.05 MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST.45
ARTICLE X...................................................................46
10.01 LIMITATION OF RIGHTS OF SECURITYHOLDERS............................46
10.02 AMENDMENT..........................................................46
10.03 SEPARABILITY.......................................................47
10.04 GOVERNING LAW......................................................47
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10.05 PAYMENTS DUE ON NON-BUSINESS DAY...................................47
10.06 SUCCESSORS.........................................................47
10.07 HEADINGS...........................................................47
10.08 REPORTS, NOTICES AND DEMANDS.......................................48
10.09 AGREEMENT NOT TO PETITION..........................................48
10.10 TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.............49
10.11 ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE....49
10.12 COUNTERPARTS.......................................................49
10.13 EXCHANGE ACT OBLIGATIONS...........................................49
Exhibits
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
iv
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AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ___________, 2000, among
(i) BLUE VALLEY BAN CORP., a Kansas corporation (including any successors or
assigns, the "Depositor"), (ii) WILMINGTON TRUST COMPANY, a Delaware banking
corporation duly organized and existing under the laws of Delaware, as property
trustee (the "Property Trustee"), (iii) WILMINGTON TRUST COMPANY, with its home
office located in the State of Delaware, as Delaware trustee (the "Delaware
Trustee," and, to the extent expressly provided herein, in its separate
corporate capacity and not in its capacity as Property Trustee or Delaware
Trustee, the "Trust Company"), (iv) Robert D. Regnier, an individual, and Mark
A. Fortino, an individual, each of whose address is c/o BLUE VALLEY BAN CORP.,
11935 Riley, Overland Park, Kansas 66225-6128 (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, the Delaware Trustee, and the Administrative
Trustees have heretofore duly formed BVBC Capital Trust 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 March 30, 2000 (the "Original Trust
Agreement"), and by the execution and filing by the Delaware Trustee and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on March 30, 2000, the form of which is attached
as EXHIBIT A; and
WHEREAS, the Depositor, the Delaware Trustee and the Administrative
Trustees 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, (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), and (iv) the
appointment of the Property Trustee;
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 Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
1.01..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;
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(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.
"Accelerated Maturity Date" has the meaning set forth in Section 1.01 of
the Indenture.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and 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 2.05 of the
Indenture.
"Administrative Trustee" means each of Robert D. Regnier and Mark A.
Fortino, solely in each such person's capacity as Administrative Trustee of the
Trust 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.
"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 United States 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 United States 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
2
<PAGE>
(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 United States 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 10.09.
"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to the
Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Kansas or Delaware 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 Exchange Act. The Depository 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 _____________, 2000.
"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 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 $8.00 and having the rights
provided therefor in this
3
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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 1100 North Market Street, Wilmington, Delaware
19890, Attention: 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 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 5.11(a), and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801, et. seq. as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust 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 4.01(a).
"Distributions" means amounts payable in respect of the Trust Securities
as provided in Section 4.01.
"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
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(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 9.01.
"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 Property Trustee, as trustee, contemporaneously
with the execution and delivery of this Trust Agreement, for the benefit of the
Holders of the Preferred Securities, as amended from time to time.
"Holder" means a Securityholder.
"Indenture" means the Subordinated Indenture, dated as of ______________,
2000, 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 $10,309,280 aggregate principal
amount (or up to $11,855,672 aggregate principal amount if the Underwriter
exercises its Option and there is an Option Closing Date) of the Depositor's
_____% Junior Subordinated Debentures due 2030, issued pursuant to the
Indenture.
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"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
dissolution 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 $8.00 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Debentures
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in Section 9.04(d).
"Maturity Date" has the meaning set forth in Section 2.02 of the Indenture.
"Officers' Certificate" means a certificate signed by the Chief Executive
Officer, 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 8.16
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 statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for 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.
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"Option" means the grant by the Trust to the Underwriter of an option to
purchase all or any portion of an additional 187,500 Preferred Securities
pursuant to the terms of the Underwriting Agreement.
"Option Closing Date" means the time, date of payment and delivery of the
Preferred Securities Certificates purchased pursuant to the Underwriter's
exercise of the Option, as more particularly described in the Underwriting
Agreement.
"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 5.04, 5.05, 5.11 and 5.13; provided, however, that in
determining whether the Holders of the requisite Liquidation Amount of the
Outstanding Preferred Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Preferred
Securities owned by the Depositor, any 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 5.09 and shall initially be the Trust Company.
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"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee for the benefit of the
Securityholders 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 Securityholders in accordance with Sections 4.01 and 4.02.
"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 a preferred undivided beneficial interest in
the assets of the Trust, designated "_____% Cumulative Trust Preferred
Securities," having a Liquidation Amount of $8.00 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.
"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 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.04.
"Securityholder" means a Person in whose name a Trust Security or Trust
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 BVBC Capital Trust 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
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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 Company" has the meaning specified in the preamble to this Trust
Agreement.
"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.
"Underwriter" means Stifel, Nicolaus & Company, Incorporated.
"Underwriting Agreement" means the Underwriting Agreement dated as of
__________, 2000, among the Trust, the Depositor and the Underwriter.
ARTICLE II
ESTABLISHMENT OF THE TRUST
2.01 NAME. The Trust heretofore created and continued hereby shall
continue to be known as "BVBC CAPITAL TRUST 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.
2.02 OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS. The
address of the Delaware Trustee in the State of Delaware is 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 Securityholders and the Depositor. The
principal executive office of the Trust is c/o BLUE VALLEY BAN CORP., 11935
Riley, Overland Park, Kansas 66225-6128.
2.03 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
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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.
2.04 ISSUANCE OF THE PREFERRED SECURITIES. On _____________, 2000, 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 5.02 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 $10,000,000 against receipt of the aggregate
purchase price of such Preferred Securities of $10,000,000, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If the
Underwriter exercises its Option and there is an Option Closing Date, then an
Administrative Trustee, on behalf of the Trust, shall execute in accordance with
Section 5.02 and deliver in accordance with the Underwriting Agreement,
Preferred Securities Certificates, registered in the name of the Persons
entitled thereto, in an aggregate amount of up to 187,500 Preferred Securities
having an aggregate Liquidation Amount of up to $1,500,000 against receipt of
the aggregate purchase price of such Preferred Securities equal to the product
of $8 multiplied by the number of Preferred Securities purchased pursuant to the
Option, which amount such Administrative Trustee shall promptly deliver to the
Property Trustee.
2.05 ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF JUNIOR
SUBORDINATED DEBENTURES.
(a) Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.02 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 $309,280 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
$10,309,280, 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 $10,309,280.
(b) If the Underwriter exercises the Option and there is an Option
Closing Date, then an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 5.02 and deliver to the
Depositor, Common Securities Certificates, registered in the name of the
Depositor, in an aggregate amount of up to 5,799 Common Securities having
an aggregate Liquidation Amount of up to $46,392 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
Trust and having an aggregate
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principal amount of up to $1,546,392, and, in satisfaction of the purchase
price of such Junior Subordinated Debentures, the Property Trustee, on
behalf of the Trust, shall deliver to the Depositor the sum of $1,546,392.
2.06 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 Securityholders. 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.
2.07 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,
including, without limitation, the execution of the Trust
Securities on behalf of the Trust in accordance with this
Trust Agreement, and complying with the terms of the
Underwriting Agreement regarding 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) to assist in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and
under state securities or blue
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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 LLC or such securities
exchange or exchanges as shall be determined by the Depositor
and, if required, the registration of the Preferred Securities
under the Exchange Act, 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 Securityholders
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 of the Certificate of Trust 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;
(I) the execution and delivery of an application for a
taxpayer identification number for the Trust; and
(J) 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 Securityholders
(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;
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(C) the receipt and collection of interest, principal
and any other payments made in respect of the Junior
Subordinated Debentures in the Payment Account;
(D) the distribution of amounts owed to the
Securityholders 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 Securityholders 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;
(I) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if the Event of Default is by or with respect to the Property
Trustee) 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 Securityholders (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
2.07(a)(ii), the Property Trustee shall have none of the
duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 2.07(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 Securityholders, 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
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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
Securityholders in their capacity as Securityholders.
(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) in the discretion of the Depositor, the preparation for
filing by the Trust and execution on behalf of the Trust of an
application to The American Stock Exchange LLC or a 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;
(vi) the negotiation of the terms of, and execution of, the
Original Trust Agreement, and the preparation of this Trust
Agreement and the selection of the Trustees; and
(vii) 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
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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 10.02, 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. In no event shall the Trustees be liable to
the Trust or the Securityholders for any failure to comply with this
Section that results from a change in law or regulations or in the
interpretation thereof.
2.08 ASSETS OF TRUST. The assets of the Trust shall consist of the Trust
Property.
2.09 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
Securityholders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
3.01 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 Securityholders 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
4.01 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
______________, 2000, and, except during any Extension Period with respect
to the Junior Subordinated Debentures, shall be
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payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing June 30, 2000. 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 4.01(a) a
"Distribution Date").
(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 15th
day of the month in which the relevant Distribution is payable.
4.02 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:
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(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot
be calculated prior to the time the notice is required to be sent,
the estimate of the Redemption Price provided pursuant to the
Indenture together with a statement that it is an estimate and that
the actual Redemption Price will be calculated on the third Business
Day prior to the Redemption Date (and, if an estimate is provided, a
further notice shall be sent of the actual Redemption Price on the
date, or as soon as practicable thereafter, that notice of such
actual Redemption Price is received pursuant to the Indenture);
(iii) the CUSIP number;
(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;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and after
said date, except as provided in Section 4.02(d) below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
(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 10:00 a.m., Delaware time, on the
Redemption Date, subject to Section 4.02(c), the Property Trustee will, so
long as 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 4.02(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
Securityholders holding Trust
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Securities so called for redemption will cease, except the right of such
Securityholders 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 4.03(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 $8.00 or an integral multiple of $8.00 in
excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $8.00. 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.
4.03 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 4.02(f), pro rata among the
Common Securities and the Preferred
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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 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. The
existence of an Event of Default does not entitle the Holders of Preferred
Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting
from 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.
4.04 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.
4.05 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
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federal withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to Securityholders under the
Trust Securities.
4.06 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.
4.07 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 5.14(b) or (c) hereof.
ARTICLE V
TRUST SECURITIES CERTIFICATES
5.01 INITIAL OWNERSHIP. Upon the formation of the Trust and the
contribution by the Depositor pursuant to Section 2.03 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.
5.02 THE TRUST SECURITIES CERTIFICATES. The Preferred Securities
Certificates shall be issued in minimum denominations of $8.00 Liquidation
Amount and integral multiples of $8.00 in excess thereof, and the Common
Securities Certificates shall be issued in denominations of $8.00 Liquidation
Amount and integral multiples of $8.00 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 5.04, 5.11
and 5.13.
5.03 EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES. On the
Closing Date, and on the Option Closing Date, if applicable, the Administrative
Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation
Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the
Trust by at least one of the Administrative Trustees and delivered, without
further corporate action by the Depositor, in authorized denominations.
5.04 REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES. The Property Trustee shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 5.08, 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
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the Property Trustee (the "Securities Registrar"), subject to such reasonable
regulations as it may prescribe, shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to Section
5.10 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 5.08, 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 5.08.
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.
5.05 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
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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.
5.06 PERSONS DEEMED SECURITYHOLDERS. 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.
5.07 ACCESS TO LIST OF SECURITYHOLDERS' 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 Securityholders as of the most recent regular
record date (as provided in Section 4.01(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
Securityholders to communicate with other Securityholders 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.
5.08 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, 1100
North Market Street, Wilmington, Delaware 19890, Attention: 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 Securityholders of any change in the location of the Securities Register or
any such office or agency.
5.09 APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
Distributions to Securityholders 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
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material respect. The Paying 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 Securityholders in trust for the benefit of
the Securityholders entitled thereto until such sums shall be paid to such
Securityholders. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 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.
5.10 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
12.01 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".
5.11 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 5.13. Unless and until Definitive Preferred Securities
Certificates have been issued to beneficial owners pursuant to Section
5.13:
(i) the provisions of this Section 5.11(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
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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 5.11
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.11 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
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 5.13, 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) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive
Common Securities Certificate.
5.12 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 5.13, 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.
5.13 DEFINITIVE PREFERRED SECURITIES CERTIFICATES. If (a) the Depositor
advises the Trustees in writing that the Clearing Agency is no longer willing or
able to discharge properly 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
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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 Securityholders. 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.
5.14 RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section
2.09, and the Securityholders 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.
(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 the right to make such declaration 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
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Outstanding shall, to the fullest extent permitted by law, have the right
to institute directly 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 SECURITYHOLDERS; MEETINGS; VOTING
6.01 LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and
10.02 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 Securityholders 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.
(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 of the Trust,
other than pursuant to the terms of this Trust Agreement, then
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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.
6.02 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 10.08 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.
6.03 MEETINGS OF HOLDERS OF PREFERRED SECURITIES. No annual meeting of
Securityholders is required to be held. The Administrative Trustees, however,
shall call a meeting of Securityholders 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 record of 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 Securityholders. 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.
6.04 VOTING RIGHTS. Securityholders shall be entitled to one vote for each
$8.00 of Liquidation Amount represented by their Trust Securities in respect of
any matter as to which such Securityholders are entitled to vote.
6.05 PROXIES, ETC. At any meeting of Securityholders, 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.
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6.06 SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by Securityholders at a meeting may be taken without a meeting if
Securityholders 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).
6.07 RECORD DATE FOR VOTING AND OTHER PURPOSES. For the purposes of
determining the Securityholders 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 Securityholders 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 Securityholders of record for such
purposes.
6.08 ACTS OF SECURITYHOLDERS. 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 Securityholders or Owners may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders 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 Securityholders 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 8.01) 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
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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.
6.09 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 Securityholders during normal business hours for any purpose
reasonably related to such Securityholder's interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE PROPERTY
TRUSTEE. The Trust Company, 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 "Trust Company" 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 Securityholders that:
(a) the Trust Company is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) the Trust Company 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 Trust Company and constitutes the valid and legally
binding agreement of the Trust Company 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 Trust Company of
this Trust Agreement has been duly authorized by all necessary corporate
or other action on the part of the Trust Company and does not require any
approval of the stockholders of the Trust Company and such execution,
delivery and performance will not (i) violate the Trust Company'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 Trust Company 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 Trust Company, or any
order, judgment or decree applicable to the Trust Company;
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(e) neither the authorization, execution or delivery by the Trust
Company of this Trust Agreement nor the consummation of any of the
transactions by the Trust Company 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 United States or the
State of Delaware governing the banking or trust powers of the Trust
Company; and
(f) there are no proceedings pending or, to the best of the Trust
Company's knowledge, threatened against or affecting the Trust Company 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 Trust Company to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
7.02 REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE DELAWARE
TRUSTEE. The Trust Company 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 "Trust Company" 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 Securityholders that:
(a) the Trust Company is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) the Trust Company 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 Trust Company and constitutes the valid and legally
binding agreement of the Trust Company 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 Trust Company of
this Trust Agreement has been duly authorized by all necessary corporate
or other action on the part of the Trust Company and does not require any
approval of the stockholders of the Trust Company and such execution,
delivery and performance will not (i) violate the Trust Company'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 Trust Company 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 Trust Company, or any
order, judgment or decree applicable to the Trust Company;
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(e) neither the authorization, execution or delivery by the Trust
Company of this Trust Agreement nor the consummation of any of the
transactions by the Trust Company 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 Trust Company; and
(f) there are no proceedings pending or, to the best of the Trust
Company's knowledge, threatened against or affecting the Trust Company 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 Trust Company to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
7.03 REPRESENTATION AND WARRANTIES OF DEPOSITOR. The Depositor hereby
represents and warrants for the benefit of the Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date or
the Option Closing Date, if applicable, 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 Securityholders 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 Trust Company, the
Property Trustee, the Trust Company or the Delaware Trustee, as the case
may be, of this Trust Agreement.
ARTICLE VIII
THE TRUSTEES
8.01 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
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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 Securityholders, 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 Securityholders 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 8.01(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;
(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
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money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.01 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.
8.02 CERTAIN NOTICES.
(a) Within five Business Days after the Property Trustee learns of
occurrence of any Event of Default, the Property Trustee shall transmit,
in the manner and to the extent provided in Section 10.08, notice of such
Event of Default to the Securityholders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or
waived prior to the sending of such notice. 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
Securityholders in the manner and to the extent provided in Section 10.08,
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 2.02 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 2.02(c) of the Indenture.
8.03 CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the provisions of
Section 8.01:
(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,
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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 Securityholders, in which event the Property Trustee shall
have no liability except for its own bad faith, negligence or willful
misconduct;
(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 Officer's 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
re-recording, re-filing or re-registration 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 Securityholders pursuant to this Trust
Agreement, unless such Securityholders shall have offered to the Property
Trustee such reasonable security or indemnity as the Property Trustee may
request 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
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or more Securityholders, 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.
8.04 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.
8.05 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 8.08 and 8.13 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.
8.06 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
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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 the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Trustee and any predecessor Trustee, (ii) any
Affiliate of any Trustee, (iii) any officer, director, shareholder,
employee, representative or agent of any Trustee, and (iv) any employee or
agent of the Trust (referred to as an "Indemnified Person") from and
against, any loss, damage, liability, tax, penalty, expense or claim of
any kind or nature whatsoever incurred by such Indemnified Person arising
out of or in connection with the creation, operation or dissolution of the
Trust or any act or omission performed or omitted by such Indemnified
Person reasonably believed to be within the scope of authority conferred
on such Indemnified Person by this Trust Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence, bad faith or willful misconduct with respect to such
acts or omissions (or, in the case of the Property Trustee, by reason of
negligence, bad faith or willful misconduct with respect to such acts or
omissions).
The provisions of this Section 8.06 shall survive the termination of this
Trust Agreement and the resignation or removal of the Property Trustee or the
Delaware Trustee, as the case may be.
The Depositor and any Trustee may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Trust Securities shall have no rights by virtue of the Trust
Agreement in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. Neither the
Depositor nor any Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and the
Depositor or any Trustee shall have the right to take for its own account
(individually or as a partner of fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Trustee may engage or be
interested in any financial or other transaction with the Depositor or any
Affiliate of the Depositor, or may act as depository for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Depositor or its Affiliates.
No Trustee may claim any Lien on any Trust Property as a result of any
amount due pursuant to this Section 8.06.
8.07 CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
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(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 million. 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.
8.08 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.
8.09 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.
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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 8.09.
(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.
8.10 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
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appointment by the successor Trustee in accordance with the applicable
requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Securityholders. If
the instrument of acceptance by the successor Trustee required by Section 8.11
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 Relevant Trustee.
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 8.11. 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, and
such successor Trustee shall comply with the applicable requirements of Section
8.11. 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, and such successor Administrative Trustee or
Administrative Trustees shall comply with the applicable requirements of Section
8.11. 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, as the case may be, and accepted appointment in the manner
required by Section 8.11, 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.
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
Securityholders in the
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manner provided in Section 10.08 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.
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 the 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 8.07).
8.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the appointment
hereunder of a successor Trustee, the retiring Relevant Trustee and each
successor Trustee shall execute and deliver an instrument wherein each successor
Trustee shall accept such appointment and which shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
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.
8.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
Person into which a 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.
8.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST. If and
when the Property 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 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).
8.14 REPORTS BY PROPERTY TRUSTEE.
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(a) Not later than July 31 of each year commencing with July 31,
2001, the Property Trustee shall transmit to all Securityholders in
accordance with Section 10.08, and to the Depositor, a brief report dated
as of the preceding December 31 with respect to:
(i) its eligibility under Section 8.07 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
(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
Securityholders 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.
8.15 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.
8.16 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.
8.17 NUMBER OF TRUSTEES.
(a) The number of Trustees shall be four, 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 8.17(a), or
if the number of Trustees is increased pursuant to Section 8.17(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed
in accordance with Section 8.10.
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(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 8.10,
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.
8.18 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 2.07(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.
8.19 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.
8.20 MAINTENANCE OF LISTING. The Administrative Trustees shall use their
best efforts to maintain the listing of the Preferred Securities on The American
Stock Exchange LLC or another national exchange or the National Market System of
The Nasdaq Stock Market for so long as the Preferred Securities are issued and
outstanding; provided, however, that any redemption of the Trust Securities, in
whole or in part, effected in accordance with the provisions of this Trust
Agreement shall not cause or result in a violation of this Section 8.20.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
9.01 DISSOLUTION UPON EXPIRATION DATE. Unless earlier dissolved, the Trust
shall automatically dissolve on _______________, 2035 (the "Expiration Date"),
and thereafter the Trust Property shall be distributed in accordance with
Section 9.04.
9.02 EARLY DISSOLUTION. The first to occur of any of the following events
is an "Early Termination Event," upon the occurrence of which the Trust shall
dissolve:
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
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(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 Securityholders in exchange for the
Preferred Securities in accordance with Section 9.04;
(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.
9.03 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 Securityholders upon
the liquidation of the Trust pursuant to Section 9.04, or upon the
redemption of all of the Trust Securities pursuant to Section 4.02, 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 Securityholders, and
(d) the filing of a certificate of cancellation of the Certificate of
Trust by the Administrative Trustee under the Delaware Business Trust Act.
9.04 LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or (d)
of Section 9.02 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 Section 3808(e) of the Delaware Business Trust Act
and any other applicable law, to each Securityholder a Like Amount of
Junior Subordinated Debentures, subject to Section 9.04(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
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(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities certificates for Junior
Subordinated Debentures, or if Section 9.04(d) applies receive a
Liquidation Distribution, as the Administrative Trustees or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.02(c) or 9.04(d) applies, in order to
effect the liquidation of the Trust and distribution of the Junior
Subordinated Debentures to Securityholders, 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 9.02(c) or 9.04(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 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 Securityholders holding Trust Securities
will cease, except the right of such Securityholders to receive Junior
Subordinated Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.04, 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 shall be dissolved and the
Trust Property shall be liquidated by the Property Trustee in such manner
as the Property Trustee determines. In such event, on the date of the
dissolution of the Trust, Securityholders will be entitled to receive out
of the assets of the Trust available for distribution to Securityholders,
after satisfaction of liabilities to creditors of the Trust as provided by
Section 3808(e) of the Delaware Business Trust Act and any other 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, 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, pro
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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 with
respect to any distributions.
9.05 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
9.05. 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
"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.
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 LIMITATION OF RIGHTS OF SECURITYHOLDERS. 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.
10.02 AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the
Trustees and the Depositor, without the consent of any Securityholders,
(i) as provided in Section 8.11 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 Securityholders.
(b) Except as provided in Section 6.01(c) or Section 10.02(c)
hereof, any provision of this Trust Agreement may be amended by the
Trustees and the Depositor (i) with the consent of Securityholders
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.
(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 6.03 or 6.06 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 Securityholders (such consent being obtained
in accordance with Section 6.03 or 6.06 hereof), this paragraph (c) of
this Section 10.02 may not be amended.
46
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(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.
10.03 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.
10.04 GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF EACH OF THE SECURITYHOLDERS, 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).
10.05 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 4.01(a) and
4.02(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.
10.06 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.
10.07 HEADINGS. The Article and Section headings are for convenience only
and shall not affect the construction of this Trust Agreement.
47
<PAGE>
10.08 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 Blue Valley Ban Corp., 11935 Riley, Overland Park, KS
66225-6128, Attention: Chief Executive Officer; Facsimile No.: (913) 338-2801.
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 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration; (b) with
respect to the Delaware Trustee, to 1100 North Market Street, Wilmington,
Delaware 19890, 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 BVBC Capital Trust I."
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.
10.09 AGREEMENT NOT TO PETITION. Each of the Trustees and the Depositor
agree for the benefit of the Securityholders 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 10.09, the Property Trustee agrees, for the benefit of Securityholders,
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 10.09 shall survive the termination of
this Trust Agreement.
48
<PAGE>
10.10 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.
10.11 ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A 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.
10.12 COUNTERPARTS. This Trust Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
and all of which counterparts together shall constitute one and the same
agreement.
10.13 EXCHANGE ACT OBLIGATIONS. For so long as the Trust Securities shall
remain Outstanding, Depositor shall fulfill all reporting and filing obligations
under the Securities Exchange Act of 1934, as amended, as applicable to
companies having a class of securities registered under Section 12(b) or 12(g)
thereunder.
49
<PAGE>
BLUE VALLEY BAN CORP.,
as Depositor
By: ______________________________________
Robert D. Regnier
Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Property Trustee
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
__________________________________________
Robert D. Regnier, as Administrative Trustee
__________________________________________
Mark A. Fortino, as Administrative Trustee
50
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
BVBC CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF BVBC CAPITAL TRUST I (the "Trust"), dated as
of March 30, 2000, is being duly executed and filed by WILMINGTON TRUST COMPANY,
a Delaware banking corporation, as Delaware trustee, and Robert D. Regnier and
Mark A. Fortino, each an individual, as administrative trustees, to form a
business trust under the Delaware Business Trust Act (12 Del. C. ss.ss. 3801 et
seq.)
1. NAME. The name of the business trust formed hereby is BVBC Capital Trust
I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware are Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, New Castle County, Delaware
19890-0001, Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon the
date and timing of filing.
4. COUNTERPARTS. This Certificate of Trust may be executed in one or more
counterparts.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
as Delaware trustee
___________________________________________
Name: Kathleen A. Pedelini
Title: Administrative Account Manager
___________________________________________
Robert D. Regnier, Administrative Trustee
___________________________________________
Mark A. Fortino, Administrative Trustee
51
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
52
<PAGE>
EXHIBIT C
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES
38,660
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
BVBC CAPITAL TRUST I
_____% COMMON SECURITIES
(LIQUIDATION AMOUNT $8.00 PER COMMON SECURITY)
BVBC CAPITAL TRUST I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Blue Valley Ban Corp.
(the "Holder") is the registered owner of Thirty-Eight Thousand Six Hundred
Sixty (38,660) securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the _____% Common Securities
(liquidation amount $8.00 per Common Security) (the "Common Securities"). In
accordance with Section 5.10 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 ______________, 2000, 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 ____________, 2000.
BVBC CAPITAL TRUST I
By:________________________________________
_________________, Administrative Trustee
53
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
________________, 2000, between BLUE VALLEY BAN CORP., a Kansas corporation (the
"Company"), and BVBC CAPITAL TRUST I, a Delaware business trust (the "Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive Debentures from, the Company and to issue and sell
up to 1,437,500 _____% Cumulative Trust 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 ______________, 2000, as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the 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 shall 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
54
<PAGE>
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;
(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.
There shall be no obligation of the Beneficiaries 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.
55
<PAGE>
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Preferred Securities of
any series 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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Facsimile No.: (302) 651-1576
Attention: Corporate Trust Administration
Blue Valley Ban Corp.
11935 Riley
Overland Park, Kansas 66225-6128
Facsimile No.: (913) 338-2801
Attention: Robert D. Regnier, Chief Executive Officer
Section 2.4. Governing Law.
This agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Kansas (without regard to conflict of
laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
BLUE VALLEY BAN CORP.
By:_________________________________________
Robert D. Regnier, Chief Executive Officer
BVBC CAPITAL TRUST I
By:_________________________________________
_________________, Administrative Trustee
56
<PAGE>
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 BVBC Capital Trust 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.
57
Certificate Number Number of Preferred Securities
**P-1** 1,250,000
CUSIP NO. 124296 20 3
Certificate Evidencing Preferred Securities
of
BVBC Capital Trust I
_____% Cumulative Preferred Securities
(liquidation amount $8.00 per Preferred Security)
BVBC Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of One Million Two Hundred Fifty Thousand
(1,250,000) preferred securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the _____% Cumulative
Preferred Securities (liquidation amount $8.00 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 5.04 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 __________, 2000, 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
Blue Valley Ban Corp., a Kansas corporation, and Wilmington Trust Company, as
guarantee trustee, dated as of ______________, 2000 (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, the Administrative Trustees of the Trust have executed
this certificate this _____ day of ___________, 2000.
BVBC CAPITAL TRUST I
By:________________________________________
Robert D. Regnier, Administrative Trustee
By:________________________________________
Mark A. Fortino, Administrative Trustee
58
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PREFERRED SECURITIES GUARANTEE AGREEMENT
BLUE VALLEY BAN CORP.
and
WILMINGTON TRUST COMPANY
Dated: ___________________, 2000
-----------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I....................................................................1
1.01 DEFINITIONS AND INTERPRETATIONS......................................1
ARTICLE II...................................................................5
2.01 TRUST INDENTURE ACT; APPLICATION.....................................5
2.02 LISTS OF HOLDERS OF SECURITIES.......................................5
2.03 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE...........................5
2.04 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE......................5
2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.....................5
2.06 EVENTS OF DEFAULT; WAIVER............................................6
2.07 EVENT OF DEFAULT; NOTICE.............................................6
2.08 CONFLICTING INTERESTS................................................6
ARTICLE III..................................................................6
3.01 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.................6
3.02 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE........................8
3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE...............10
3.04 COMPENSATION AND REIMBURSEMENT......................................10
ARTICLE IV..................................................................11
4.01 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY............................11
4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED
GUARANTEE TRUSTEES.............................................11
ARTICLE V...................................................................12
5.01 GUARANTEE...........................................................12
5.02 WAIVER OF NOTICE AND DEMAND.........................................12
5.03 OBLIGATIONS NOT AFFECTED............................................13
5.04 RIGHTS OF HOLDERS...................................................13
5.05 GUARANTEE OF PAYMENT................................................14
5.06 SUBROGATION.........................................................14
5.07 INDEPENDENT OBLIGATIONS.............................................14
i
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ARTICLE VI..................................................................14
6.01 LIMITATION OF TRANSACTIONS..........................................14
6.02 RANKING.............................................................15
ARTICLE VII.................................................................15
7.01 TERMINATION.........................................................15
ARTICLE VIII................................................................15
8.01 SUCCESSORS AND ASSIGNS.............................................15
8.02 AMENDMENTS..........................................................15
8.03 NOTICES.............................................................15
8.04 BENEFIT.............................................................16
8.05 GOVERNING LAW.......................................................16
ii
<PAGE>
CROSS REFERENCE TABLE
Section of Trust Indenture Act
of 1939, as Amended Section of Guarantee Agreement
310(a)..............................4.01(a)
310(b)..............................4.01(c), 2.08
310(c)..............................Inapplicable
311(a)..............................2.02(b)
311(b)..............................2.02(b)
311(c)..............................Inapplicable
312(a)..............................2.02(a)
312(b)..............................2.02(b)
313.................................2.03
314(a)..............................2.04
314(b)..............................Inapplicable
314(c)..............................2.05
314(d)..............................Inapplicable
314(e)..............................1.01, 2.05, 3.02
314(f) .............................2.01, 3.02
315(a)..............................3.01(d)
315(b)..............................2.07
315(c)..............................3.01
315(d)..............................3.01(d)
316(a)..............................1.01, 3.06, 5.04
316(b)..............................5.03
316(c)..............................8.02
317(a)..............................Inapplicable
317(b)..............................Inapplicable
318(a)..............................2.01(b)
318(b)..............................2.01
318(c)..............................2.01(a)
iii
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as
of ___________________, 2000, is executed and delivered by BLUE VALLEY BAN
CORP., a Kansas corporation (the "Guarantor"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, 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 BVBC CAPITAL TRUST I, a Delaware
statutory business trust ("BVBC Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement") dated as of ______________, 2000 among the trustees of BVBC Trust
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of BVBC Trust, BVBC Trust is
issuing up to 1,437,500 preferred securities, having an aggregate liquidation
amount of up to $11,500,000 designated the _____% Cumulative Trust 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
1.01 DEFINITIONS AND INTERPRETATIONS. 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 1.01;
(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;
1
<PAGE>
(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.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Kansas 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 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: 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: (a) every
obligation of such person for money borrowed; (b) 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; (c) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (d) 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); (e) every capital lease obligation of such person; and (f) every
obligation of the type referred to in clauses (a) through (e) 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 BVBC Trust: (a) any accrued and unpaid Distributions (as defined
in the Trust Agreement) that are required to be paid on such Preferred
Securities to the extent BVBC Trust shall have funds available therefor, (b) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent BVBC Trust has funds available
therefor, with respect to any Preferred Securities called for redemption by BVBC
Trust, and (c) upon a voluntary or involuntary dissolution, winding-up or
termination of BVBC Trust (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 (i) the
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aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent BVBC Trust shall
have funds available therefor, and (ii) the amount of assets of BVBC Trust
remaining available for distribution to Holders in liquidation of BVBC Trust (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
BVBC Trust of any Preferred Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver 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
___________________, 2000, 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 BVBC Trust.
"Junior Subordinated Debentures" means the series of junior subordinated
deferrable interest debt securities of the Guarantor designated the _____%
Junior Subordinated Debentures due 2030 held by the Property Trustee of BVBC
Trust.
"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.
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"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 with direct responsibility for the administration of this
Preferred Securities Guarantee, 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 4.01.
"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 (a) 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, (b) any Debt of the Guarantor to any of its subsidiaries, (c) any
Debt to any employee of the Guarantor, (d) 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, (e) the Junior
Subordinated Debentures, and (f) any other debt securities issued pursuant to
the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
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ARTICLE II
TRUST INDENTURE ACT
2.01 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.
2.02 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.
2.03 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before July 31 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.
2.04 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.
2.05 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) of the Trust Indenture Act may be given in
the form of an Officers' Certificate.
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2.06 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.
2.07 EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee, 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.
2.08 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
3.01 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 5.04(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.
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(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
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06) 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
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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.
3.02 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(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
re-recording, re-filing or registration thereof).
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(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 3.02(a)(vi) shall be taken to relieve the Preferred Guarantee
Trustee, upon the occurrence of an Event of Default actually known to
a Responsible Officer of the Preferred Guarantee Trustee, 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. The
reasonable expense of every such investigation shall be paid by the
Guarantor or, if paid by the Preferred Guarantee Trustee, shall be
repaid by the Guarantor upon demand.
(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
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Guarantee, both of which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's taking such action.
(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 (A)
may request instructions from the Holders of a Majority in liquidation
amount of the Preferred Securities, (B) may refrain from enforcing
such remedy or right or taking such other action until such
instructions are received, and (C) shall be protected in conclusively
relying on or acting in accordance with such instructions.
(xi) The Preferred Guarantee Trustee shall not be charged with
knowledge of any default or Event of Default hereunder unless a
Responsible Officer of the Guarantee Trustee shall have knowledge of
the default or Event of Default.
(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.
3.03 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.
3.04 COMPENSATION AND REIMBURSEMENT.
(a) The Guarantor covenants and agrees to pay to the Preferred
Guarantor Trustee, and the Preferred Guarantor 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 Guarantor and the Preferred Guarantor 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 Preferred Guarantee Trustee, and,
except as otherwise expressly provided herein, the Guarantor will pay or
reimburse the Preferred Guarantor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Preferred Guarantor Trustee in accordance with any of the provisions of
this Preferred Securities Guarantee (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance
as may arise from its negligence or bad faith. The Guarantor also
covenants to indemnify the
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Preferred Guarantor 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
Preferred Guarantor 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 claims of liability in the
premises.
(b) When the Preferred Guarantor Trustee incurs expenses or renders
services after an Event of Default specified in Section 7.01(iv), (v) or
(vi) of the Indenture occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under the
Bankruptcy Reform Act of 1978 or any successor statute. The provisions of
this Section 3.04 shall survive termination of the Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
4.01 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 4.01(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 4.01(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in
Section 4.02(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.
4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEES.
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(a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.02(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 4.02 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 4.02, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
5.01 GUARANTEE. The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by BVBC Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that BVBC Trust 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 BVBC Trust to pay such amounts to the Holders.
5.02 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 BVBC Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
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5.03 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 BVBC Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by BVBC Trust;
(b) the extension of time for the payment by BVBC Trust 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 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 BVBC Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, BVBC
Trust or any of the assets of BVBC Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 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.
5.04 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
13
<PAGE>
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 BVBC Trust, the Preferred Guarantee Trustee or any
other Person.
5.05 GUARANTEE OF PAYMENT. This Preferred Securities Guarantee
creates a Guarantee of payment and not of collection.
5.06 SUBROGATION. The Guarantor shall be subrogated to all (if any) rights
of the Holders of Preferred Securities against BVBC Trust 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.
5.07 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of BVBC Trust with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section
5.03.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
6.01 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 (i) dividends or distributions in common
stock, (ii) 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,
(iii) payments under this Preferred Securities Guarantee and (iv)
14
<PAGE>
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).
6.02 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
7.01 TERMINATION. This Preferred Securities Guarantee shall terminate upon
(a) full payment of the Redemption Price of all Preferred Securities, (b) upon
full payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of BVBC Trust or (c) 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
MISCELLANEOUS
8.01 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.
8.02 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; provided, however, that no amendment that affects the
rights, powers, duties, obligations or immunities of the Preferred Guarantee
Trustee shall be effective unless approved in writing by the Preferred Guarantee
Trustee. 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.
8.03 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):
15
<PAGE>
WILMINGTON TRUST COMPANY
1100 North Market Street
Wilmington, Delaware 19890
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):
BLUE VALLEY BAN CORP.
11935 Riley
Overland Park, Kansas 66225-6128
Attention: Chief Executive Officer
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of BVBC Trust.
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.
8.04 BENEFIT. This Preferred Securities Guarantee is solely for the
benefit of the Holders of the Preferred Securities and, subject to Section
3.01(a), is not separately transferable from the Preferred Securities.
8.05 GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE, INCLUDING THE
IMMUNITIES AND THE STANDARD OF CARE OF THE TRUSTEE, SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF KANSAS.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first
above written.
BLUE VALLEY BAN CORP.,
as Guarantor
By:___________________________________
Robert Regnier
Chief Executive Officer
16
<PAGE>
WILMINGTON TRUST COMPANY,
as Preferred Guarantee Trustee
By:___________________________________
Name:_________________________________
Title:________________________________
17
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
________________, 2000, between BLUE VALLEY BAN CORP., a Kansas corporation (the
"Company"), and BVBC CAPITAL TRUST I, a Delaware business trust (the "Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive Debentures from, the Company and to issue and sell
up to 1,437,500 _____% Cumulative Trust 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 ______________, 2000, as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the 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 shall 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
<PAGE>
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;
(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.
There shall be no obligation of the Beneficiaries 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.
<PAGE>
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Preferred Securities of
any series 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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Facsimile No.: (302) 651-1576
Attention: Corporate Trust Administration
Blue Valley Ban Corp.
11935 Riley
Overland Park, Kansas 66225-6128
Facsimile No.: (913) 338-2801
Attention: Robert D. Regnier, Chief Executive Officer
Section 2.4. Governing Law.
This agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Kansas (without regard to conflict of
laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
BLUE VALLEY BAN CORP.
By:_________________________________________
Robert D. Regnier, Chief Executive Officer
BVBC CAPITAL TRUST I
By:_________________________________________
_________________, Administrative Trustee
April 7, 2000
BVBC Capital Trust I
c/o Blue Valley Ban Corp
11935 Riley
Overland Park, Kansas 66225
Re: BVBC Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel to BVBC Capital Trust I, a
Delaware statutory business trust (the "Trust"), and Blue Valley Ban Corp, a
Kansas corporation ("Blue Valley"), in connection with certain matters relating
to (i) the formation of the Trust and (ii) the proposed issuance by the Trust of
Preferred Securities to beneficial owners pursuant to and as described in the
Registration Statement (and the Prospectus forming a part thereof) on Form S-1
filed with the Securities and Exchange Commission on April 7, 2000 (the
"Registration Statement") relating to the Preferred Securities. Capitalized
terms used herein and not otherwise herein defined are used as defined in the
Amended and Restated Trust Agreement of the Trust in the form attached as an
exhibit to the Registration Statement (the "Governing Instrument").
In rendering this opinion, we have examined and relied upon copies
of the following documents in the forms provided to us: the Certificate of Trust
of the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "State Office") on March 30, 2000 (the "Certificate of Trust"); a
Trust Agreement of the Trust dated as of March 30, 2000 (the "Original Governing
Instrument"); the Governing Instrument; the Subordinated Indenture to be entered
into between Blue Valley and Wilmington Trust Company, as Trustee; the Preferred
Securities Guarantee Agreement to be entered into between Blue Valley and
Wilmington Trust Company, as Trustee; the form of Underwriting Agreement
relating to the Preferred Securities among Blue Valley, the Trust and Stifel,
Nicolaus & Company (the "Underwriting Agreement"); the Registration Statement;
and a certification of good standing of the Trust obtained as of a recent date
from the State Office. In such examinations, we have assumed the genuineness of
all signatures, the conformity to original documents of all documents submitted
to us as drafts or copies or forms of documents to be executed and the legal
capacity of natural persons to complete the execution of documents. We have
further assumed for purposes of this opinion: (i)
<PAGE>
BVBC Capital Trust I
April 7, 2000
Page 2
the due formation or organization, valid existence and good standing of each
entity (other than the Trust) that is a party to any of the documents reviewed
by us under the laws of the jurisdiction of its respective formation or
organization; (ii) the due authorization, execution and delivery by, or on
behalf of, each of the parties thereto of the above-referenced documents
(including, without limitation, the due authorization, execution and delivery of
the Governing Instrument and the Underwriting Agreement prior to the first
issuance of Preferred Securities); (iii) that no event has occurred subsequent
to the filing of the Certificate of Trust, or will occur prior to the first
issuance of Preferred Securities, that would cause a dissolution or liquidation
of the Trust under the Original Governing Instrument or the Governing
Instrument, as applicable; (iv) that the activities of the Trust have been and
will be conducted in accordance with the Original Governing Instrument or the
Governing Instrument, as applicable, and the Delaware Business Trust Act, 12
Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that payment of the
required consideration for the Preferred Securities has, or prior to the first
issuance of Preferred Securities will have, been made in accordance with the
terms and conditions of the Governing Instrument, the Registration Statement and
the Underwriting Agreement and that the Preferred Securities are otherwise
issued and sold to the Preferred Security Holders in accordance with the terms,
conditions, requirements and procedures set forth in the Governing Instrument,
the Registration Statement and the Underwriting Agreement; and (vi) that the
documents examined by us are in full force and effect, express the entire
understanding of the parties thereto with respect to the subject matter thereof
and have not been amended, supplemented or otherwise modified, except as herein
referenced. We have not reviewed any documents other than those identified above
in connection with this opinion, and we have assumed that there are no other
documents that are contrary to or inconsistent with the opinions expressed
herein. Further, we express no opinion with respect to, and assume no
responsibility for the contents of, the Registration Statement or any other
offering material relating to the Preferred Securities. No opinion is expressed
herein with respect to the requirements of, or compliance with, federal or state
securities or blue sky laws. As to any fact material to our opinion, other than
those assumed, we have relied without independent investigation on the
above-referenced documents and on the accuracy, as of the date hereof, of the
matters therein contained.
Based on and subject to the foregoing, and limited in all respects
to matters of Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing business trust in
good standing under the laws of the State of Delaware.
2. Upon issuance, the Preferred Securities will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the assets of the Trust.
3, Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized
<PAGE>
BVBC Capital Trust I
April 7, 2000
Page 3
under the General Corporation Law of the State of Delaware; provided, however,
we express no opinion with respect to the liability of any Preferred Security
Holder who is, was or may become a named Trustee of the Trust. Notwithstanding
the foregoing, we note that, pursuant to the Governing Instrument, Preferred
Security Holders may be obligated to make payments or provide indemnity or
security under the circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and reference to our opinion
under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In
giving this consent, 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. This opinion speaks only as of the date hereof and is
based on our understandings and assumptions as to present facts, and on our
review of the above-referenced documents and the application of Delaware law as
the same exist as of the date hereof, and we undertake no obligation to update
or supplement this opinion after the date hereof for the benefit of any person
or entity with respect to any facts or circumstances that may hereafter come to
our attention or any changes in facts or law that may hereafter occur or take
effect. This opinion is intended solely for the benefit of the addressee hereof
in connection with the matters contemplated hereby and may not be relied on by
any other person or entity or for any other purpose without our prior written
consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Jonathan I. Lessner
Jonathan I. Lessner
BLACKWELL SANDERS PEPER MARTIN LLP
2300 MAIN STREET, SUITE 1000, KANSAS CITY, MO 64108
P.O. BOX 419777, KANSAS CITY, MO 64141-6777
TEL: (816) 983-8000 FAX: (816) 983-8080
WEBSITE: www.bspmlaw.com
April 6, 2000
BVBC Capital Trust I
Blue Valley Ban Corp
11935 Riley
Overland Park, Kansas 66225-6128
Ladies and Gentlemen:
We have acted as counsel to Blue Valley Ban Corp (the "Company") and to
BVBC Capital Trust I (the "Trust") in connection with the registration statement
of the Company and the Trust on Form S-1 (the "Registration Statement"), of
which a prospectus ("Prospectus") is a part, filed by the Company and the Trust
with the United States Securities and Exchange Commission under the Securities
Act of 1933, as amended. This opinion is furnished pursuant to the requirements
of Item 601(b)(8) of Regulation S-K.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents to all documents submitted to us as copies, the authenticity
of such copies and the accuracy and completeness of all corporate records made
available to us by the Company and the Trust.
Based solely upon our review of such documents, and upon such
information as the Company has provided to us (which we have not attempted to
verify in any respect), and reliance upon such documents and information, we are
of the opinion that the statements contained in the Prospectus under the caption
"Material Federal Income Tax Consequences," insofar as such statements
constitute matters of law or legal conclusions, constitute an accurate
description of the United States federal income tax consequences.
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
state, local, foreign, or other tax considerations. If any of the information on
which we have relied is incorrect, or if changes in the relevant facts occur
after the date hereof, our opinion could be affected thereby.
Moreover, our opinion is based on the Internal Revenue Code of 1986, as
amended, applicable Treasury regulations promulgated thereunder, and Internal
Revenue Service rulings, procedures, and other pronouncements published by the
United States Internal Revenue Service. These authorities are all subject to
change, and such change may be made with retroactive effect. We can give no
assurance that, after such change, our opinion would not be different. We
undertake no responsibility to update or supplement our opinion. This opinion is
not binding on the Internal Revenue Service, and there can be no assurance, and
none is hereby given, that the Internal Revenue Service will not take a position
contrary to one or more of the positions reflected in the foregoing opinion, or
that our opinion will be upheld by the courts if challenged by the Internal
Revenue Service.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Material Federal Income Tax Consequences."
Very truly yours,
/s/ Blackwell Sanders Peper Martin LLP
Boatmen's First National Bank
of Kansas City
14 West 10th Street
Boatmen's Kansas City, Missouri 64105
1439286-0001-B42 "Bank"
SECURITY AGREEMENT
(Property Other Than Inventory, Accounts and General Intangibles)
to
Bank
To secure payment of all Obligations of the undersigned ("Obligor") to
Bank, Obligor by this Security Agreement (this "Agreement") grants to Bank a
security interest under the Uniform Commercial Code in, and pledges and assigns
to Bank, the following property and such other property as may be described in
any exhibit attached hereto, all of Obligor's books and records (including
computer data and storage media) pertaining to the foregoing, all rights related
thereto, all additions thereto and substitutions therefor, and all interest,
dividend or other income, products, and cash and noncash proceeds, of or from
said property, and everything that becomes (or is held for the purpose of being)
affixed to or installed in any of said property (collectively the "Collateral"):
258,000 SHARES OF BANK OF BLUE VALLEY STOCK
THE PROCEEDS OF SHARES OF THE CAPITAL STOCK OF BANK OF BLUE VALLEY
INCLUDING, BUT NOT LIMITED TO, ALL ACCRUALS TO SUCH SHARES AND DIVIDENDS,
RIGHTS AND PAYMENTS, SHARES AND PROPERTY RECEIVED IN RESPECT THEREOF,
INCLUDING THOSE BY WAY OF CORPORATE REORGANIZATION, LIQUIDATION, SPLIT OR
CHANGE IN CAPITAL STRUCTURE.
Obligor agrees in favor of Bank as follows:
1. OBLIGATIONS. As used herein, the term "Obligations" shall mean all
indebtedness (whether principal, interest, fees or otherwise), obligations and
liabilities of Obligor to Bank (including without limitation all extensions,
renewals, modifications, rearrangements, restructures, replacements and
refinancings thereof, whether or not the same involve modifications to interest
rates or other payment terms of such indebtedness, obligations and liabilities),
whether now existing or hereafter created, absolute or contingent, direct or
indirect, joint or several, secured or unsecured, due or not due, contractual or
tortious, liquidated or unliquidated, arising by operating of law or otherwise,
or acquired by Bank outright, conditionally or as collateral security from
another, including but not limited to the obligation of Obligor to repay FUTURE
ADVANCES by Bank, whether or not made pursuant to commitment and whether or not
presently contemplated by Obligor and Bank, and the obligation to repay advances
by Bank under any letters of credit issued for Obligor's account, and (to the
extent permitted by law) all costs of collection thereof, including but not
limited to reasonable attorney's fees and actual attorney's expenses (whether or
not there is litigation), court costs and all costs in connection with any
proceedings under the United States Bankruptcy Code pertaining thereto;
provided, however, that the term "Obligations" shall not include any
indebtedness
<PAGE>
evidenced by or secured pursuant to any writing which states in effect that such
indebtedness is secured only by the property described in such writing, but only
if the property so described does not include the Collateral.
2. REPRESENTATIONS AND WARRANTIES. Obligor represents and warrants
to Bank that Obligor is the owner of all the Collateral free and clear of any
and all liens, encumbrances and security interests, other than the security
interest of Bank.
3. SECURITIES AS COLLATERAL. If any of the property which is part
of the Collateral is a security:
3.1. Obligor has delivered to Bank the certificates or other instruments
representing the securities, together with stock powers or other
instruments of transfer satisfactory to Bank executed in blank by Obligor
for each such certificate or instrument.
3.2. Bank may transfer the security into its name or the name of its
nominee for so long as the security remains part of the Collateral.
3.3. The issuer of any security which is part of the Collateral is hereby
granted the authority to make the transfer into Bank's name or the name of
Bank's nominee.
3.4. So long as there is no default by Obligor hereunder, Obligor shall
have and retain all voting rights with respect to the securities, and all
income from the securities shall be paid and delivered to Obligor;
provided, however, that any securities received by Obligor by reason of
Obligor's ownership of the securities pledged hereunder shall be promptly
delivered to Bank as part of the Collateral.
4. ADDITIONAL COLLATERAL. If, in Bank's sole opinion, the Collateral
becomes insufficient to secure payment of the Obligations, Bank may require
Obligor to assign, pledge and deliver to bank, and to grant Bank a security
interest under the Uniform Commercial Code in, additional property satisfactory
to Bank as part of the Collateral within twenty-four (24) hours of request by
Bank.
5. POSSESSION OF COLLATERAL. Until a default hereunder, Obligor may have
possession of the Collateral which is not herewith delivered to Bank and may use
each item thereof in any lawful manner not inconsistent with this Agreement or
with any policy of insurance covering it.
6. BUSINESS PURPOSE. The Collateral is not and shall not be used
for personal, family or household purposes.
7. ADVERSE CONDITIONS AFFECTING COLLATERAL. Obligor shall notify Bank
immediately in writing of any adverse fact or condition of which Obligor is
aware or should be aware which bears upon the value of the Collateral including
without limitation any adverse fact or condition, or the occurrence of any
event, which causes loss or depreciation in the value of any Item of the
Collateral and the amount of such loss or depreciation. Obligor shall provide
such additional information to Bank regarding the amount of any loss or
depreciation in value of the Collateral as Bank may reasonably request from time
to time.
<PAGE>
8. INSURANCE. Obligor shall at all times keep all tangible Collateral
insured against loss, damage, theft and other risks (and in the case of motor
vehicles, obtain comprehensive and collision insurance), in such amounts and
with such companies as shall be satisfactory to Bank. All such policies shall
provide that loss proceeds are payable to Bank as its interest appears, and Bank
may apply any proceeds of such insurance toward payment of the Obligations,
whether or not due, in such order of application as Bank alone determines. Upon
Bank's request at any time, Obligor shall furnish to Bank certificates that such
insurance is in force and that all premiums due therefor have been paid. Every
such insurance policy shall require at least thirty (30) days' written notice to
Bank prior to cancellation. If any such insurance policy is canceled, Bank may
collect any return premiums and apply them toward payment of the Obligations,
whether or not due, in such order of application as Bank alone determines.
9. DISBURSEMENT DIRECTLY TO SELLER OF COLLATERAL. To the extent that
Obligor has advised Bank that any Collateral is being acquired with a loan or
advance from Bank, such proceeds may be disbursed by Bank directly to the seller
of such Collateral.
10. TAXES; TRANSFERS, LIENS AND ENCUMBRANCES. Obligor shall timely pay and
discharge all taxes assessed on the Collateral. Obligor shall not transfer,
sell, assign or convey the Collateral, or any part thereof or any interest
therein, without the prior written consent of Bank. Obligor shall not create or
grant or allow to exist any lien, encumbrance or security interest on any
Collateral other than the security interest of Bank. Obligor shall not permit
Obligor's rights in any of the Collateral to be affected by attachment, levy,
garnishment or other judicial process remaining unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for more than sixty (60) days, and Obligor
shall defend the Collateral against the claims and demands of all persons.
11. OBLIGOR'S CHIEF EXECUTIVE OFFICE; LOCATION OF COLLATERAL. Obligor's
home address, if Obligor is an individual, and the address of Obligor's chief
executive office is that given at the end of this Agreement ("Obligor's Chief
Business Address"). All other places of business of Obligor, if any, are listed
on an exhibit attached hereto. Unless Bank otherwise consents in writing, all
the tangible Collateral shall be kept at Obligor's Chief Business Address or
such other listed places of business. Obligor shall keep at Obligor's Chief
Business Address, or at one of such other listed addresses, when not in use, all
Collateral which is movable; and without Obligor first making arrangements
satisfactory to Bank to protect Bank's security interest therein, Obligor shall
not locate any of the Collateral in any other place. If Obligor's name changes,
or the location of Obligor's Chief Business Address changes, or Obligor opens
other places of business, Obligor shall promptly notify Bank of the same in
writing and shall execute such additional documents as Bank may reasonably
request in order to maintain a perfected security interest in favor of Bank in
the Collateral.
12. INSPECTION. Whenever requested by Bank, Obligor shall permit Bank or
any of its authorized representatives to inspect the Collateral and audit the
books and records of Obligor pertaining to the Collateral during the normal
business hours of Obligor. Upon request of Bank, Obligor shall reimburse Bank
for Bank's reasonable costs and expenses incurred in performing such audits and
inspections.
<PAGE>
13. MAINTENANCE OF COLLATERAL. Obligor shall keep all tangible items of
Collateral (if any) in the same condition as existed on the date hereof (or,
with respect to hereafter acquired Collateral, in the same condition as existed
on the date acquired), ordinary wear and tear excepted.
14. PROTECTION OF SECURITY INTEREST. Bank may file a copy of this
Agreement, or a financing statement executed by Bank as agent for Obligor, in
any public office deemed necessary by Bank to perfect its security interest in
the Collateral. In addition, Obligor shall execute or cause the execution of
such additional financing statements and other documents (and pay the cost of
filing or recording the same in all public offices deemed necessary by Bank) and
do such other acts and things, including execution of applications and
certificates of title naming Bank as a secured party and delivery of same to
Bank, as Bank may from time to time request or deem necessary to establish and
maintain a valid and perfected security interest in the Collateral, and, if any
of the property which is part of the Collateral is a security, including sending
written notices to advise any registrar, paying agent, trust or like person or
entity of the existence of the security interest granted hereunder in the
securities and to instruct any such person or entity to make payments,
disbursements and distributions in respect of the securities directly to Bank
when and as contemplated by this Agreement. Upon the request of Bank, Obligor
shall place a notice of the existence of Bank's security interest in the
Collateral, in form and by means acceptable to Bank, upon those writings
evidencing the Collateral and the books and records of Obligor pertaining to the
Collateral, as designated by Bank.
15. PRESERVATION OF COLLATERAL. Bank may, but is not obligated to, perform
any obligation of Obligor hereunder which Obligor fails to perform. Bank may
also take any other action which it deems necessary for the maintenance or
preservation of any of the Collateral or the security interest of Bank therein
including, but not limited to, the payment and discharge of taxes, liens,
encumbrances and security interests of any kind against the Collateral or the
procurement of insurance. Bank may take any action which it deems necessary in
order to adjust, settle or cancel any policy of insurance on items of
Collateral, or endorse any draft received in connection therewith in payment of
a loss, refund or otherwise. Obligor agrees to reimburse Bank on demand for all
costs and expenses incurred or paid by Bank pursuant to this paragraph together
with interest thereon at the highest rate provided in any instrument, document
or agreement evidencing any of the Obligations. Any amount not so reimbursed
shall be added to and become a part of the Obligations. Bank may, for the
foregoing purposes, act in its own name or in the name of Obligor. Obligor
hereby grants to Bank a power of attorney, irrevocable so long as any of the
Obligations secured hereby are outstanding, to take any of the actions described
or permitted by this paragraph.
16. EVENTS OF DEFAULT. Each of the following events shall constitute
a default under this Agreement:
16.1. Obligor fails to pay when due any amount payable on any of the
Obligations.
16.2 Obligor fails to pay any obligation to any person or entity other
than Bank in full when it becomes due or the maturity of any such
obligation is for any reason accelerated.
<PAGE>
16.3. Obligor or any other person who has signed any instrument, document
or agreement evidencing any of the Obligations as maker, surety, endorser
or guarantor dies; or any corporation which has signed, in any capacity,
any instrument, document or agreement evidencing any of the Obligations is
dissolved or liquidated.
16.4. Obligor, or any guarantor or surety for Obligor, makes an assignment
for the benefit of his or its creditors, ceases to operate his or its
business, or files or has filed against him or it a petition for relief
under the United States Bankruptcy Code or any other federal or state law
pertaining to the relief of debtors or a receiver is appointed with
respect to any of the Collateral.
16.5. There is loss, theft, damage, destruction, sale or encumbrance to or
of any of the Collateral or there is a levy on, seizure of or attachment
to any of the Collateral.
16.6. Obligor fails to do anything that Obligor has agreed to do in this
Agreement or in an other document, instrument or agreement evidencing or
executed in connection with the Obligations, or any warranty,
representation or statement made or furnished to Bank by or on behalf of
Obligor is found to have been false or untrue in any material respect when
made or furnished.
16.7. Bank deems its position with respect to the Obligations or
Collateral is or is about to become impaired and Obligor fails to give
additional collateral or provide other assurances to bank within
twenty-four (24) hours after the same are requested by Bank.
17. REMEDIES. Upon a default under this Agreement, all of the Obligations,
at the option of Bank, shall become immediately due and payable, and Bank may
enforce full payment of the same and shall have and may exercise any of the
rights and remedies of a secured party under the Uniform Commercial Code or
otherwise possessed by Bank. Further, Bank may treat all of Obligor's property
in Bank's possession as part of the Collateral to secure payment of the
Obligations. If Bank so requires, Obligor shall assemble the Collateral and make
it available to Bank at a place to be designated by Bank which is reasonably
convenient to both parties.
18. CUSTODY AND PRESERVATION OF THE COLLATERAL. Bank shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if it takes such action for that purpose as Obligor requests
in writing. Failure of Bank to comply with any such request shall not of itself
be deemed a failure to exercise such reasonable care. The failure of Bank to
preserve or protect any rights with respect to any of the Collateral against
other parties, or to do any act with respect to the preservation of such
Collateral not so requested by Obligor, shall not be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
19. ATTORNEY'S FEES AND OTHER COSTS. Obligor shall reimburse Bank (to the
extent permitted by law) for all expenses incurred by Bank in seeking to collect
or enforce the Obligations and any other rights under this Agreement or under
any other instrument, document or agreement evidencing any of the Obligations,
including reasonable attorney's fees and actual attorney's expenses (whether or
not there is litigation), court costs and all costs in connection with any
proceedings under the United States Bankruptcy Code and any expenses incurred on
<PAGE>
account of damage to any property to which any of the Collateral may be affixed
and for repairs to such property or reimbursement for such damage.
20. SUBSTITUTION OF COLLATERAL. With Bank's prior written consent, Obligor
may substitute for any property which is part of the Collateral other property
of equivalent collateral value. Any substitution of Collateral by Obligor shall
not affect Bank's rights against any endorser, guarantor or surety on any
instrument, document or agreement evidencing any of the Obligations. Neither
shall it affect Bank's right to collect on any instrument, document or agreement
evidencing any of the Obligations. Bank shall have the same rights in the
property that Obligor substitutes as part of the Collateral that it had in the
property originally given as collateral under this Agreement.
21. ASSIGNMENT BY BANK. Bank may assign or transfer to another any
instrument, document or agreement evidencing any of the Obligations and Bank's
rights under this Agreement and may deliver all the property which is part of
the Collateral and in its possession to the assignee or transferee.
22. NO RELEASE OR IMPAIRMENT OF COLLATERAL. Bank's security interest
hereunder and Bank's rights in connection therewith shall continue unimpaired
notwithstanding that Bank takes or releases other security, releases any party
primarily or secondarily liable for any of the Obligations, grants or allows
extensions, renewals, modifications, rearrangements, restructures, replacements
or refinancings thereof, whether or not the same involve modifications to
interest rates or other payment terms thereof, or indulgences with respect to
the Obligations. Bank may apply to the Obligations in such order as Bank shall
determine, any proceeds or other amounts received on account of the Collateral
pursuant hereto by the exercise of any right permitted under this Agreement,
regardless whether there is any other security for the Obligations.
23. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the state of Bank's address as listed at the top of this Agreement
(the "State"), without regard to choice or conflict of laws rules, including the
version of the Uniform Commercial Code adopted in the State. Capitalized terms
used and not otherwise defined in this Agreement shall have the meanings given
thereto in the Uniform Commercial Code.
24. SUCCESSORS AND ASSIGNS. The obligations and liabilities of Obligor
under this Agreement may not be delegated. This Agreement shall inure to the
benefit of and shall be enforceable by Bank and Bank's assignees, transferees
and successors against Obligor and Obligor's successors, heirs, devisees,
beneficiaries, executors and administrators.
25. NOTICES. Any communication by Bank to Obligor shall be deemed given if
in writing and when (i) personally delivered to Obligor, or (ii) sent to Obligor
at Obligor's Notice Address by certified or registered mail, courier, or
telegram, or (iii) sent by facsimile to Obligor's FAX Number, whether received
by Obligor or not. No communication from or concerning Obligor shall be deemed
for any purpose to have been received by Bank unless it is in writing and
actually received by an executive officer of Bank. Whenever applicable
provisions of the Uniform Commercial Code or other applicable law require that
notice be reasonable, ten (10) days' notice shall be deemed reasonable.
Obligor's "Notice Address" is the
<PAGE>
mailing address shown below Obligor's signature. Obligor's FAX Number is the
telephone number for Obligor's facsimile machine shown below Obligor's
signature.
26. WAIVERS AND MODIFICATIONS. No waiver by Bank shall be effective unless
it is in a writing and signed by an authorized officer of Bank. No such waiver
shall operate as a waiver of any other matter or of a similar matter at a future
time. This Agreement may not be changed except by a writing executed by both
Obligor and an authorized officer of Bank.
27. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable under any applicable law, the rest of this Agreement
shall remain fully valid and enforceable.
Executed June 7, 1994.
OBLIGOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS DOCUMENT. IF THERE IS MORE THAN
ONE UNDERSIGNED AS OBLIGOR, ALL REFERENCES HEREIN TO "OBLIGOR" REFER TO ALL OF
THE UNDERSIGNED AND TO EACH OF THEM, AND THEIR OBLIGATIONS HEREUNDER ARE JOINT
AND SEVERAL.
BLUE VALLEY BAN CORP
BY: /s/ Robert D. Regnier
President Robert D. Regnier
Obligor's Notice Address: P O Box 26128, OVERLAND PARK, KS 66225
Telephone Number: 913-338-1000 FAX Number:
Obligor's Chief Business Address: P O Box 26128
OVERLAND PARK, KS 66225
AGREEMENT
This Agreement is made this 2nd day of January, 1997, between BLUE VALLEY
BANCORP, a Kansas corporation (the "Borrower"), BANK OF BLUE VALLEY, a Kansas
corporation (the "Subsidiary Bank"), and BOATMEN'S FIRST NATIONAL BANK OF KANSAS
CITY (the "Bank"), having its principal office at 14 West 10th Street, Kansas
City, Missouri.
Subject to the terms and conditions of this Agreement and the Note and
Security Agreement hereunder, the Bank agrees to extend credit to the Borrower
in an amount not to exceed TWO MILLION EIGHT HUNDRED EIGHTY-SEVEN THOUSAND FIVE
HUNDRED DOLLARS ($2,887,500).
1. Promissory Note. The loan to be made hereunder will be evidenced by
the Note which will be payable on the following terms:
1.1 Interest. The Note will bear interest on the unpaid balance at
Boatmen's First National Bank of Kansas City Corporate Base Rate.
The interest rate will change daily. Interest will be payable
quarterly commencing March 31, 1996.
1.2 Maturity. The entire unpaid balance of the Note and all accrued
interest will be due and payable ON DEMAND, but no later than
December 31, 1997.
1.3 It is the Bank's expectation that, if the Borrower reduces the
principal amount of the note in the amount of $350,000 on or
before December 31, 1997, the Note will be renewed from time to
time on principally the same terms and under the same conditions
until the Borrower's obligation is paid in full. Notwithstanding
the above, the Borrower understands that should the Bank
determine, in its absolute discretion, that Borrower's credit
standing is unsatisfactory, the Note will not be renewed by the
Bank and must be paid in full.
2. Collateral Security. Payment on the Note will be secured by a first
pledge and security interest covering TWO HUNDRED FIFTY-EIGHT THOUSAND
(258,000) shares of the capital stock of the Bank of Blue Valley.
3. Conditions of Lending. Until payment in full of the Note, the Borrower
agrees that, unless the Bank otherwise consents in writing, the
Borrower will perform or cause to be performed the following:
3.1 Records. Accurate books and records of account will be maintained
by the Borrower and the Subsidiary Bank in accordance with sound
accounting practices consistently applied, and the Bank and its
designated representatives will have the right to examine such
books and records, and to discuss the affairs, finances,
accounts, and content of such books and records of the Borrower
and the Subsidiary Bank.
<PAGE>
3.2 Financial Statements. Furnish within ninety (90) days after the
close of each fiscal year of the Borrower, complete copies of the
balance sheets as of the close of such fiscal year and the profit
and loss statements and surplus reconciliations of the Borrower
for such fiscal year prepared in accordance with sound accounting
principles by accountants and in form satisfactory to the Bank.
3.3 Reports. Furnish within thirty (30) days after each filing
thereof: (a) copies of the FRY-6 Annual Report of the Borrower to
the Federal Reserve System; and (b) copies of all Consolidated
Reports of Condition and Consolidated Reports of Income and Call
Reports filed by the Subsidiary Bank with the appropriate
regulatory agency.
3.4 Other Information. Such other information concerning the Borrower
and Subsidiary Bank as the Bank might reasonably request.
4. Adverse Change. The Borrower will immediately advise the Bank of any
requirement by the regulatory authorities for additional capital in
the Subsidiary Bank, or the institution of any agreement, order, or
proceeding between any regulatory authority and the Borrower or
Subsidiary Bank, whether or not such agreement, order, or proceeding
is agreed to by the Borrower or Subsidiary Bank. The Borrower will
immediately advise the Bank of any significant litigation or other
matter which might result in a material adverse change in the
financial condition of the Borrower or the Subsidiary Bank.
5. Change in Ownership. Any change in control of the ownership of the
Borrower or any merger or consolidation with or into another
corporation or other disposition of property by the Borrower, without
the prior written consent of the Bank, shall constitute an event of
default and upon such an occurrence the Bank may demand the entire
obligation of the Borrower to be immediately due and payable. Borrower
agrees to immediately notify Bank of any such change in ownership.
6. In the event additional capital shall be injected in Subsidiary Bank,
whether by capital note, stock or in other form, such capital note,
stock or other instrument shall be immediately pledged to the Bank.
7. If default shall be made in the due observance or performance of any
terms, covenants or agreements in this Agreement, the Bank may demand
the entire obligation of the Borrower to be due and payable. No
failure on the part of the Bank to exercise and no delay in exercising
any right hereunder shall operate as a waiver thereof.
8. This Agreement and the rights and obligations of the parties shall be
governed by the interpreted in accordance with the laws of the State
of Missouri.
9. This Agreement is the final expression of the agreement between
Boatmen's and the Borrower(s). This Agreement may not be contradicted
by evidence of any prior oral agreement or of a contemporaneous oral
agreement between the parties.
<PAGE>
All the terms of the final agreement of the parties not set forth above or
which vary any terms set forth above, including any previous oral agreements,
are as follows:
No unwritten oral agreement between the parties exists.
BLUE VALLEY BANCORP
"Borrower"
By: /s/ Robert D. Regnier
Title:_________________________________
BANK OF BLUE VALLEY
"Subsidiary Bank"
By: /s/ Robert D. Regnier
Title:_________________________________
BOATMEN'S FIRST NATIONAL BANK
OF KANSAS CITY
"Bank"
By: /s/ Deon Pitsor
Title: Vice President
Amendment of Loan Documents
This Amendment is effective as of the 26th day of December, 1997 and is
entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley
(the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First
National Bank of Kansas City ("Bank").
Whereas, Borrower is indebted to Bank as currently evidenced by a
Promissory Note dated December 31, 1996 in the face principal amount of
$2,887,500 (the "Note") with a current outstanding principal balance of
$2,537,500;
Whereas, the loan evidenced by the Note is governed by the terms of an
Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and
Bank (the "Loan Agreement"), and the loan is secured by a Security Agreement
dated June 7, 1994 and executed by Borrower in favor of Bank (the "Security
Agreement") whereby Borrower pledged a security interest in, among other items
of collateral, 258,000 shares of Borrower's stock in the Subsidiary Bank; and
Whereas, Borrower has, among other requests, requested an additional
advance or loan in the amount of $1,500,000 for the purpose of injecting the
proceeds thereof into the Subsidiary Bank as a capital contribution, and Bank
has agreed to do so upon the terms and conditions hereinafter set forth.
Now, therefore, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank
agree as follows:
1. Amendment of Note. The Note shall be amended as follows:
a. Bank shall advance $1,500,000 to Borrower on or aboutthe date
hereof; therefore, the face principal amount of the Note shall be
and hereby is amended to reflect a face principal amount of
$4,387,500. Borrower agrees to pay to Bank the current
outstanding principal amount under the Note, as so amended, of
$4,037,500 according to the terms of the Note, as herein amended.
b. The "Reference Rate" (i. e., the "Corporate Base Rate") described
in the Note shall mean the prime rate of interest ("Prime Rate")
established from time to time by Bank, which Prime Rate may not
be the best or lowest rate charged by Bank to its customers; and
the Note shall be and hereby is amended to reflect the foregoing
change.
c. From the effective date hereof, principal outstanding under the
Note, as amended hereby, shall bear interest at the per annum
rate equal to Bank's Prime Rate, minus one-half of one percent
(0.50%). The interest rate charged under the Note, as amended
hereby, shall change as of the date on which Bank makes changes
to its Prime Rate.
<PAGE>
d. The "Final Maturity" date set forth in the Note, at which time
all sums due under the Note, as amended, shall be due and payable
in full, shall be and hereby is changed from January 31, 1998 to
January 31, 1999.
e. Notwithstanding anything to the contrary contained in the Note or
the Loan Agreement, the payments paragraph of the Note shall be
amended and hereby is amended to read as follows:
"Borrower shall make a principal payment in the amount of
$87,500, plus accrued interest, on January 31, 1998; thereafter,
on the 30th day of each April, July, October and January,
Borrower shall make a principal payment of $125,000, together
with accrued interest outstanding on each such payment date.
Borrower shall pay the entire amount outstanding under this Note
on January 31, 1999, unless the Final Maturity is extended with
Bank's consent."
2. Amendment of Loan Agreement. The Loan Agreement shall be amended as
follows:
a. Notwithstanding anything to the contrary in the Loan Agreement,
the terms thereof shall be changed and hereby are changed to
reflect the amended face principal amount of the Note, the
amended Maturity Date or Final Maturity, and the amended interest
rate, all as more specifically set forth in Section 1 hereof.
b. Section 1.3 of the Loan Agreement shall be supplemented by adding
the following paragraph thereto:
"It is the Bank's expectation that, if the Borrower reduces the
outstanding principal amount of the Note, as amended, to not more
than $3,450,000 on or before January 31, 1999, the Bank will
consider the renewal and extension of the Final Maturity date as
set forth in the Note, as amended, along principally the same
terms and conditions. Notwithstanding the foregoing, the Borrower
understands and agrees with the Bank that should the Bank
determine, in its sole discretion, that the Borrower's credit
standing is no longer acceptable to the Bank, the Note, as
amended, will not be renewed and extended by the Bank."
c. Borrower agrees to add, and by the execution hereof adds, two new
covenants to the Loan Agreement under Section 3 (Conditions of
Lending) as follows:
"3.5 Borrower shall not pay any dividends or make distributions
of any kind on the stock of Borrower.
3.6 Borrower shall not incur any additional indebtedness."
<PAGE>
3. Security Agreement. The collateral provided for in the Security
Agreement shall continue to secure the "Obligations" as defined therein, which
shall include indebtedness evidenced by the Note, as amended hereby.
4. Except as amended hereby, all other terms and conditions in the Note,
the Loan Agreement and the Security Agreement shall remain unchanged and in full
force and effect.
5. Borrower represents and warrants to Bank that it is not, as of the
effective date hereof, in default under the Note, the Loan Agreement, or the
Security Agreement. Borrower further warrants and represents to Bank that as of
the effective date hereof Borrower has no claim, counterclaim, defense or
set-off with respect to the amounts due to Bank under the Note as amended.
Blue Valley Ban Corp
By: /s/ Robert D. Regnier
Title: President
Bank of Blue Valley
By: /s/ Robert D. Regier
Title: President
NationsBank, N.A., successor to
Boatmen's First National Bank
of Kansas City
By: /s/ Deon Pitsor
Title: Vice President
Second Amendment to Loan Documents
This Amendment is effective as of the 31st day of January, 1999 and is
entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley
(the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First
National Bank of Kansas City ("Bank").
Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note
dated December 31, 1996 in the face principal amount of $2,887,500 and
Promissory Note being amended by an Amendment of Loan Documents dated December
26, 1997 which Amendment, among other matters, increased the face principal
amount of said Promissory Note to $4,387,500 (as amended, the "Note"), the Note
having an anticipated outstanding principal balance of $3,450,000 if and when
Borrower shall pay a scheduled principal payment due on January 31, 1999;
Whereas, the loan evidenced by the Note is governed by the terms of an
Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank, and
Bank said Loan Agreement being amended by the above described Amendment of Loan
Documents dated December 26, 1997 (as amended, the "Loan Agreement"), and the
loan is secured by a Security Agreement dated June 7, 1994 and executed by
Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged a
security interest in, among other items of collateral, 258,000 shares of
Borrower's stock in Subsidiary Bank; and
Whereas, Borrower has requested that the Final Maturity (as defined in the
Note) date of the Note be extended to January 31, 2000, and Bank has agreed to
do so upon the terms and conditions hereinafter set forth.
Now, therefore, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank
agree as follows:
1. Replacement of Note. The Note shall be amended and replaced by a new
note to be dated as of the effective date hereof (the "New Note") which shall be
in the form of Exhibit A attached hereto, which New Note shall extend the Final
Maturity as described above and provide for such other changes as may be
provided for therein. All sums outstanding under the Note shall from the
effective date of this Amendment be evidenced by the New Note referenced herein,
and all terms in the Loan Agreement and the Security Agreement referencing the
Note or the Promissory Note shall mean the Note as replaced by the New Note.
2. Amendment of Loan Agreement. The Loan Agreement shall be amended as
follows:
a. Notwithstanding anything to the contrary in the Loan Agreement,
the terms thereof shall be changed and hereby are changed to
reflect the amended Maturity Date or Final Maturity, as more
specifically set forth in the New Note.
b. Section 1.3 of the Loan Agreement shall be supplemented by adding
the following paragraph thereto:
<PAGE>
"It is the Bank's expectation that, if the Borrower reduces
the outstanding principal amount of the Note, as amended, to
not more than $2,950,000 on or before January 31, 2000, the
Bank will consider the renewal and extension of the Final
Maturity date as set forth in the Note, as amended, along
principally the same terms and conditions. Notwithstanding
the foregoing, the Borrower understands and agrees with the
Bank that should the Bank determine, in its sole discretion,
that the Borrower's credit standing is no longer acceptable
to the Bank, the Note, as amended, will not be renewed and
extended by the Bank."
3. Security Agreement. The collateral provided for in the Security
Agreement shall continue to secure the "Obligations" as defined therein, which
shall include indebtedness evidenced by the Note, as replaced by the New Note.
4. Except as amended hereby, all other terms and conditions in the Note,
the Loan Agreement and the Security Agreement shall remain unchanged and in full
force and effect.
5. Borrower represents and warrants to Bank that it is not, as of the
effective date hereof, in default under the Note, the Loan Agreement, or the
Security Agreement. Borrower further warrants and represents to Bank that as of
the effective date hereof Borrower has no claim, counterclaim, defense or
set-off with respect to the amounts due to Bank under the Note as amended.
This Second Amendment of Loan Documents shall become effective as of the date
set forth above upon Borrower's delivery to Bank of the original executed copies
of this Second Amendment and the New Note.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS
REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
<PAGE>
Blue Valley Ban Corp
By: /s/ Robert D. Regnier
Title: President
Bank of Blue Valley
By: /s/ Robert D. Regnier
Title: President
NationsBank, N.A., successor to
Boatmen's First National Bank of
Kansas City
By: /s/
Title: Sr. V. P.
THIRD AMENDMENT OF LOAN DOCUMENTS
This Amendment is effective as of the 21st day of June, 1999 and is
entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley
(the "Subsidiary Bank"), and NationsBank, N.A., successor to Boatmen's First
National Bank of Kansas City ("Bank").
Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note
dated December 31, 1996 in the face principal amount of $2,887,500, said
Promissory Note being amended by an Amendment of Loan Documents dated December
26, 1997 which Amendment, among other matters, increased the face principal
amount of said Promissory Note to $4,387,500, said Promissory Note being further
amended and replaced by that certain Promissory Note dated January 31, 1999 in
the face principal amount of $3,450,000 (as amended and replaced, the "Former
Note"), the Former Note having an outstanding principal balance of $3,325,000 as
of the date hereof;
Whereas, the loan evidenced by the Former Note is governed by the terms of
an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank,
and Bank, said Loan Agreement being amended by the above-described Amendment of
Loan Documents dated December 26, 1997 as well as by that certain Second
Amendment of Loan Documents dated January 31, 1999 (as amended, the "Loan
Agreement"), and the loan evidencing the Former Note is secured by a Security
Agreement dated June 7, 1994 and executed by Borrower in favor of Bank (the
"Security Agreement") whereby Borrower pledged a security interest in, among
other items of collateral, 258,000 shares of Borrower's stock in the Subsidiary
Bank; and
Whereas, Borrower has requested that the Final Maturity (as defined in the
Former Note) date of the Former Note be extended to July 31, 2000, that the face
principal amount of the Former Note be increased so as to make additional loan
proceeds available to Borrower, and that the interest rate set forth in the
Former Note be changed, and Bank has agreed to do so upon the terms and
conditions hereinafter set forth.
Now, therefore, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank
agree as follows:
1. Amendment and Restatement of Former Note; Additional Loan Proceeds. The
Former Note shall be amended and restated by a new note to be dated as of the
effective date hereof (the "New Note") which shall be in the form of Exhibit A
attached hereto, which New Note shall increase the principal amount thereof and
provide for such other changes as may be provided for therein. All sums
outstanding under the Former Note shall from the effective date of this
Amendment be evidenced by the New Note referenced herein. Such sums include a
principal amount of $3,325,000. Additional loan proceeds in the amount of
$2,500,000 shall be made available to Borrower from the date hereof, which
additional amount of principal as well as the existing principal balance under
the Former Note shall be evidenced by the New Note, with the result that the New
Note shall evidence a face principal amount of $5,825,000. All terms in the Loan
Agreement and the Security Agreement referencing the "Note" or the "Promissory
Note" shall from the date hereof mean the Former Note as amended and replaced by
the New Note.
<PAGE>
2. Amendment of Loan Agreement. The Loan Agreement shall be amended as
follows:
a. Notwithstanding anything to the contrary in the Loan Agreement, the
terms thereof shall be changed and hereby are changed to reflect the
amended Maturity Date or Final Maturity, as more specifically set
forth in the New Note.
b. Section 1.1 of the Loan Agreement shall be amended to reflect the new
interest rate set forth in the New Note, such amended interest rate to
take effect as of the effective date of the New Note.
c. Section 1.3 of the Loan Agreement shall be supplemented by adding the
following paragraph thereto:
"It is the Bank's expectation that, if the Borrower reduces the
outstanding principal amount of the Note, as amended, to not more than
$4,887,500 on or before July 31, 2000, the Bank will consider the
renewal and extension of the Final Maturity date as set forth in the
Note, as amended, along principally the same terms and conditions.
NOTWITHSTANDING THE FOREGOING, THE BORROWER UNDERSTANDS AND AGREES
WITH THE BANK THAT SHOULD THE BANK DETERMINE, IN ITS SOLE DISCRETION,
THAT THE BORROWER'S CREDIT STANDING IS NO LONGER ACCEPTABLE TO THE
BANK, THE NOTE, AS AMENDED, WILL NOT BE RENEWED AND EXTENDED BY THE
BANK."
3. Security Agreement. The collateral provided for in the Security
Agreement shall continue to secure the "Obligations" as defined therein, which
shall include indebtedness evidenced by the Former Note, as replaced by the New
Note.
4. Except as amended hereby, all other terms and conditions in the Note,
the Loan Agreement and the Security Agreement shall remain unchanged and in full
force and effect.
5. Borrower represents and warrants to Bank that it is not, as of the
effective date hereof, in default under the Note, the Loan Agreement, or the
Security Agreement. Borrower further warrants and represents to Bank that as of
the effective date hereof Borrower has no claim, counterclaim, defense or
set-off with respect to the amounts due to Bank under the Note as amended.
This Third Amendment of Loan Documents shall become effective as of the date set
forth above upon Borrower's delivery to Bank of the original executed copies of
this Third Amendment and the New Note.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT,
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS
<PAGE>
REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
Blue Valley Ban Corp
By: /s/ Robert D. Regnier
Title: President
Bank of Blue Valley
By: /s/ Robert D. Regnier
Title: President
NationsBank, N.A., successor to Boatmen's
First National Bank of Kansas City
By: /s/
Title: Sr. V. P.
FOURTH AMENDMENT OF LOAN DOCUMENTS
This Amendment is effective as of the 30th day of December, 1999 and is
entered into by and among Blue Valley Ban Corp ("Borrower"), Bank of Blue Valley
(the "Subsidiary Bank"), and Bank of America, N.A., successor to NationsBank,
N.A., which was successor to Boatmen's First National Bank of Kansas City
("Bank").
Whereas, Borrower is indebted to Bank as evidenced by a Promissory Note
dated December 31, 1996 in the face principal amount of $2,887,500 and
Promissory Note being amended by an Amendment of Loan Documents dated December
26, 1997 which Amendment, among other matters, increased the face principal
amount of said Promissory Note to $4,387,500, said Promissory Note being further
amended and replaced by that certain Promissory Note dated January 31, 1999 in
the face principal amount of $3,450,000, and subsequently said Promissory Note
being further amended and replaced by that certain Amended and Restated
Promissory Note dated June 21st, 1999 ("Former Note"), the Former Note having an
outstanding principal balance of $5,450,000 as of the date hereof;
Whereas, the loan evidenced by the Former Note is governed by the terms of
an Agreement dated January 2, 1997 by and among Borrower, the Subsidiary Bank,
and Bank said Loan Agreement being amended by the above described Amendment of
Loan Documents dated December 26, 1997 and by that certain Second Amendment of
Loan Documents dated January 31, 1999 as well as that certain Third Amendment of
Loan Documents (as amended, the "Loan Agreement"), and the loan evidenced by the
Former Note is secured by a Security Agreement dated June 7, 1994 and executed
by Borrower in favor of Bank (the "Security Agreement") whereby Borrower pledged
a security interest in, among other items of collateral, 258,000 shares of
Borrower's stock in Subsidiary Bank; and
Whereas, Borrower has requested that the face principal amount of the
Former Note be increased so as to make additional loan proceeds available to
Borrower, and Bank has agreed to do so upon the terms and conditions hereinafter
set forth.
Now, therefore, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, Borrower, the Subsidiary Bank, and Bank
agree as follows:
1. Amendment and Restatement of Former Note: Additional Loan Proceeds. The
Former Note shall be amended and restated by a new note to be dated as of the
effective date hereof (the "New Note") which shall be in the form of Exhibit A
attached hereto, which New Note shall increase the principal amount thereof and
provide for such other changes as may be provided for therein. All sums
outstanding under the Former Note shall from the effective date of this
Amendment be evidenced by the New Note referenced herein. Such sums include a
principal amount of $5,450,000. Additional loan proceeds in the amount of
$2,000,000 shall be made available to Borrower from the date hereof which
additional amount of principal as well as the existing principal balance under
the Former Note shall be evidenced by the New Note, with the result that the New
Note shall evidence a face principal amount of $7,450,000. All terms in the Loan
Agreement and the Security Agreement referencing the "Note" or the "Promissory
<PAGE>
Note" shall from the date hereof mean the Former Note as amended and replaced by
the New Note.
2. Amendment of Loan Agreement. Section 3.6, as added by the Amendment to
Loan Documents dated December 26, 1997, shall be amended to specifically allow
for Borrower's issuance of up to an aggregate amount of Twelve Million Five
Hundred Thousand Dollars ($12,500,000) in junior subordinated debentures,
subordinate to Bank, and Borrower's guaranty of a like amount in preferred
securities to be issued by BBVC Capital I.
3. Security Agreement. The collateral provided for in the Security
Agreement shall continue to secure the "Obligations" as defined therein, which
shall include indebtedness evidenced by the Former Note, as replaced by the New
Note.
4. Except as amended hereby, all other terms and conditions in the Note,
the Loan Agreement and the Security Agreement shall remain unchanged and in full
force and effect.
5. Borrower represents and warrants to Bank that it is not, as of the
effective date hereof, in default under the Note, the Loan Agreement, or the
Security Agreement. Borrower further warrants and represents to Bank that as of
the effective date hereof Borrower has no claim, counterclaim, defense or
set-off with respect to the amounts due to Bank under the Note as amended.
This Fourth Amendment of Loan Documents shall become effective as of the date
set forth above upon Borrower's delivery to Bank of the original executed copies
of this Fourth Amendment and the New Note.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH WITH THE OTHER LOAN DOCUMENTS
REFERRED TO IN THIS SECOND AMENDMENT OF LOAN DOCUMENTS IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
Blue Valley Ban Corp Bank of America, N.A., successor to
NationsBank, N.A., successor to
Boatmen's
First National Bank of Kansas City
By: /s/ Robert D. Regnier
Title: President By: /s/ William J. Hornung
Title: V. P. Bank of Blue Valley
By: /s/ Robert D. Regnier
Title: President
EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$7,450,000.00 December 30, 1999
The undersigned ("Borrower") promises to pay to the order of Bank of America,
N.A., successor to NationsBank, N.A., successor to Boatmen's First National Bank
of Kansas City ("Bank"), at such address as Bank shall designate from time to
time ("Bank's Address") the principal sum of Seven Million Four Hundred Fifty
Thousand Dollars ($7,450,000.00), plus interest thereon as required below.
From the effective rate hereof, interest shall accrue on the outstanding
principal balance of this Note at the Bank's Prime Rate of interest per annum,
as such Prime Rate changes from time to time, minus one per cent (1%). Bank's
Prime Rate of interest is that interest rate established by Bank from time to
time as its Prime Rate, which rate may not be the best or lowest rate charged by
Bank to its customers. Changes in such rate shall be made without notice to the
undersigned and shall be effective on the date of each such change.
After maturity, whether upon the lapse of time or by acceleration, all past due
principal, and interest to the extent permitted by law, shall bear interest
until paid at the same rate as would be applicable if it was before maturity,
plus 2.0%. All interest shall be calculated on the basis of the days actually
elapsed over a year deemed to consist of 360 days.
Notwithstanding anything to the contrary contained in this Note, the rate of
interest payable under this Note shall not exceed the maximum amount Bank
lawfully may charge. If Bank receives anything of value deemed interest under
applicable law which would exceed the maximum amount of interest permissible
under applicable law, or if application of any variable rate, used of a 360-day
year or any other circumstance, including acceleration, prepayment, or demand,
would cause the effective interest rate under this Note to exceed such maximum
rate, then the interest rate under this Note shall be deemed reduced to such
maximum rate, and the excessive interest shall, at the option of Bank, be
applied to the reduction of the outstanding principal balance under this Note or
refunded to Borrower.
The entire outstanding principal balance and all accrued interest thereon shall
be due and payable on JULY 31, 2000 ("Final Maturity").
Until Final Maturity, Borrower shall make payments as follows:
QUARTERLY principal payments of $187,500 each, plus (at the same time)
accrued interest, commencing on July 31, 1999 and continuing on the last
day of each quarter-year thereafter, until July 31, 2000, on which date
the entire unpaid principal balance and all interest accrued thereon shall
be due and payable.
This Note is secured by that certain Security Agreement dated June 7, 1994 and
the collateral specified therein. This Note is also related tot he terms of that
certain Agreement dated
<PAGE>
January 2, 1997 (as such Agreement has been amended by that certain Amendment of
Loan Documents dated December 26, 1997, that certain Second Amendment of Loan
Documents dated January 31, 1999, that certain Third Amendment of Loan Documents
dated June 21, 1999 and that certain Fourth Amendment of Loan Documents of even
date herewith), with this Note being issued by Borrower in favor of Bank
pursuant to the provisions set forth in said Fourth Amendment of Loan Documents
of even date herewith between Borrower and Bank.
There may be other security and Borrower acknowledges that omitting to list it
here shall not constitute a waiver or abandonment thereof. The holder of this
Note, in addition to any other rights the holder may have, shall have the right
to offset against amounts due under this Note all deposit, funds, securities,
and other property of Borrower in the possession of the holder.
If Borrower does not pay any principal or interest when due hereunder, or if
Borrower or any other party defaults under or fails to perform or pay any
covenant or obligation in any agreement that secures this Note or has been
executed and delivered to the holder hereof in connection with the indebtedness
evidenced by this Note, the holder hereof my declare all principal and unpaid
accrued interest to be immediately due and payable. Failure to do so at any time
shall not constitute a waiver of the right of the holder hereof to do so at any
other time.
Borrower and all others who are or become parties to this Note, whether as
makers, endorsers, or guarantors, by becoming parties to this Note, waive
presentment for payment, notice of dishonor, protest, notice of protest, and all
other notices and lack of diligence in the enforcement of this Note. Every such
party be becoming a party to this Note assents to each and every extension or
postponement of the time of payment or other indulgence by the holder of this
Note, whenever made, and waives notice thereof. Every such party by becoming a
party to this Note further waives any and all defenses which such party may have
based on suretyship or impairment of collateral with respect to this Note.
If this Note is not paid strictly according to its terms, Borrower shall (to the
extent permitted by law) pay all costs of collection, including but not limited
to court costs and attorney's fees and expenses (whether or not there is
litigation), and all costs of the holder hereof incurred in connection with any
proceedings affecting this Note under the United States Bankruptcy Code and
under similar sate debtor relief laws.
Borrower agrees that it will use the proceeds of this Note for business purposes
only, and not for personal, family or household purposes.
THIS NOTE AMENDS AND REPLACES THAT CERTAIN PROMISSORY NOTE PERVIOUSLY DATED JUNE
21, 1999 FROM BORROWER TO BANK IN TH FACE PRINCIPAL AMOUNT OF $5,825,000.00.
THIS NOTE EVIDENCES OUTSTANDING BALANCES PERVIOUSLY EXISTING UNDER SUCH PRIOR
NOTE AS WELL AS ADVANCES OF LOAN PROCEEDS MADE TO BORROWER FROM AND AFTER THE
DATE HEREOF ALL AS MORE SPECIFICALLY SET FORTH IN THAT CERTAIN FOURTH AMENDMENT
OF LOAN DOCUMENTS DATED OF EVEN DATE HEREWITH.
<PAGE>
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND BANK FROM MISUNDERSTANDING OR
DISAPPOINTMENTS, ANY AGREEMENTS WE REACH CONCERNING SUCH MATTERS ARE CONTAINED
IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT
BETWEEN BORROWER AND BANK, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
EFFECTIVE: December 30, 1999.
BORROWER:
Blue Valley Ban Corp
By: /s/ Robert D. Regnier
Name: Robert D. Regnier
Title: President
PROMISSORY NOTE
$2,500,00.00 July 15, 1994
FOR VALUE RECEIVED, the undersigned, BLUE VALLEY BUILDING CORP., a
Kansas corporation ("Borrower"), with an address at P.O. Box 26128, Overland
Park, Kansas 66225, promises to pay to BUSINESS MEN'S ASSURANCE COMPANY OF
AMERICA, a Missouri corporation, with an address at c/o Charter American
Mortgage Company, 2001 Shawnee Mission Parkway, Mission Hills, Kansas 66205
("Lender") or to order, the principal sum of Two Million Five Hundred Thousand
and 00/100 Dollars ($2,500,000.00), together with interest on the unpaid
principal balance of this Note at the "Interest Rate" (as defined below) in the
amounts and in the manner set forth herein.
1. Term.
(a) The term of this Note (the "Loan Term") shall commence on the date
hereof and shall end on August 1, 2009 (the "Maturity Date"). "Loan Year", as
used herein, shall mean the twelve (12) month period beginning on the due date
of the first "Monthly Payment" (as set forth in Section 3 below) and each
consecutive twelve (12) month period thereafter during the Loan Term, and "Loan"
shall mean the loan from Lender to Borrower evidenced by this Note.
(b) Notwithstanding the provisions of paragraph 1(a) above, Lender
shall have the right to accelerate the maturity of this Note and to declare the
same due and payable on the last day of the tenth (10th) Loan Year (the
"Accelerated Maturity Date"), by giving notice to Borrower not later than one
hundred eighty (180) days prior to the Accelerated Maturity Date. The entire
outstanding principal balance and all accrued and unpaid interest shall then be
due and payable on the Accelerated Maturity Date, without prepayment charge.
2. Interest Rate.
(a) This Note shall bear interest at a rate equal to seven and one-half
percent (7.50%) per annum (the "Interest Rate"). All payments due under this
Note shall be applied first against accrued interest and then against the
outstanding principal amount due under this Note. The interest hereunder shall
be calculated based on a three hundred sixty (360) day year consisting of twelve
(12) months of thirty (30) days each.
(b) At Lender's option, the Interest Rate shall be adjusted as of the
first (1st) day of the eleventh (11th) Loan Year (the "Adjustment Date") to a
rate per annum (the "Adjusted Interest Rate") equivalent to two hundred (200)
basis points above the then current yield of U.S. Treasury Securities (i) with
an asking price closest to par, (ii) paying interest semi-annually, (iii) not a
"zero coupon" obligation or an obligation with an optional prepayment, and (iv)
having a maturity date closest to the Maturity Date, as such yield is published
in the Wall Street Journal on the Adjustment Date (or the next preceding
publication date), such yield rate to be applicable regardless of the schedule
of interest payments under this Note and such Treasury Security, but in no event
shall the Adjusted Interest Rate be less than seven and one-half percent (7.50%)
nor greater than eight and one-half percent (8.50%) per annum. If Lender shall
so elect to adjust to the Interest Rate, Lender shall so notify Borrower not
later than sixty (60) days prior to the Adjustment Date. Borrower shall
thereupon have a period of one hundred eighty (180) days from the Adjustment
Date in which Borrower may prepay the Loan in full, without prepayment charge or
other penalty. If Borrower shall not so prepay the Loan prior to the expiration
of such one hundred eighty (180) day period, Borrower shall be deemed to have
accepted the Adjusted Interest Rate, and this Note
<PAGE>
shall continue in full force and effect in accordance with its terms and the
Adjusted Interest Rate. Notwithstanding the election of Borrower to prepay the
Loan under this paragraph (b), the Adjusted Interest Rate shall be applicable
until the date of such prepayment.
3. Monthly Payment; Final Payment.
(a) The outstanding principal balance and accrued interest under this
Note shall be repaid in monthly installments of principal and interest of
$23,175.31 (the "Monthly Payments"). The first Monthly Payment shall be due and
payable on the first day of September, 1994, and on the first day of each
succeeding month; provided, however, that on August 1, 1994, Borrower shall make
a payment of the accrued interest from the date of closing of the Loan through
and including the last day of July, 1994. If not sooner paid, the entire
outstanding principal balance and all accrued and unpaid interest under this
Note shall be due and payable on the Maturity Date.
(b) If the Interest Rate shall be adjusted pursuant to Section 2(b)
above, then effective as of the first day of the eleventh (11th) Loan Year, the
Monthly Payment shall be adjusted to an amount sufficient to fully amortize the
then outstanding principal balance of this Note in equal monthly installments of
principal and interest over a period of sixty (60) months at the Adjusted
Interest Rate.
4. Prepayment. (a) Borrower shall not have the right to prepay any
principal or interest under this Note for the first three (3) Loan Years of
the Loan Term. After the third (3rd) Loan Year, Borrower shall have the
right to prepay the entire outstanding principal balance of this Note on
the following terms and conditions:
(1) Delivery of sixty (60) days prior written notice to Lender;
(2) Payment of all accrued interest and other charges under this
Note and all sums due under all other Loan Documents; and
(3) Payment of a percentage of the then outstanding principal
balance of this Note, as a prepayment charge, during the
fourth (4th) Loan Year and thereafter, of two percent (2%).
(b) Notwithstanding the foregoing, Borrower shall have the right, after
the third (3rd) Loan Year, to prepay up to five percent (5%) of the then
outstanding principal balance of this Note, on a non-cumulative basis, without
prepayment charge, on the due date of any monthly payment, upon first complying
with the provisions of clauses (1) and (2) of paragraph (a) above. Borrower
shall further have the right to prepay the Loan, including all interest and
charges thereunder, in full, without prepayment charge, on the last day of the
tenth (10th) Loan Year, even though Lender shall not have exercised its right
under Section 1(b) above, upon first giving notice to Lender not later than one
hundred eighty (180) days prior to the date of prepayment.
5. Security. The indebtedness evidenced by this Note is secured by a
Mortgage, Assignment of Leases and Rents, Security Agreement and Financing
Statement dated as of the date hereof (the "Mortgage") and by a separate
Assignment of Leases and Rents dated as of the date hereof, given by Borrower to
Lender and encumbering certain real property and improvements located in the
City of Overland Park, County of Johnson, State of Kansas (the "Mortgaged
Estate"). This Note, the Mortgage, Assignment of Leases and Rents, Environmental
Indemnity and any other instruments or documents that evidence or secure the
indebtedness under this Note are herein collectively called the "Loan
Documents", and the terms of all Loan Documents are incorporated into this Note
by reference.
2
<PAGE>
6. Late Charge. If any payment of interest, principal or other charge
or cost under this Note or any other Loan Document is not made within ten (10)
days of the date such payment is due and payable (calculated by including the
due date), Borrower shall pay to Lender, as liquidated damages by reason of such
delay in payment, an amount equal to five percent (5%) of the total amount of
such delinquent payment (a "Late Charge"). Any such payment on which a Late
Charge is payable shall not be deemed to be have been paid until the Late Charge
shall have been paid.
7. Default Rate. If any payment of interest, principal, premium or
other charge or cost under this Note or any other Loan Document is not made
within ten (10) days of the date such payment is due and payable (calculated by
including the due date), including payment after acceleration of this Note, such
delinquent amount shall accrue interest at a rate (the "Default Rate") equal to
the lesser of (i) the Interest Rate (as the same may be adjusted from time to
time) plus five percent (5%) or (ii) the maximum rate allowed by law, until the
date such payment, including any applicable Late Charge, shall be paid in full.
Any such payment on which interest at the Default Rate is payable shall not be
deemed to have been paid until all interest accrued at the Default Rate shall
have been paid.
8. Events of Default. Each of the following shall be an "Event of
Default" under this Note: (i) failure to pay when due any principal, interest or
other charge payable under this Note or any other Loan Document within ten (10)
days of the date such payment is due and payable (calculated by including the
due date); (ii) failure to perform or observe any other covenant or obligation
of Borrower under this Note and such default is not completely cured by Borrower
within thirty (30) days after notice thereof from Lender specifying such
default; or (iii) the occurrence of an "Event of Default" as defined in any
other Loan Document or any other default under any other Loan Document which is
not cured within the applicable cure period, if any, provided therein.
9. Remedies. Upon the occurrence of an Event of Default, Lender may, at
its option, exercise any one or more of the following remedies: (i) declare the
entire unpaid principal balance of this Note, together with all accrued and
unpaid interest and any other charges or amounts payable under the Loan
Documents, to be immediately due and payable, regardless of the Maturity Date;
(ii) pursue any other rights and remedies of Lender under the Loan Documents,
applicable law, or otherwise; and (iii) offset against any amounts payable under
this Note any debts or obligations of Lender to Borrower, or any amounts held by
Lender on behalf or for the benefit of Borrower.
10. Reinvestment Fee. If Lender shall exercise its right under Section
9(i) above to accelerate the payment of this Note, then Borrower shall pay to
Lender, as a reinvestment fee, an amount equal to ten percent (10%) of the
outstanding principal balance of this Note during the first three (3) Loan
Years, and thereafter in accordance with the prepayment charge set forth in
Section 4(a) above.
11. Waiver by Borrower. Borrower and any guarantor or endorser of this
Note hereby waive diligence, demand, presentment for payment, notice of
nonpayment, protest, notice of dishonor and notice of protest, and specifically
consent to and waive notice of any renewals, modifications or extensions of this
Note, whether in favor of Borrower or any other person or persons, and hereby
waive any defense by reason of extension of time for payment or other indulgence
granted by Lender.
12. No Waiver by Lender. No delay, failure or forbearance on the part
of Lender in exercising any right, remedy or privilege under this Note or under
any other Loan Document shall affect such right, remedy or privilege, nor shall
any single or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, remedy or privilege preclude any further exercise
thereof or the exercise of any other rights, remedies or
3
<PAGE>
privileges under any Loan Document. The rights, remedies and privileges of
Lender hereunder are cumulative and not exclusive of any rights, remedies or
privileges which Lender may have and may be exercised and enforced
alternatively, successively or concurrently, at the sole discretion of Lender.
13. Notices. All notices, consents or communications required or
permitted to be given under this Note shall be in writing and shall be deemed to
have been properly given and received (i) if sent by hand delivery, then upon
delivery, (ii) if sent by overnight courier or United States Express Mail, then
one (1) day after dispatch, and (iii) if mailed by certified or registered U.S.
mail, postage prepaid and return receipt requested, then two (2) days after
deposit in the mail. All such notices and communications shall be given (x) to
Lender at its address set forth in this Note, and (y) to Borrower at its address
set forth in this Note, Attn: Robert D. Regnier (with a copy to Buck, Bohm &
Stein, 4601 College Boulevard, Suite 200, Leawood, Kansas 66211-1650), or at
such other addresses as either party may designate by notice in accordance with
the terms of this paragraph.
14. Lender's Costs. Borrower and any guarantor or endorser of this Note
agree to pay all costs, charges and expenses, including attorneys' fees, to the
extent permitted by law, which may be incurred by Lender for the collection of
any sums due under the Loan Documents or enforcing any of Lender's rights under
the Loan Documents, together with interest on such sums from the date incurred
at the Default Rate.
15. Limited Liability. The liability of Borrower for the repayment of
the indebtedness evidenced by this Note and the performance of the Secured
Obligations shall be limited to the security given by Borrower and other parties
for this Note and other Secured Obligations. Notwithstanding anything to the
contrary contained herein, and notwithstanding any delay by Lender in exercising
any right, remedy or privilege under any Loan Document, Borrower shall be
personally liable beyond its interest in the security granted to Lender to the
extent of: (i) any funds received by Borrower or any other person or entity for
or on account of Borrower as security deposits under any Leases; (ii) any Rents
received or held by Borrower after the occurrence of an Event of Default or any
Rents received by Borrower which are prepaid more than one month in advance;
(iii) all condemnation awards and payments and insurance proceeds received by
Borrower that have not been applied as required by the terms of the Loan
Documents; (iv) the cost to repair the Mortgaged Estate as a result of a
casualty not reimbursed by insurance to the extent that such insurance is
required by the terms of the Loan Documents; (v) any liability, damage, cost or
expense (including attorneys' fees) incurred by Lender as a result of any fraud,
misrepresentation or bad faith by Borrower or any Guarantor; (vi) any liability,
damage, cost or expense (including attorneys' fees) incurred by Lender under the
terms of the Environmental Indemnity; (vii) any liability, damage, cost or
expense (including attorneys' fees) incurred by Lender due to any waste of the
Mortgaged Estate by Borrower or Borrower's representatives or tenants; and
(viii) any failure to pay delinquent Taxes. Nothing contained herein shall limit
or affect Lender's rights under any guaranty or other collateral which may now
or hereafter be given in connection with this Note.
16. Miscellaneous.
(a) This Note shall be governed by and construed in accordance with the
laws of the State in which the Mortgaged Estate is located. The terms of this
Note are severable, and if any provision, or the application or any provision,
shall be declared invalid or unenforceable, the remaining provisions and all
other applications of such provisions shall remain in full force and effect, and
shall not be impaired in any way.
(b) This Note may not be amended or modified except by a written
agreement signed by Borrower and Lender.
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(c) In no event shall payments of interest to Lender exceed the maximum
rate or amount permitted to be charged under applicable law. If Lender shall
receive any payment that is or would be in excess of the interest or other
charge permitted to be charged under applicable law, the portion of any such
payment received by Lender in excess of the maximum interest permitted by law
shall be credited to the principal balance of the Loan.
(d) Whenever used herein, the terms "Borrower" and "Lender" shall also
mean, to the extent applicable, the heirs, successors, legal representatives and
assigns of Borrower and Lender, and the term "including" shall mean "including,
without limitation." Unless otherwise defined herein, capitalized terms used
herein shall have the respective meanings as set forth in the Mortgage.
(e) Time is of the essence of this Note.
(f) This Note and every covenant and agreement herein contained shall
be jointly and severally binding upon each party or entity executing this Note
as or on behalf of Borrower and its and their heirs, successors, legal
representatives and assigns, and shall inure to the benefit of Lender and its
successors and assigns.
BLUE VALLEY BUILDING CORP.,
a Kansas corporation
ATTEST: [SEAL] By: /s/ Robert D. Regnier
Robert D. Regnier, President
By: Patricia L. Day
Secretary
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10060
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FINANCING STATEMENT, made and entered into as of the 15th day of July, 1994, by
and among BLUE VALLEY BUILDING CORP., a Kansas corporation ("Borrower"), with an
address at P.O. Box 26128, Overland Park, Kansas 66225, as mortgagor, and
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, a Missouri corporation ("Lender"),
with an address at c/o Charter American Mortgage Company, 2001 Shawnee Mission
Parkway, Mission Hills, Kansas 66205, as mortgagee (hereinafter, this
"Mortgage").
WITNESSETH, THAT in consideration of Lender's agreement to make a loan to
Borrower in the original principal amount of Two Million Five Hundred Thousand
Dollars ($2,500,000.00) (the "Loan" and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Borrower hereby
warrants, represents, covenants and agrees as follows:
ARTICLE I
Granting Clauses
Section 1.01. Grant of Real Estate Security. Borrower hereby irrevocably
grants, bargains, sells, mortgages, warrants, transfers, convoys, assigns, sets
over and pledges to Lender all of the following described property (the
"Mortgaged Estate"):
(a) The real property located in the City of Overland Park, County of
Johnson, State of Kansas, described on Exhibit A, attached hereto and
incorporated herein, and all and singular the tenements, hereditaments and
appurtenances thereto, together with all right, title and interest of Borrower
in all easements, rights-of-way, gores or strips of land, surface waters, ground
waters, watercourses, mineral interests and subsurface rights, alleys, streets
and sidewalks, whether now owned or hereafter acquired, either in law or in
equity, adjacent or appurtenant to or adjoining such real property (the "Land");
(b) Any and all buildings and improvements now or hereafter erected or
located on the Land, including all fixtures, attachments, appliances, equipment,
machinery and other articles attached to such buildings and improvements (the
"Improvements");
(c) All right, title and interest of Borrower in and to all tangible
personal property now owned or hereafter acquired by Borrower and now or at any
time hereafter located on the Land or within the Improvements and used in
connection therewith, including all building materials stored on the Land, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens, all
plumbing, heating, lighting, ventilating, refrigerating, incinerating, air
conditioning and sprinkler equipment, all furniture, furnishings, equipment and
other personal property owned by Borrower and attached to or otherwise forming a
part of the Land or Improvements, and used in connection with the operation of
the Mortgaged Estate, and all renewals and replacements
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thereof (excluding any such property owned by a tenant of the Mortgaged Estate)
(the "Personal Property"), all of which property shall, so far as permitted by
law, be deemed to form a part and parcel of the real property and for the
purpose of this Mortgage to be real estate and covered by this Mortgage;
(d) All of Borrower's interest in all existing and future accounts,
contract rights, general intangibles, files, books of account, agreements,
permits, licenses and certificates necessary or desirable in connection with the
acquisition, ownership, leasing, operation or management of the Mortgaged
Estate, whether now existing or entered into or obtained after the date hereof,
including the "Leases" and "Rents" (as defined herein);
(e) All agreements for use and occupancy of any part of the Mortgaged
Estate, now existing or hereafter entered into, including any and all extensions
or modifications thereto (the "Leases"), and all of the rents, royalties,
security deposits, income, receipts, revenues and other sums now due or which
may hereafter become due to Borrower under any Lease or arising from the use and
enjoyment of any part of the Mortgaged Estate, and all rights and remedies which
Borrower may have against any party under the Leases (the "Rents"); and
(f) All the estate, interest, right, title or other claim or demand with
respect to the proceeds of insurance and any and all awards made for the taking
of any part of the Mortgaged Estate by the power of eminent domain, or by any
proceeding or purchase in lieu thereof.
TO HAVE AND TO HOLD the Mortgaged Estate unto Lender and its successors
and assigns, forever.
Section 1.02. Grant of Security Interest. With respect to any portion of
the Mortgaged Estate which constitutes Personal Property, fixtures or other
property or interests governed by the Uniform Commercial Code of the state in
which the Mortgaged Estate is located (the "UCC"), this Mortgage shall
constitute a security agreement between Borrower, as the debtor, and Lender, as
the secured party, and Borrower hereby grants to Lender a security interest in
such portion of the Mortgaged Estate. Borrower agrees to execute and deliver to
Lender all financing and continuation statements and other information which are
from time to time required to establish and maintain the validity and priority
of the security interests herein granted. Upon the occurrence of an "Event of
Default" (as defined herein), Lender shall have all of the rights and remedies
of a secured party available under the UCC with respect to the property
encumbered by the security interests; provided, however, Lender may, at its
option, dispose of such property in accordance with Lender's rights and remedies
under this Mortgage, in lieu of proceeding under the UCC. Borrower hereby
appoints Lender as its attorney-in-fact to execute, deliver and file any and all
required financing statements, continuation statements and other instruments as
Lender may require in order to perfect and maintain the security interests
granted herein.
Section 1.03. Assignment of Leases and Rents. Borrower hereby assigns and
transfers to Lender all of the Leases and Rents. The terms of such assignment
are more specifically set forth in the separate Assignment of Leases and Rents
dated as of the date hereof, executed by Borrower in favor of Lender and
recorded simultaneously with this Mortgage, the terms of which Assignment of
Leases and Rents are specifically incorporated herein by this reference.
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Section 1.04. Secured Obligations. (a) This Mortgage shall secure the
following indebtedness and obligations, including all replacements, renewals,
amendments, extensions, substitutions and modifications thereof:
(1) Payment of all indebtedness and performance of all obligations
and covenants of Borrower under or pursuant to (i) the Promissory Note
dated as of the date hereof, executed by Borrower in favor of Lender in
the aggregate principal amount of the Loan (the "Note"); (ii) this
Mortgage; (iii) the Assignment of Leases and Rents; (iv) Environmental
Indemnity Agreement dated as of the date hereof between Borrower and
Lender (the "Environmental Indemnity"); and (v) all other "Loan Documents"
(as defined herein); and
(2) Payment of all future advances and all sums advanced by Lender
to protect the Mortgaged Estate or otherwise pursuant to the terms of the
Loan Documents, with interest on all of the foregoing at the "Default
Rate" (as defined in the Note) from the date of Lender's advance to the
date of Borrower's repayment of same.
(b) The indebtedness and the obligations secured by this Mortgage which
are described in paragraph (a) above are hereinafter referred to as the "Secured
Obligations."
(c) This Mortgage, the Note, the Assignment of Leases and Rents, the
Environmental Indemnity, that certain loan commitment letter dated March 1,
1994, as amended, between Lender and Borrower, and any other writing or
instrument given to evidence or secure the payment of performance of any of the
Secured Obligations are hereinafter collectively referred to as the "Loan
Documents."
ARTICLE II
Payment and Performance
Section 2.01. Payment of Secured Obligations. Borrower shall pay all sums
due under the Loan Documents without offset, counterclaim or defense, as and
when the same shall become due. Borrower shall fully and faithfully observe and
perform all of the obligations of Borrower to be observed and performed under
the Loan Documents.
Section 2.02. Warranty of Title. Borrower warrants and represents that: (i)
Borrower has good and marketable title to an indefeasible estate in fee simple
in the Land and improvements; (ii) Borrower has good and marketable title to all
of the rest of the Mortgaged Estate; and (iii) such title of Borrower is free
and clear of any liens or encumbrances except as set forth in Exhibit B,
attached hereto and incorporated herein (the "Permitted Encumbrances"). Borrower
shall preserve Borrower's title and interest in the Mortgaged Estate and will
forever warrant and defend the validity and priority of the lien, security
interest and assignments created herein against the claims of all persons
whomsoever, subject only to the Permitted Encumbrances.
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ARTICLE III
Taxes and Insurance
Section 3.01. Taxes. Borrower shall pay when due and before any penalty
attaches or interest accrues, all general taxes, special taxes, assessments,
water charges, sewer service charges, and other similar charges against or
affecting the Mortgaged Estate or any property or equipment located on the Land,
or which might become a lien upon the Mortgaged Estate (the "Taxes"). If any Tax
may be legally paid in installments, Borrower shall have the right, at its
option, to pay such Tax in installments.
Section 3.02. Insurance. (a) Borrower shall at all times keep in full
force and effect the following policies of insurance with respect to the
Mortgaged Estate: (i) comprehensive general public liability insurance in an
amount of not less than $1,000,000, combined single limit coverage for injury to
persons and damage to property, with a deductible limit satisfactory to Lender;
(ii) standard fire and extended coverage casualty insurance, with vandalism and
malicious mischief coverage and so called "all risks" or "DIC" coverage in the
amount of the full insurable value of the Mortgaged Estate on a replacement cost
basis (but in any event not less than the amount of the Loan); (iii) loss of
rents or business interruption insurance covering all Rents for a period of one
(1) year; and (iv) such other policies of insurance as Lender may from time to
time require.
(b) All insurance policies shall: (i) be issued by a company or
companies rated "A" or better by A.M. Best & Company and otherwise
satisfactory to Lender; (ii) shall name Lender as an additional insured
and loss payee; and (iii) shall provide a minimum of thirty (30) days'
written notice to Lender prior to the expiration or any cancellation or
modification of such policies. Borrower shall provide Lender with
certificates evidencing all required insurance. In the event Borrower
shall fail to maintain the insurance required by this section, Lender may,
but shall not be so obligated, to procure such insurance as Lender shall
deem necessary, and any amount so expended by Lender shall be secured by
this Mortgage and be repayable by Borrower upon demand, with interest at
the "Default Rate" (as defined in the Note.)
(c) In the event of any damage or destruction to the Mortgaged
Estate, Borrower shall promptly make proof of loss to the insurers, and
Borrower shall not adjust or compromise any claim under such insurance
without the prior written approval of Lender. All proceeds of such
insurance shall be paid directly to Lender, and each insurer is hereby
authorized and directed to make such payment directly to Lender. Any
proceeds shall be applied first to the payment of all costs and expenses
incurred by Lender in obtaining such proceeds. The balance of the
proceeds, if any, may be applied at the option of the Lender fill against
the Secured Obligations, without prepayment premium, or (ii) to the
restoration or the repair of the Mortgaged Estate, in such order as Lender
may elect, in its sole discretion. If Lender elects to apply the insurance
proceeds to restoration or repair of the Mortgaged Estate, Lender shall
have the right to establish requirements for the disbursement of such
proceeds as may be imposed by responsible mortgagees or holders of deeds
of trust for advances of proceeds of commercial construction loans in the
state in which the Mortgaged Estate is located.
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Section 3.03. Tax and Insurance Escrow. On the first day of each calendar
month, Borrower shall deposit with Lender or Lender's designated agent an amount
equal to one-twelfth (1/12) of the estimated aggregate annual insurance premiums
and Tax payments for the Mortgaged Estate. Such deposits shall be non-interest
bearing and are hereby pledged as additional security for the Secured
Obligations. Upon receipt of bills, statements or other evidence of insurance
premiums or Taxes due, Lender shall pay or cause to be paid such amounts out of
the funds so deposited. If at any time such funds are insufficient to pay such
amounts, Borrower shall immediately deposit an amount equal to the deficiency.
Lender shall not be deemed a trustee of such funds or to be obligated to expend
any amount in excess of such funds under this Section. If Borrower fails to
deposit sufficient sums as required, Lender may, but shall not be so obligated,
advance any amounts required to make up the deficiency, which advances shall be
secured by this Mortgage and be repayable by Borrower upon demand, with interest
at the Default Rate.
ARTICLE IV
Maintenance: Alterations: Inspections
Section 4.01. Maintenance. Borrower shall: (i) maintain the Mortgaged
Estate in good condition and repair, subject to ordinary wear and tear; (ii) not
commit or suffer to be committed any waste of the Mortgaged Estate; (iii) comply
with all laws, ordinances, regulations and restrictions now or hereafter
affecting the Mortgaged Estate; and (iv) not do or permit to be done any act
which would otherwise diminish the value of the Mortgaged Estate.
Section 4.02. Alterations. Borrower shall not remove, demolish or alter
any of the Improvements without the prior written approval of Lender; provided,
however, that Borrower may make interior, nonstructural alterations in an amount
not to exceed $1,000,000.00 in each calendar year. Borrower shall complete any
construction or alteration of the Mortgaged Estate in a good and workmanlike
manner.
Section 4.03. Inspections. Lender shall have the right at any time, upon
reasonable prior notice to Borrower, to enter upon the Mortgaged Estate for the
purpose of inspecting the same or to exercise any of its rights and remedies
under the Loan Documents.
ARTICLE V
Eminent Domain
Section 5.01. Eminent Domain. If all or any part of the Mortgaged Estate
is taken or damaged by the exercise of the power of eminent domain or a
conveyance in lieu thereof (a "Condemnation"), or should Borrower receive any
notice or other information regarding any such proceeding, Borrower shall give
prompt written notice thereof to Lender. Lender may participate in Condemnation
proceedings, and Borrower shall consult with Lender and its attorneys and
cooperate with them in the carrying on or defense of any such proceedings. All
proceeds of Condemnation awards or sales in lieu thereof, and all judgments,
decrees and awards for injury or damage to the Mortgaged Estate shall be paid to
Lender and shall be applied first to all costs and expenses incurred by Lender
in obtaining the proceeds. The balance of the
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proceeds, if any, may be applied at the option of Lender (i) against the Secured
Obligations, without prepayment premium or (ii) to the restoration or repair of
the Mortgaged Estate, in such order as Lender may elect, in its sole discretion.
Lender shall not be liable or responsible for failure to collect or exercise
diligence in the collection of any proceeds, judgments, decrees or awards.
ARTICLE VI
Events Of Default: Remedies
Section 6.01. Events of Default. Each of the following shall be an
"Event of Default" under this Mortgage:
(a) Failure of Borrower to make any payment of principal or interest
or any other payment under the Note or any other sum secured under any
Loan Document within ten (10) days of the date such payment shall be due
and payable (calculated by including the due date);
(b) Failure by Borrower to perform or observe any other covenant or
agreement set forth in this Mortgage, and the continuance of such default
for thirty (30) days after notice thereof from Lender specifying such
default;
(c) The occurrence of a default or an "Event of Default" under
any Loan Document other than this Mortgage;
(d) Any suit or proceeding shall be filed against Borrower or any
guarantor of Borrower under any Loan Document which, if adversely
determined, could materially impair the ability of Borrower or such
guarantor to perform any of its obligations under any Loan Document, in
the opinion of Lender, in its sole discretion;
(e) Any representation, warranty or statement made by Borrower, any
guarantor or other party under any Loan Document or any other affidavit or
instrument executed or delivered with respect to the Loan shall be
determined by Lender to be false or misleading in any material respect;
(f) Borrower shall convey, alienate, transfer, mortgage, encumber,
lease or assign ownership or control of all or any part of the Mortgaged
Estate or any interest therein, whether legal or equitable, or in
Borrower, in violation of Section 7.01 hereof, or Borrower shall be
divested of its title or any interest in the Mortgaged Estate in any
manner, whether voluntarily or involuntarily, or if there is any merger,
consolidation or dissolution affecting Borrower;
(g) Borrower (i) shall execute an assignment for the benefit of
creditors or an admission in writing of Borrower's inability or failure to
pay debts generally as they become due; or (ii) shall allow the levy
against the Mortgaged Estate or any part thereof of any execution,
attachment, sequestration or other writ or action which is not vacated or
discharged within sixty (60) days after such levy; or (iii) shall allow
the appointment of a
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receiver, trustee or custodian of Borrower or the Mortgaged Estate or any
part thereof which receiver, trustee or custodian is not discharged within
sixty (60) days after such appointment; or (iv) shall file as a debtor a
petition, case, proceeding or other action pursuant to, or voluntarily
seeks the benefit or benefits of, any law granting relief to any debtor, or
takes any action in furtherance thereof; or (v) shall file a petition,
complaint, answer or other instrument which seeks to effect a suspension
of, or which has the effect of suspending, any of the rights or powers of
Lender granted under any Loan Document; or (vi) shall allow the filing of a
petition, case, proceeding or other action against Borrower as a debtor
under any law granting relief to a debtor, or shall seek or allow
appointment of a receiver, trustee, custodian or liquidator of Borrower or
of the Mortgaged Estate, or any part thereof, or of any significant portion
of Borrower's other property; and (x) Borrower shall admit, acquiesce in or
fail to contest diligently the allegations thereof, or (y) such petition,
case, proceeding or other action shall result in the entry of an order for
relief or order granting the relief sought against Borrower, or (z) such
petition, case, proceeding or other action is not permanently dismissed or
discharged on or before the earlier of trial thereon or sixty (60) days
following the date of filing.
(h) The occurrence of any event described in paragraph (g) above
with respect to any guarantor of the Secured Obligations or any other
person or entity obligated in any manner to pay or perform the Secured
Obligations.
Section 6.02. Remedies. Upon the occurrence of an Event of Default,
Lender shall have the right to take any one or more of the following actions:
(a) Declare all Secured Obligations to be due and payable, and the
same shall thereupon become due and payable without any presentment,
demand, protest or notice of any kind except as otherwise provided herein,
and Borrower hereby waives notice of intent to accelerate the Secured
Obligations;
(b) Commence an action to foreclose this Mortgage, appoint a
receiver or specifically enforce any of the covenants of this Mortgage;
(c) Exercise any or all of the remedies available to a secured
party under the UCC;
(d) Either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court, and without
regard to the adequacy of its security, enter upon and take possession of
the Mortgaged Estate or any part thereof and do any acts which it deems
necessary or desirable to protect and preserve Lender's security;
(e) Without notice to Borrower or anyone claiming under Borrower,
and without regard to the value of the Mortgaged Estate, to apply to any
court having jurisdiction to appoint a receiver or receivers of the
Mortgaged Estate, and Borrower hereby irrevocably consents to such
appointment and waives notice of any application therefore. Any such
receiver or receivers shall have all of the usual powers and duties of
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receivers in like or similar cases and all powers and duties of Lender in
case of entry as provided in Section 6.05.
(f) If Lender shall exercise its right to declare all Secured
Obligations to be due and payable, then in addition to such Secured
Obligations, Borrower shall pay Lender a reinvestment fee which shall be
equal to ten percent (10%) of the outstanding principal balance of the
Note during the first three (3) "Loan Years" (as defined in the Note) and
thereafter in accordance with the prepayment charge set forth in the Note.
Section 6.03. Remedies Not Exclusive; No Waiver. Every power or remedy
given Lender by any of the Loan Documents, or to which Lender may be otherwise
entitled, may be exercised without prejudice to any other power or remedy,
concurrently, independently, in any order or any manner from time to time and as
often as may be deemed expedient by Lender. No remedy or power is intended to be
exclusive of any other remedy or power, and Lender may pursue inconsistent
remedies. The acceptance by Lender of the payment or performance of any Secured
Obligation after the same shall be due shall not constitute a waiver of Lender's
right to the prompt payment or performance of same, or to declare a default as
herein provided. The acceptance by Lender of any sum in an amount less than the
sum then due shall not constitute a waiver of Borrower's obligation to pay the
entire sum, and such failure shall continue to be a default by Borrower
notwithstanding Lender's acceptance of such partial payment. Consent by Lender
to any action or inaction of Borrower which is subject to consent or approval
shall not be deemed a waiver of any other or future right of Lender to consent
under this Mortgage. Nothing set forth in this Mortgage shall be construed to
constitute Lender as a "mortgagee in possession" in the absence of its actual
taking possession of the Mortgaged Estate pursuant to the powers granted herein.
Section 6.04. Waivers. To the extent permitted by law, Borrower hereby
agrees that it shall not at any time insist upon, plead, claim or take any
benefit or advantage, in any way whatsoever, whether now or in the future, and
Borrower hereby irrevocably waives, all of the following, whether the same
exists under federal or state law, or otherwise at law or in equity:
(a) Any right of redemption of any of the Mortgaged Estate
after sale under this Mortgage;
(b) All rights and claims it may have in or to any of the
Mortgaged Estate as a "homestead exemption," or similar exemptions;
(c) Any stay, extension or moratorium law which may extend the
period for enforcement of this Mortgage or any period of redemption;
(d) Any and all right to require the marshalling of assets in
connection with the exercise of any of Lender's remedies under this
Mortgage, it being agreed that Lender shall have the right to determine,
in its sole discretion, the order in which any of the Mortgaged Estate
shall be sold, or the order in which any Secured Obligations are satisfied
from the proceeds of such sale;
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(e) Any right to trial by jury in any action, proceeding or
counterclaim brought by any party against any other party on any matter
arising out of or in any way connected with this Mortgage or the Loan
Documents, the relationship between Borrower and Lender, or Borrower's use
and occupancy of the Mortgaged Estate;
(f) Any law providing for the valuation or appraisal of all or any
part of the Mortgaged Estate prior to or after any sale or sales made
pursuant to this Mortgage;
(g) Personal service of process in any action or proceeding at any
time commenced to enforce this Mortgage or any of the Loan Documents,
Borrower hereby agreeing that such process shall be deemed properly and
adequately served if sent to Borrower as provided in Section 7.03 of this
Mortgage;
(h) All notices not herein specifically required of Borrower's
default under any of the Loan Documents, or of Lender's exercise, or
election to exercise, any right, option or election under this Mortgage;
and
(i) Any and all technical or procedural errors, defects and
imperfections in any of the Loan Documents or any proceedings instituted
by Lender under this Mortgage.
Section 6.05. Preservation of Security. Notwithstanding the provisions of
this Article VI, and in addition to any other rights or remedies of Borrower
under this Mortgage, should Borrower at any time fail to make any payment or
perform any obligation under any Loan Document, Lender, in its sole discretion,
without obligation to do so and without notice to or demand upon Borrower, and
without releasing Borrower from any Secured Obligation or waiving any of
Lender's rights under the Loan Documents, may cure such default of Borrower in
such manner and to such extent as Lender may deem necessary to protect the
security of this Mortgage. In connection therewith, without limiting its general
powers, Lender shall have and is hereby given the right, but not the obligation:
(a) To enter upon and take possession of the Mortgaged Estate;
(b) To direct Borrower to terminate any management agent and
employ such management agent as Lender may determine;
(c) To make additions, alterations, repairs and improvements to the
Mortgaged Estate which Lender may consider necessary or proper to keep the
Mortgaged Estate in good condition and repair;
(d) To appear and participate in any action or proceeding
affecting or which may affect the security hereof or the rights or
powers of Lender;
(e) To pay, purchase, contest or compromise any encumbrance, claim,
charge, lien or debt which in the judgment of Lender may effect the
security of this Mortgage or be prior or superior hereto; and
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(f) In exercising such powers, to pay necessary expenses, including
employment of counsel or other necessary or desirable consultants.
All costs and expenses incurred by Lender in connection with the exercise of the
foregoing rights, including costs of evidence of title, court costs, appraisals,
surveys and attorneys' fees, shall be secured by this Mortgage and be repayable
by Borrower upon demand, with interest at the Default Rate.
ARTICLE VII
General Covenants
Section 7.01. Prohibition On Transfer. Borrower shall not, by operation of
law or otherwise, sell, convey, alienate, transfer, mortgage, encumber, lease or
assign ownership or control, or permit the same, of all or any part of the
Mortgaged Estate or any interest therein, whether legal or equitable (including
rents, issues or profits arising therefrom), or of a controlling interest in
Borrower, Blue Valley BanCorp or Bank of Blue Valley (including any general or
limited partnership interests, shares of stock or any other equity, beneficial
or ownership interest in Borrower) without the prior written approval of Lender,
in its sole discretion. Lender may withhold its approval for any reason or
Lender may condition its approval upon an increase in the interest rate under
the Note and/or the payment of a fee. Notwithstanding the foregoing, such
approval of Lender shall not be required for any such transfer by devise or
descent, or for the grant of a leasehold interest in the Mortgaged Estate of ten
(10) years or less upon then current market terms.
Section 7.02. Compliance With Laws. Borrower shall promptly comply with
all present and future federal, state and local laws, statutes and ordinances,
and all covenants and restrictions of record affecting the Mortgaged Estate,
including (i) the Occupational Safety and Health Act (OSHA) 29 U.S.C. ss. 651,
and the Americans with Disabilities Act ("ADA) 42 U.S.C. ss. 12101. Borrower
shall not initiate or acquiesce in any zoning reclassification or material
change in the zoning affecting the Mortgaged Estate without the prior written
approval of Lender.
Section 7.03. Notices. All notices, approvals or communications required
or permitted to be given under this Mortgage shall be in writing and shall be
deemed to have been properly given and received (i) if sent by hand delivery,
then upon delivery, (ii) if sent by overnight courier or U.S. Express Mail, then
one (1) day after dispatch, and (iii) if mailed by registered or certified U.S.
mail, postage prepaid and return receipt requested, then one (1) day after
deposit in the mail. All such notices and communications shall be given (x) to
Lender at its address set forth in this Mortgage, and (y) to Borrower at its
address set forth in this Mortgage, Attn: Robert D. Regnier (with a copy to
Buck, Bohm & Stein, 4601 College Boulevard, Suite 200, Leawood, Kansas
66211-1650), or at such other addresses as either party may designate by notice
in accordance with the terms of this Section.
Section 7.04. Legal Existence. If Borrower is a corporation, partnership
or other entity, Borrower shall preserve and keep in full force and effect its
legal existence and all franchises,
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rights and privileges under the laws of the state of its incorporation or
formation and its standing and/or qualification to do business in the state in
which the Mortgaged Estate is located.
Section 7.05. Liens. Borrower shall not create, permit to accrue or suffer
to exist upon any of the Mortgaged Estate, any security interest, judgment lien,
mechanic's or materialman's lien, or any other lien, encumbrance, charge,
retention or reservation of title, as security, pledge, hypothecation or
assignment as security, and shall promptly pay, when the same shall become due,
all claims and demands of contractors, subcontractors, mechanics, materialmen,
laborers and others which claims, if unpaid, might result in or permit the
creation of a lien upon the Mortgaged Estate, and Borrower shall cause any such
lien to be promptly paid and discharged, whether by payment, bonding or
otherwise, within thirty (30) days after the filing of same.
Section 7.06. Financial Statements. Borrower shall deliver to Lender, with
reasonable promptness (and any event within 150 days after the close of
Borrower's fiscal year): (i) an income and expense statement with respect to the
operation of the Mortgaged Estate for the immediately preceding fiscal year of
Borrower, and (ii) a balance sheet and statement of profit and loss of Borrower
for the immediately preceding fiscal year of Borrower. Each such operating and
expense statement and financial statement shall be certified by the general
partner or chief financial officer of Borrower, and shall be prepared in
accordance with generally accepted accounting principles. Borrower shall also
provide Lender with such additional information or records relating to the
Mortgaged Estate or Borrower's financial condition as Lender may from time to
time request. Upon request of Lender, Borrower shall furnish financial
statements from major tenants under any Leases.
Section 7.07. Successors. The terms and provisions of this Mortgage, and
the rights and obligations of Borrower and Lender, shall inure to the benefit of
and be binding upon Borrower and Lender and their successors and assigns.
Section 7.08. Governing Law. This Mortgage shall be governed by and
construed in accordance with the laws of the state in which the Mortgaged
Estate is located.
Section 7.09. Release of Mortgage. Upon payment and performance in full of
all of the Secured Obligations, Lender shall, upon demand of Borrower but in no
event later than the time prescribed by applicable law, release the Mortgaged
Estate from the lien of this Mortgage and shall furnish Borrower with a properly
executed and recordable instrument evidencing such release.
Section 7.10. Estoppel Certificate. Within twenty (20) days after request
by Lender, Borrower shall furnish Lender a duly acknowledged written statement,
in form satisfactory to Lender, setting forth the amount of principal and
interest then owing under the Note, any other charges payable under any Loan
Documents, and stating whether any offsets or defenses exist to the indebtedness
secured hereby.
Section 7.11. Lender's Approval. In any instance under this Mortgage in
which Lender's approval shall be required, such approval may be given or
withheld by Lender in Lender's sole discretion, and shall be final and
conclusive. The granting of any approval by Lender shall not be
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deemed a waiver of such right of approval to any future matter, and all
approvals by Lender must be in writing.
Section 7.12. Severability. If any term or provision of this Mortgage or
the application thereof to any person or circumstance shall, to any extent, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof or
any other circumstance or situation with respect to this Mortgage, and each
remaining term and provision of this Mortgage shall be valid and be enforced to
the fullest extent by law.
Section 7.13. Limited Liability. The liability of Borrower for the
repayment of the indebtedness evidenced by the Note and the performance of the
Secured Obligations shall be limited to the security given by Borrower and other
parties for the Note and other Secured Obligations. Notwithstanding anything to
the contrary contained herein, and notwithstanding any delay by Lender in
exercising any right, remedy or privilege under any Loan Document, Borrower
shall be personally liable beyond its interest in the security granted to Lender
to the extent of: (i) any funds received by Borrower or any other person or
entity for or on account of Borrower as security deposits under any Leases; (ii)
any Rents received or held by Borrower after the occurrence of an Event of
Default or any Rents received by Borrower which are prepaid more than one month
in advance; (iii) all condemnation awards and payments and insurance proceeds
received by Borrower that have not been applied as required by the terms of the
Loan Documents; (iv) the cost to repair the Mortgaged Estate as a result of a
casualty not reimbursed by insurance to the extent that such insurance is
required by the terms of the Loan Documents; (v) any liability, damage, cost or
expense (including attorneys' fees) incurred by Lender as a result of any fraud,
misrepresentation or bad faith by Borrower or any Guarantor; (vi) any liability,
damage, cost or expense (including attorneys' fees) incurred by Lender under the
terms of the Environmental Indemnity; (vii) any liability, damage, cost or
expense (including attorneys' fees) incurred by Lender due to any waste of the
Mortgaged Estate by Borrower or Borrower's representatives or tenants; and
(viii) any failure to pay delinquent Taxes. Nothing contained herein shall limit
or affect Lender's rights under any guaranty or other collateral which may now
or hereafter be given in connection with the Note.
ARTICLE VIII
Environmental Indemnity
Section 8.01. Hazardous Substances. Borrower shall not generate, store,
use or dispose, or permit the generation, storage, use or disposal of, any
"Hazardous Substance" (as defined in the Environmental Indemnity) on or about
the Mortgaged Estate, unless: (i) the Hazardous Substance is used in minor
amounts in the ordinary course of business of Borrower or tenants; (ii) the
Hazardous Substance is used in full compliance with all applicable
"Environmental Requirements" (as defined in the Environmental Indemnity); and
(iii) the proposed presence and use of such Hazardous Substance is specifically
disclosed to Lender and has been approved in writing, in advance by Lender.
Borrower shall promptly notify Lender of any violation or suspected or alleged
violation of any Environmental Requirements on or about the Mortgaged Estate of
which Borrower becomes aware.
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Section 8.02. Indemnity. Borrower shall indemnify, defend and save and
hold harmless Lender from and against any and all losses, liabilities, damages,
costs and expenses (including costs of remediation or cleanup, loss of property
value or defects in title to the Mortgaged Estate, and the reasonable fees and
disbursements of Lender's counsel) asserted against or suffered or incurred by
Lender and in any way relating to or arising out of the generation, storage,
manufacturing, refining, releasing, transportation, treatment, disposal or other
presence of any Hazardous Substance on or about or removed from the Mortgaged
Estate, which indemnity shall survive: (i) the foreclosure of this Mortgage;
(ii) any conveyance of the Mortgaged Estate in lieu of such foreclosure; (iii)
the payment and performance of the Secured Obligations, (iv) the release of the
lien of this Mortgage; and (v) any other transfer of Borrower's title to or
interest in the Mortgaged Estate. The terms and provisions of the Environmental
Indemnity are specifically incorporated into this Article VIII and made a part
hereof.
IN WITNESS WHEREOF, Borrower has caused this Mortgage to be duly executed
on the day and year set forth in the acknowledgement attached hereto and to be
effective as of the date first set forth above.
BLUE VALLEY BUILDING CORP.,
a Kansas corporation
ATTEST: [SEAL] By: /s/ Robert D. Regnier
---------------------
Robert D. Regnier, President
By: /s/ Patricia L. Day
Secretary
Acknowledgment
Exhibit A: Legal Description
Exhibit B: Permitted Encumbrances
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STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
NOW, on this 15th day of July, 1994, before me, a Notary Public, appeared
Robert D. Regnier, to me personally known, who being by me duly sworn did say
that he is the President of Blue Valley Building Corp., a Kansas corporation,
and that said instrument was signed in his capacity as President of said
corporation in behalf of said corporation and said Robert D. Regnier
acknowledged said instrument to be the free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid, the day and year lost above written.
/s/ Kathryn R. Mills
Notary Public
[SEAL)
My Commission Expires: KATHRYN L MILLS
Notary Public - Notary Seal
______________________ STATE OF MISSOURI
Clay County
My Commission Expires: May 24, 1997
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EXHIBIT A
Legal Description
Tract B, METCALF AT 119TH STREET DEVELOPMENT, a subdivision in the City of
Overland Park, Johnson County, Kansas; and together with an appurtenant easement
for access as defined by the Declaration of Cross Easement filed January 26,
1989 in Volume 2932 page 171, described as follows: A tract of land lying in the
East 1/2 of the East 1/2 of the Northwest 1/4 of the Northeast 1/4 of Section
19, Township 13 South, Range 25 East, in the City of Overland Park, Johnson
County, Kansas, and also being a part of WINDSOR SQUARE, a subdivision in the
City of Overland Park, Johnson County, Kansas, more particularly described as
follows: Commencing at the Northeast corner of said Northwest 1/4 of the
Northeast 1/4; thence South 00 degrees 06' 10" West along the East line of said
Northwest 1 /4 of the Northeast 1 /4 a distance of 60.00 feet to the Point of
Beginning, said point being the Northeast corner of Lot 1, Block 1, WINDSOR
SQUARE; thence continuing South 00 degrees 06' 10" West along the East line of
said Northwest 1/4 of the Northeast 1/4 a distance of 455.01 feet; thence South
89 degrees 44' 08" West parallel with the North line of said Northwest 1/4 of
the Northeast 1/4 a distance of 32.00 feet; thence North 00 degrees 06' 10" East
parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a
distance of 174.91 feet; thence on a curve to the left having a radius of 15.00
feet (a chord bearing of North 45 degrees 04' 51" West, a length of 21.28 feet)
a distance of 23.66 feet; thence South 89 degrees 44' 08" West parallel with the
North line of said Northwest 1/4 of the Northeast 1/4 a distance of 284.00 feet;
thence North 00 degrees 07' 42" East a distance of 30.00 feet; thence North 89
degrees 44' 08" East parallel with the North line of said Northwest 1/4 of the
Northeast 1/4 a distance of 284.18 feet; thence on a curve to the left having a
radius of 15.00 feet (a chord bearing of North 44 degrees 55' 09" East, a length
of 21.15 feet) a distance of 23.47 feet; thence North 00 degrees 06' 10" East
parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a
distance of 148.35 feet; thence North 02 degrees 16' 17" West a distance of
48.28 feet; thence North 00 degrees 06' 10" East parallel with the East line of
said Northwest 1/4 of the Northeast 1/4 a distance of 11.50 feet; thence on a
curve to the left having a radius of 20.00 feet (a chord bearing of North 18
degrees 17' 11 " West, a length of 12.62 feet) a distance of 12.84 feet; thence
North 89 degrees 44' 08" East parallel with the North line of said Northwest 1/4
of the Northeast 1/4 a distance of 37.98 feet to the point of beginning; and
also together with the appurtenant easement for access defined as the Access
Easement reserved by the document filed August 25, 1992 in Volume 3684 Page 46,
described as follows: All that part of the Northeast 1/4 of the Northeast 1/4 of
Section 19, Township 13, Range 25, in the City of Overland Park, Johnson County,
Kansas, more particularly described as follows: Beginning at the Northwest
corner of the Northeast 1/4 of the Northeast 1/4 of said Section 19; thence
South 01 degrees 57' 41" East along the West line of the Northeast 1/4 of the
Northeast 1/4 of said Section 19, a distance of 310 feet; thence North 88
degrees 02' 19" East, along a line perpendicular to the West line of the
Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 35 feet;
thence North 01 degree 57' 41 " West, along a line 35 feet East of and parallel
to the West line of the Northeast 1/4 of the Northeast 1/4 of said Section 19, a
distance of 310.22 feet, to a point on the North line thereof; thence South 87
degrees 40' 39" West, along the North line of the Northeast 1/4 of the Northeast
1/4 of said Section 19, a distance of 35 feet to the point of beginning, all
subject to that part thereof dedicated for street purposes.
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EXHIBIT B
Permitted Encumbrances
1. General and special taxes and assessments for 1994 and subsequent
years, not yet due and payable.
2. Controlled access as defined by document filed in Book of Misc. 169, at
page 193.
3. Right-of-way filed October 24, 1983, in Volume 1928, at page 215.
4. Storm Sewer Easement filed November 29, 1988, in Volume 2903, at page
420.
5. Permanent Storm Water Drainage Easement filed November 30, 1988, in Volume
2904, at page 684.
6. Cross Easement filed October 16, 1989, in Volume 3067, at page 384.
7. Cross Easement and Restrictive Covenant Agreement filed October 16, 1989,
in Volume 3067, at page 392.
8. Easement Agreement filed October 16, 1989, in Volume 3067, at page 397.
9. Easement filed November 20, 1989, in Volume 3085, at page 651.
10. Easement filed December 18, 1989, in Volume 3098, at page 250.
11. Easement filed June 25, 1993, in Volume 3979, at page 817.
12. Sidewalk Easement filed June 29, 1993, in Volume 3982, at page 940.
13. A 35 foot ingress-egress easement and utility easement along the West lot
line and a 30 foot private drive easement affecting the North 15 feet of
Tract B as shown on the recorded plat.
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10060
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment"), dated as of July
15, 1994, is made by BLUE VALLEY BUILDING CORP., a Kansas corporation
("Borrower"), with an address at P.O. Box 26128, Overland Park, Kansas 66225, to
and in favor of BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, a Missouri
corporation ("Lender"), with an address at c/o Charter American Mortgage
Company, 2001 Shawnee Mission Parkway, Mission Hills, Kansas 66205.
RECITALS
(A) Lender has agreed to make a loan to Borrower in the amount of
$2,500,000.00 (the "Loan"), which will be evidenced by that certain Promissory
Note of even date herewith (the "Note") executed by Borrower in favor of Lender
in the amount of the Loan and bearing interest and being payable as set forth
therein.
(B) The Loan will be secured, in part, by that certain Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing Statement dated
as of the date of the Note (the "Mortgage") between Borrower and Lender,
encumbering the Mortgaged Estate, including the Land described on Exhibit A,
attached hereto and incorporated herein, and the other Loan Documents, which
term includes this Assignment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower hereby agrees as follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings given them in the Mortgage, unless otherwise defined herein. The term
"including" shall mean "including, without limitation."
2. Assignment. (a) To further secure the Secured Obligations, Borrower
hereby assigns, transfers, conveys and sets over to Lender all of Borrower's
estate, right, title and interest in, to and under all leases, whether existing
on the date hereof or hereafter entered into (including any extensions,
modifications or amendments thereto) relating to the Mortgaged Estate, including
the leases, tenancies and other occupancy agreements described on Exhibit B,
attached hereto and incorporated herein (the "Leases"), together with all
rights, powers, privileges, options and other benefits of Borrower as the
landlord under the Leases regarding the current tenants and any future tenants
(the "Tenants", and each a "Tenant"), and also together with all guarantees of
the Tenants' performance and payment under the Leases, and all the rents,
charges, issues, royalties, revenues, profits, and income under the Leases or
from the Mortgaged Estate (collectively, the "Rents"), including those now due,
past due or to become due.
(b) This Assignment is a present, absolute and unconditional assignment,
and is not a contingent assignment. The rights of Lender in and to the Leases
and Rents are not dependent upon the absence or occurrence of any event.
Notwithstanding the foregoing, however, so long as no "Event of Default" (as
defined herein) has occurred, Borrower shall have a revocable license to possess
and control the Mortgaged Estate and collect and receive all Rents. Upon the
occurrence of an Event of Default, such license shall automatically be deemed to
be revoked by Lender.
<PAGE>
3. Agreements of Borrower. Borrower hereby agrees as follows:
(a) Upon the occurrence of an Event of Default, Borrower irrevocably
appoints Lender its true and lawful attorney-in-fact, at the option of Lender at
any time and from time to time, to take possession and control of the Mortgaged
Estate, pursuant to Borrower's rights as lessor under the Leases, and to demand,
receive and enforce payment, to give receipts, releases and satisfaction and to
sue, in the name of Borrower or Lender, for all Rents;
(b) If any of the Leases provide for a security deposit paid by the Tenant
thereunder to Borrower, this Assignment shall transfer to the Lender all of
Borrower's right, title and interest in and to such security deposits; provided,
however, that Borrower shall have the right to retain such security deposits so
long as no Event of Default shall have occurred; and provided, further, that
Lender shall have no obligation to any such Tenant with respect to such security
deposits unless and until Lender comes into actual possession and accepts
control of such security deposits by notice to such Tenant;
(c) With respect to any Lease or Leases of 7,500 square feet or more (in
the aggregate) to any single Tenant, Borrower shall not terminate any such Lease
(except pursuant to the terms of such Lease upon a default by the Tenant
thereunder), grant concessions or modify or amend any such Lease in any material
manner, or consent to an assignment or subletting, without the prior written
consent of Lender;
(d) Borrower has not and shall not collect any Rent more than one (1) month
in advance of the date on which it becomes due under the terms of each Lease, or
discount any future accruing Rent, or waive any right of setoff against any
Tenant under the Leases;
(e) Except with the prior written consent of Lender, Borrower shall not
permit a subordination of any Lease to any mortgage, deed of trust or other
encumbrance, or any other lease, now or hereafter affecting the Mortgaged Estate
or any part thereof, or permit the conversion of any Lease to a sublease;
(f) Borrower shall faithfully perform and discharge all obligations of the
landlord under the Leases, and shall give prompt written notice to Lender of any
notice of Borrower's default received from a Tenant or any other person and
shall furnish Lender with a complete copy of said notice;
(g) Upon the request of Lender, Borrower shall promptly provide to Lender a
true and correct copy of all existing Leases; and
(h) Nothing herein shall be construed to constitute Lender as a "mortgagee
in possession" in the absence of its taking of actual possession of the
Mortgaged Estate pursuant to the powers granted herein, or to impose any
liability or obligation on Lender under or with respect to the Leases or the
Mortgaged Estate. Borrower shall indemnify and hold Lender harmless from and
against any and all liabilities, losses and damages (including attorneys' fees)
that Lender may incur under the Leases or by reason of this Assignment, and of
and from any and all claims and demands whatsoever that may be asserted against
Lender by reason of any alleged obligations to be performed or discharged by
Lender under the Leases or this Assignment. Any Rent collected by Lender may be
applied by Lender in its discretion in satisfaction of any such liability, loss,
damage, claim, demand, costs, expense or fees. Borrower shall appear in and
defend, at no cost to Lender, any action or proceeding arising under or in any
manner connected with the Leases. If requested by Lender, Borrower shall enforce
any Lease and all remedies available to Borrower against the Tenant in the case
of default under such Lease by the Tenant thereunder.
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4. Event of Default. The following shall constitute an Event of Default
hereunder: (i) the occurrence of an Event of Default under any Loan Document; or
(ii) if at any time any representation or warranty made by Borrower in this
Assignment shall be or become materially incorrect; or (iii) the breach of any
agreement by Borrower under this Assignment.
5. Remedies of Lender. (a) Upon the occurrence of an Event of Default,
Lender shall have the following rights and remedies, all of which are
cumulative, in addition to all other rights and remedies provided under the Loan
Documents, or any other agreement between Borrower and Lender, or otherwise
available at law or in equity or by statute:
(i) Lender may, at any time without notice, either in person, by agent
or by a court-appointed receiver, regardless of the adequacy of Lender's
security, enter upon and take possession and control of the Mortgaged
Estate, or any part thereof, to perform all acts necessary and appropriate
to operate and maintain the Mortgaged Estate including, but not limited to,
execute, cancel or modify the Leases, make repairs to the Mortgaged Estate,
execute or terminate contracts providing for the management or maintenance
of the Mortgaged Estate, all on such terms as are deemed best to protect
the security of this Assignment, in Lender's sole discretion, and in
Lender's or Borrower's name, sue for or otherwise collect such Rents from
the Mortgaged Estate as specified in this Assignment as the same become due
and payable, including, but not limited to, Rents then due and unpaid; and
(ii) Lender shall be deemed to be the creditor of each Tenant in
respect of any assignments for the benefit of creditors and any bankruptcy,
arrangement, reorganization, insolvency, dissolution, receivership or other
debtor-relief proceedings affecting the Tenant (without obligation on the
part of Lender, however, to file timely claims in such proceedings or
otherwise pursue creditor's rights therein).
(b) All Rents collected subsequent to the occurrence of any Event of
Default shall be applied at the discretion of, and in such order as determined
by, Lender to the costs, if any, of taking possession and control of and
managing the Mortgaged Estate and collecting such amounts, including, attorney's
fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the
Mortgaged Estate, premiums on insurance policies, taxes, assessments and other
charges on the Mortgaged Estate, and the costs of discharging any obligation or
liability of Borrower as lessor or landlord of the Mortgaged Estate and to the
Secured Obligations. Lender or the receiver shall have access to the books and
records used in the operation and maintenance of the Mortgaged Estate and shall
be liable to account only for those Rents actually received. Lender shall not be
liable to Borrower, anyone claiming under or through Borrower or anyone having
an interest in the Mortgaged Estate by reason of anything done or left undone by
Lender hereunder.
(c) Lender shall have the right to notify all Tenants of an Event of
Default and to direct the Tenants to thereafter pay all Rents to Lender, and
Lender shall be entitled to receive the Rents without appointment of a receiver
or other court action. All Tenants and guarantors of Leases are hereby
authorized to rely upon and comply with any notice from Lender to begin paying
the Rents to Lender, and all such Rents paid to Lender shall be in satisfaction
of the Tenants' obligations under the Leases, and Borrower shall have no claim
against any Tenant for any such Rents paid to Lender pursuant to such notice.
(d) If the Rents are not sufficient to meet the costs, if any, of taking
possession and control of and managing the Mortgaged Estate and collecting the
same, any funds expended by Lender for such purposes shall become Secured
Obligations.
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(e) Any entering upon and taking possession and control of the Mortgaged
Estate by Lender or the receiver and any application of Rents as provided herein
shall not cure or waive any Event of Default or invalidate any other right or
remedy of Lender.
(f) Borrower hereby represents and agrees that it is and will be the sole
owner of the entire landlord's interest (or Tenant's interest in the case of
Leases with respect to which Borrower is the Tenant) in all Leases, subject only
to the Permitted Encumbrances.
6. Lease Provisions. All Leases executed after the date of this Assignment
shall contain (i) a provision obligating the Tenant to enter into a
subordination and attornment agreement with Lender in form and substance
satisfactory to Lender, subordinating such Lease to the lien of the Mortgage and
(ii) a provision authorizing the Tenant to pay the Rents to Lender upon notice
of an Event of Default under this Assignment.
7. Release. The assignment contained herein and all rights herein assigned
to Lender shall cease and terminate as to all Leases: (i) upon the satisfaction
of all Secured Obligations; or (ii) upon the release of the Mortgaged Estate
subject to such Lease from the lien of the Mortgage covering such Mortgaged
Estate pursuant to the provisions of such Mortgage. It is expressly understood
that no judgment or decree that may be entered on any Secured Obligation shall
operate to abrogate or lessen the effect of this Assignment, but that the same
shall continue in full force and effect as herein provided. The provisions of
this Assignment shall also remain in full force and effect during the pendency
of any proceedings for the foreclosure and/or sale of the Mortgaged Estate, or
any part thereof, both before and after sale, until the issuance of a deed
pursuant to a decree of foreclosure and/or sale, unless all Secured Obligations
are fully satisfied. Lender may take or release other security for the Secured
Obligations, may release any party primarily or secondarily liable therefor and
may apply any other security held by it to the satisfaction of Secured
Obligations, without prejudice to any of its rights under this Assignment.
8. No Waiver. Nothing contained in this Assignment and no act done or
omitted by Lender pursuant to the powers and rights granted it hereunder shall
prejudice or be deemed to be a waiver by Lender of its rights and remedies under
the Loan Documents. A waiver by Lender of any of its rights hereunder or under
the Leases or of a breach of any of the covenants and agreements contained
herein to be performed by Borrower shall not be construed as a waiver of such
rights in any succeeding instance or of any succeeding breach of the same or
other covenants, agreements, restrictions or conditions.
9. Further Assurances. Borrower hereby agrees that it shall, whenever and
as often as it shall be requested to do so by Lender, execute, acknowledge and
deliver, or cause to be executed, acknowledged, and delivered, any and all such
further conveyances, approvals, consents, memoranda of the subject matter
hereof, duplicate originals hereof, and any and all other documents and to do
any and all other acts as may be necessary or appropriate to carry out the terms
of this Assignment.
10. Notices. All notices consents or communications permitted required
under this Assignment shall be in writing and shall be deemed to have been
properly given and received if sent by hand delivery, overnight courier or U.S.
Express Mail , or certified mail, postage prepaid, as specified in the Mortgage.
11. Governing Laws; Severability. This Assignment shall be governed by and
construed under the laws of the state where the Land is located. In case any of
the provisions of this Assignment shall at any time be held by a court of
competent jurisdiction to be illegal, invalid, or unenforceable for any reason,
such illegality, invalidity or unenforceability shall not affect the remaining
provisions of this Assignment, and this Assignment shall be construed and
enforced as if all such illegal, invalid or unenforceable provisions had never
been inserted herein.
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12. Assignment By Lender. Lender shall have the right to assign Borrower's
right, title and interest under this Assignment in any of the Leases to any
subsequent holder of the Note or any participating interest therein or to any
person acquiring title to the Mortgaged Estate or any part thereof through
foreclosure or otherwise. Any subsequent assignee shall have all the rights and
powers herein provided to Lender.
13. Successors. This Assignment shall inure to the benefit of and be
binding upon Borrower and Lender, and their respective heirs, successors, legal
representatives and assigns.
IN WITNESS WHEREOF, Borrower has executed this Assignment as of the date
first set for above.
BLUE VALLEY BUILDING CORP.,
a Kansas corporation
ATTEST: [SEAL] By: /s/ Robert D. Regnier
Robert D. Regnier, President
By: /s/ Patricia L. Day
Secretary
Acknowledgement
Exhibit A: Legal Description
Exhibit B: Leases
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STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
NOW, on this 15th day of July, 1994, before me, a Notary Public, appeared
Robert D. Regnier, to me personally known, who being by me duly sworn did say
that he is the President of Blue Valley Building Corp., a Kansas corporation,
and that said instrument was signed in his capacity as President of said
corporation in behalf of said corporation and said Robert D. Regnier
acknowledged said instrument to be the free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid, the day and year last above written.
/s/ Kathryn L. Mills
Notary Public
[SEAL]
My Commission Expires:
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EXHIBIT A
Legal Description
Tract B, METCALF AT 119TH STREET DEVELOPMENT, a subdivision in the City of
Overland Park, Johnson County, Kansas; and together with an appurtenant
easement for access as defined by the Declaration of Cross Easement filed
January 26, 1989 in Volume 2932 page 171, described as follows: A tract of
land lying in the East 1/2 of the East 1/2 of the Northwest 1/4 of the
Northeast 1/4 of Section 19, Township 13 South, Range 25 East, in the City
of Overland Park, Johnson County, Kansas, and also being a part of WINDSOR
SQUARE, a subdivision in the City of Overland Park, Johnson County,
Kansas, more particularly described as follows: Commencing at the
Northeast corner of said Northwest 1/4 of the Northeast 1/4; thence South
00 degrees 06' 10" West along the East line of said Northwest 1/4 of the
Northeast 1/4 a distance of 60.00 feet to the Point of Beginning, said
point being the Northeast corner of Lot 1, Block 1, WINDSOR SQUARE; thence
continuing South 00 degrees 06' 10" West along the East line of said
Northwest 1/4 of the Northeast 1/4 a distance of 455.01 feet; thence South
89 degrees 44' 08" West parallel with the North line of said Northwest 1/4
of the Northeast 1/4 a distance of 32.00 feet; thence North 00 degrees 06'
10" East parallel with the East line of said Northwest 1/4 of the
Northeast 1/4 a distance of 174.91 feet; thence on a curve to the left
having a radius of 15.00 feet (a chord bearing of North 45 degrees 04' 51"
West, a length of 21.28 feet) a distance of 23.66 feet; thence South 89
degrees 44' 08" West parallel with the North line of said Northwest 1/4 of
the Northeast 1/4 a distance of 284.00 feet; thence North 00 degrees 07'
42" East a distance of 30.00 feet; thence North 89 degrees 44' 08" East
parallel with the North line of said Northwest 1/4 of the Northeast 1/4 a
distance of 284.18 feet; thence on a curve to the left having a radius of
15.00 feet (a chord bearing of North 44 degrees 55' 09" East, a length of
21.15 feet) a distance of 23.47 feet; thence North 00 degrees 06' 10" East
parallel with the East line of said Northwest 1/4 of the Northeast 1/4 a
distance of 148.35 feet; thence North 02 degrees 16' 17" West a distance
of 48.28 feet; thence North 00 degrees 06' 10" East parallel with the East
line of said Northwest 1/4 of the Northeast 1/4 a distance of 11.50 feet;
thence on a curve to the left having a radius of 20.00 feet (a chord
bearing of North 18 degrees 17' 11" West, a length of 12.62 feet) a
distance of 12.84 feet; thence North 89 degrees 44' 08" East parallel with
the North line of said Northwest 1/4 of the Northeast 1/4 a distance of
37.98 feet to the point of beginning; and also together with the
appurtenant easement for access defined as the Access Easement reserved by
the document filed August 25, 1992 in Volume 3684 Page 46, described as
follows: All that part of the Northeast 1/4 of the Northeast 1/4 of
Section 19, Township 13, Range 25, in the City of Overland Park, Johnson
County, Kansas, more particularly described as follows: Beginning at the
Northwest corner of the Northeast 1/4 of the Northeast 1/4 of said Section
19; thence South 01 degrees 57' 41" East along the West line of the
Northeast 1/4 of the Northeast 1/4 of said Section 19, a distance of 310
feet; thence North 88 degrees 02' 19" East, along a line perpendicular to
the West line of the Northeast 1/4 of the Northeast 1/4 of said Section
19, a distance of 35 feet; thence North 01 degree 57' 41" West, along a
line 35 feet East of and parallel to the West line of the Northeast 1/4 of
the Northeast 1/4 of said Section 19, a distance of 310.22 feet, to a
point on the North line thereof; thence South 87 degrees 40' 39" West,
along the North line of the Northeast 1/4 of the Northeast 1/4 of said
Section 19, a distance of 35 feet to the point of beginning, all subject
to that part thereof dedicated for street purposes.
<PAGE>
EXHIBIT B
Leases
1. Building Lease dated February 17, 1993, by and between Blue
Valley Building Corp., as Lessor, and Bank of Blue Valley, as Lessee.
2. Office Building Lease dated September 23, 1992, by and between
Blue Valley Building Corp., as Lessor, and Sunburst Realty Partners, Inc., as
Lessee.
3. Office Building Lease dated September 29, 1992, by and between
Blue Valley Building Corp., as Lessor, and Positive Care Service, Inc., as
Lessee.
4. Office Building Lease dated November 1, 1993, by and between Blue
Valley Building Corp., as Lessor, and Advance Mortgage Corporation, as Lessee.
5. Office Building Lease dated May 1, 1994, by and between Blue
Valley Building Corp., as Lessor, and City Cafe's, Inc., as Lessee.
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease"), is made and entered into this 18th day of
January, 1999 by and between CMI, INC., a Kansas corporation ("Landlord") and
Bank of Blue Valley a state banking association ("Tenant")
WITNESSETH THAT:
IN CONSIDERATION of the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. PREMISES.
A. DEMISED PREMISES. Landlord does hereby demise and lease unto
Tenant, and Tenant does lease and take from Landlord the following described
premises (hereinafter referred to as the "Demised Premises"), now or hereafter
to be erected in and about the Roche Price Chopper at Highway K7 and Johnson
Drive and more particularly described in Exhibit "A" attached hereto and by this
reference made a part hereof (hereinafter referred to as the "Store Premises"),
in the city of Shawnee, Johnson County, Kansas:
Branch: a concession unit measuring approximately twenty-five
feet (25') in width by a depth of approximately seventeen feet
(17') and containing a total area of approximately four hundred
twenty-five (425) square feet; and
ATM: a free standing automated teller machine located within the
Store Premises;
The approximate boundaries and location of the Branch, and ATM are outlined in
red on the floor plans of the Store Premises building, which floor plans are
marked Exhibit "B" and Exhibit "C", respectively, and are attached hereto and
made a part hereof.
B. COMMON AREAS. In addition to the occupancy of the Demised Premises,
Tenant and Tenant's concessionaires, officers', employees, agents, customers,
and invitees also shall have the right to the nonexclusive use of automobile
parking areas, access roads, truck loading areas, delivery areas, walkways, bus
stops, landscaped areas, driveways, sidewalks, restrooms and other common areas
which now are or hereafter may be located upon some portion of the Store
Premises. (Such parking areas, access roads, truck loading areas, delivery
areas, walkways, bus stops, landscaped areas, driveways, sidewalks, restrooms
and other common areas are hereinafter collectively referred to as the "Common
Areas"). Landlord agrees to make the Common Areas continuously available to the
aforementioned groups of persons during the term of this Lease, except when
portions thereof temporarily may be unavailable for use by reason of repair work
then being underway thereon. The nonexclusive use of the Common Areas by Tenant
and Tenant's concessionaires, officers, employees, agents, customers, and
invitees at all times shall be subject to such reasonable rules and regulations
as Landlord from time to time may establish.
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2. BRANCH BANK APPLICATION. Landlord acknowledges and agrees that Tenant
shall file for Branch Bank status for the Demised Premises, and the approval of
such filing by the applicable banking regulatory agency shall be a condition
precedent to the commencement of the initial term under this Lease. Tenant shall
have the right to use the Store Premises name as part of the business name of
the Branch located at the Demised Premises, if required to be established, for
purposes of location identification. If Tenant's applications for a Branch on
the Demised Premises is rejected by the applicable banking regulatory agency,
this Lease shall be null and void and the parties shall be mutually released
from any liability or obligation hereunder, provided that Tenant shall
immediately begin the application process, and diligently pursue the same, after
execution of this Lease. If Tenant has not received regulatory approval as of
March 1, 1999, then Landlord may, in its discretion, terminate this Lease.
3. TERM. The initial term of this Lease shall be for three (3) years
following the commencement of the term unless sooner terminated as herein
provided.
4. RENT. Tenant agrees to pay to Landlord at the office of Landlord or at
such other place as may be designated by Landlord for each year of the basic
term and the first option period, if so exercised, an annual rental of
$30,000.00, payable in advance in equal monthly installments of $2,500.00.
If the Lease term commences on a day other than the first day
of a calendar month, the rent for that first fractional month shall be prorated
and paid on the first day of the month next succeeding, and the last fractional
month shall be similarly prorated, but paid in advance.
5. COMMENCEMENT OF TERM. The original term shall begin on the earlier of
(i) the day Tenant opens its Branch for business with the general public, or
(ii) sixty (60) days following the receipt by Tenant of notice in writing from
Landlord that the Demised Premises are ready for occupancy During said sixty
(60) day period Tenant may, without opening for business, have access to the
Demised Premises for purposes of making appropriate preparation for opening.
6. OPTIONS TO EXTEND. If Tenant is not then in default under any of the
terms and provisions of this Lease, Tenant shall have the option to extend the
term of this Lease upon the same terms and conditions for an additional term of
three (3) years, from and after the expiration of the initial term of this
Lease. Tenant's election to exercise the first extension option must be made in
writing and delivered to Landlord no less than six (6) months prior to
expiration of the initial term of this Lease. Said first extension shall be on
the same terms and conditions as the basic term with the exception of rent which
shall be $31,500.00 annually for each year of this first option period, payable
in advance in equal monthly installments of $2,625.00.
If Tenant exercises its first option to extend the term of this Lease and is not
then in default under any of the terms and provisions of this Lease, then Tenant
shall have the option to further
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extend the term of this Lease upon the same terms and conditions for a second
additional term of three (3) years, from and after the expiration of the first
additional term of this Lease. Tenant's election to exercise this second
extension must be made in writing and delivered to Landlord no less than six (6)
months prior to expiration of the first extension term of this Lease. Said
second extension shall be on the same terms and conditions as the basic term
with the exception of rent which shall be $33,075.00 annually for each year of.
this second option period, payable in advance in equal monthly installments of
$2,756.25.
If Tenant exercises its second option to extend the term of this Lease and is
not then in default under any of the terms and provisions of this Lease, then
Tenant shall have the option to further extend the term of this Lease upon the
same terms and conditions for a third additional term of three (3) years, from
and after the expiration of the second additional term of this Lease. Tenant's
election to exercise this third extension must be made in writing and delivered
to Landlord no less than six (6) months prior to expiration of the second
extension term of this Lease. Said third extension shall be on the same terms
and conditions as the basic term with the exception of rent which shall be
$34,728.75 annually for each year of this third option period, payable in
advance in equal monthly installments of $2,894.07.
7. CONSTRUCTION OF DEMISED PREMISES.
A. LANDLORD'S OBLIGATION. Landlord shall at its cost and expense
construct in a good and workerlike manner the Demised Premises for Tenant's use
and occupancy in accordance with the Outline Specifications entitled "Landlord's
and Tenant's Architectural and Construction Work" which by this reference is
made a part hereof although not attached hereto. Landlord agrees to indemnify
Tenant and hold Tenant harmless against any loss, liability, or damage resulting
from such work.
B. TENANT'S OBLIGATION. All work to be performed by Tenant pursuant
to said Outline Specifications shall be constructed by Tenant in a good and
workerlike manner and free of any liens for labor and materials. Tenant may
choose its own architect, contractor and materials (which must be compatible
with the overall Store Premises' design). Tenant agrees to indemnify Landlord
and hold Landlord harmless against any loss, liability, or damage resulting from
such work.
8. ATTORNEY IN FACT. Landlord hereby appoints Tenant Landlord's lawful
attorney-in-fact for the sole purpose of applying for and securing from any
governmental authority having jurisdiction thereover any permit or license which
may be necessary in connection with any construction, alteration, addition,
repair to or occupancy of the Demised Premises.
9. COVENANT AGAINST MECHANICS LIENS. Tenant shall do all things necessary
to prevent the filing of any mechanic's or other liens against the Demised
Premises by reason of any work, labor, services performed or any materials
supplied or claimed to have been performed or supplied to Tenant, or anyone
holding the Demised Premises, or any part thereof, through or under Tenant. If
any such lien shall at any time be filed, Tenant shall either cause the
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same to be vacated and canceled of record within thirty (30) days after the date
of the filing thereof or, if Tenant in good faith determines that such lien
should be contested, Tenant shall furnish such security by surety bond or
otherwise as may be necessary or be prescribed by law to release the same as a
lien against the real property and to prevent any foreclosure of such lien
during the pendency of such contest. If Tenant shall fail to vacate or release
such lien in the manner and within the time period aforesaid, then, in addition
to any other right or remedy of Landlord resulting from' Tenant's said default
Landlord may, but shall not be obligated to, vacate or release the same either
by paying the amount claimed to be due or by procuring the release of such lien
by giving security, or in such other manner as may be prescribed by law. Tenant
shall repay to Landlord, on demand, all sums disbursed or deposited by Landlord
pursuant to the foregoing provisions of this paragraph, including Landlord's
cost and expenses and reasonable attorney's fees incurred in connection
therewith. However, nothing contained herein shall imply any consent or
agreement on the part of Landlord to subject its estate or interest to liability
under any mechanic's or other lien law, whether or not the performance or the
furnishing of such work, labor, services, or materials to Tenant or anyone
holding the Demised Premises, or any part thereof, through or under Tenant,
shall have been consented to by Landlord and/or any of such parties.
10. FIXTURES AND MACHINERY. It is mutually agreed that all personal
property on the Demised Premises, including merchandise of every kind, nature,
and description, furnishings, equipment, trade fixtures, and all other property
hereafter placed or kept on the Demised Premises by Tenant, are and shall
continue to be the sole property of the Tenant. Tenant may, during the term of
this Lease, remove any furniture, fixtures, or equipment as it may so desire,
provided Tenant shall repair all damage resulting from such removal, as nothing
herein is intended to impose any restrictions on the use of the furniture,
fixtures, or equipment as the Tenant may deem necessary or desirable in the
operation of its business,
11. PUBLIC LIABILITY INSURANCE. Subject to paragraph 14 hereafter, Tenant,
at its expense at all times during the term of, this Lease and any other period
of occupancy of the Demised Premises by Tenant, shall provide and maintain with
respect to the Demised Premises general public liability insurance in form
customarily written for the protection of owners, landlords, and tenants of real
estate, with Landlord and Tenant as named insured, which insurance shall provide
coverage of not less than $500,000 for personal injury and $250,000 for property
damage.
12. INDEMNIFICATION. Landlord and Tenant agree to indemnify each other
against and to hold each other harmless from any and all claims or demands of
any third party arising from or based upon the act, omission or negligence of
the indemnifying party or its contractors, concessionaires, licensees, agents,
servants, invitees, employees, or anyone else for whom the indemnifying party
may be or alleged to be responsible. In the event that either party shall
without fault on its part be made a party to any litigation commenced by any
third party against the other party, then such other party shall protect and
hold the party without fault harmless from and with respect to such litigation,
and shall pay all costs, expenses, and reasonable attorney's fees incurred or
paid by the party without fault in connection with such litigation, together
with any judgments rendered against the party without fault.
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13. WAIVER OF SUBROGATION. Neither Landlord nor Tenant shall be liable to
the other for any business interruption or any loss or damage to property or
injury or death of persons occurring on the Demised Premises, or in any part of
the Store Premises, or in any manner growing out of Tenant's use of the Demised
Premises or Landlord's use of the Store Premises, whether or not caused by the
fault or negligence of the Landlord or Tenant, or their respective agents,
employees, subtenants, licensees, or assignees; provided, however, this release
shall apply only to the extent that such business interruption, loss or damage
to property, or injury or death of persons is covered by insurance, and to the
extent that recovery is made of proceeds thereunder, and regardless of whether
such insurance protects the Landlord or Tenant or both. Nothing herein shall be
construed to impose any other or greater liability upon either of the parties to
this Lease than would have existed in the absence of this paragraph. This
paragraph shall be effective only so long as its provisions do not adversely
affect the right of the insured, whether Landlord or Tenant or both, to recover
under the applicable policy or policies of insurance, and if prohibited under
the terms of such policy or policies, shall be deemed wholly without force or
effect.
14. TAXES.
A. LANDLORD'S TAXES. All real estate taxes and special
assessments levied and assessed by lawful authority against the Demised
Premises shall be timely paid by Landlord.
B. TENANT'S TAXES. Tenant shall pay to the proper authorities all
taxes, special assessments, and similar charges on the Branch and personal
property, consisting of ATM equipment and furniture and fixtures, required to be
paid in connection with the operation thereof, except real estate taxes and
special assessments hereinbefore covenanted to be paid by Landlord. Tenant shall
procure at its expense all permits and licenses required by law for the
operation of the Branch and ATMs.
15. UTILITIES. Landlord shall furnish Tenant heat, air conditioning
and electricity adequate and reasonable for the Demised Premises during the
term hereof at its sole cost and expense.
16. MAINTENANCE AND REPAIRS.
A. BY LANDLORD. Landlord shall keep and maintain in good condition
and repair the Common Areas of the Store Premises, and the foundations, roof,
exterior walls, windows, doors, ceiling, heating, ventilating, and air
conditioning equipment, and wiring, and all structural and supporting parts of
the Demised Premises. Landlord shall keep the Common Areas free and clear of
ice, snow and obstructions. Landlord shall provide and maintain adequate
lighting for the Common Areas for the convenience and safety of Tenant and
Tenant's officers, employees, agents, concessionaires, customers, and invitees.
B. BY TENANT. Subject to the obligations of Landlord as herein above
stated, Tenant shall otherwise maintain the Demised Premises in good condition
and repair,
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including without limitation the interior of the Branch comprising a portion of
the Demised Premises. Tenant shall repair any damage resulting to the Demised
Premises due to the acts or negligence of its employees, agents, invitees, and
guests or as a result of any casualty caused due to the presence or conduct of
Tenant's operations on the Demised Premises. Upon Tenant's request, Landlord
will assign to Tenant any guarantees and warranties Landlord may possess with
respect to any structure or equipment in or about the Demised Premises that
Tenant is obligated to maintain, repair or restore. Tenant shall be solely
responsible, at its cost, for performing servicing and maintenance of the ATMs.
Landlord shall permit Tenant, its agents, employees, and contractors free and
unobstructed access to and egress from the Demised Premises during normal
business hours to service, maintain, repair or replace the ATMs. In connection
with the servicing and repair of the ATMs, it is agreed that Tenant shall have
access to a telephone on or about the Demised Premises near the ATMs for
Tenant's use on a toll-free basis. It is further agreed by the parties hereto
that it may be necessary for Tenant to interrupt the operation of the ATMs for
such periods as are necessary to perform repairs, maintenance, and daily
balancing. Such interruptions may be made without Tenant being deemed to have
violated any term of this Lease. Landlord agrees that it will use its best
efforts to report to Tenant any need to service the ATMs which has been made
known to Landlord.
17. ALTERATIONS OF DEMISED PREMISES. Tenant, at its expense during
the term of this Lease, may make such alterations to the Demised Premises as
it deems appropriate provided that:
(i) the structural integrity of the Store Premises building shall not be
affected or diminished;
(ii) the value of the Store Premises building is not thereby diminished;
(iii) the exterior appearance (including the Store Premises building front)
is not thereby altered or changed; and
(iv) Tenant shall have secured prior written approval and consent of
Landlord before making any alterations, which consent shall not be
unreasonably withheld or delayed by Landlord. At the time Landlord's
approval of any alterations is sought, Tenant shall submit to Landlord
plans and specifications for such Work. All such alterations shall be
completed in a good and workerlike manner with first-class materials.
Upon the termination of this Lease any additions or alterations made
to the interior of the Demised Premises by Tenant shall remain a part
of the Demised Premises and be surrendered therewith unless required
to be removed by Landlord.
18. REMODELING OF STORE PREMISES. Tenant recognizes that Landlord may from
time to time wish to remodel, rearrange, or enlarge the Store Premises to
accommodate changes in retailing patterns. In the event that the remodeling,
rearranging, or, enlargement may require relocation of the Demised Premises for
a purpose other than to provide Tenant's space comprising all or a portion of
the Demised Premises to another retail vendor of goods and/or services or to a
competitor of Tenant's, Landlord agrees to discuss with Tenant its alteration
plans to determine if the Demised Premises can be moved to another location
mutually satisfactory to Tenant and Landlord within the Store Premises. If
Landlord desires to move Tenant's Demised Premises to an alternate location
within the Store Premises and Landlord and Tenant cannot agree upon an alternate
location, then either Tenant or Landlord may terminate this Lease effective upon
the date of commencement of the remodeling of the Store Premises. In such event,
Landlord agrees to reimburse Tenant for the Improvements made by Tenant pursuant
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to Section 7(B,) above by paying to Tenant an amount equal to 100% of the actual
cost of the Improvements. If, however, Landlord desires to move Tenant's Demised
Premises within the Store Premises and Landlord and Tenant agree upon an
alternate location after remodeling, then Landlord shall pay the entirety of
Tenant's relocation and remodeling costs. In no event shall Landlord exercise
its rights hereunder for a purpose other than to provide Tenant's space
comprising all or a portion of the Demised Premises to another retail vendor of
goods and/or services or to a competitor of Tenant's without the prior written
consent of Tenant, which consent Tenant may give or withhold by Tenant in its
sole discretion.
19. DAMAGE TO THE PREMISES. If the Demised Premises is damaged by fire or
other casualty to such an extent as to render the Demised Premises unfit for
conducting business or if the Store Premises building within which the Demised
Premises is situated is so seriously damaged by fire or other casualty that it
shall be necessary to perform major repair or rebuild the Store Premises
building, then and in that event Landlord or Tenant may cancel this Lease by
giving notice in writing not later than thirty (30) days after the damage to the
Demised Premises or Store Premises building shall have occurred; and upon the
giving of such notice, this Lease shall terminate and all the rights and
obligations of Landlord and Tenant hereunder shall cease and terminate;
provided, however, that Tenant shall be responsible for the payment of all rent
through the date of such damage. In the event that the Landlord or Tenant shall
not elect to cancel. this Lease, Landlord shall commence the repair, rebuilding
and/or reconstruction of the Demised Premises or Store Premises building within
a reasonable time after the damage to the Demised Premises or Store Premises
building. In the event the Demised Premises or Store Premises building should be
partially damaged by fire or other casualty, but not to such an extent as to
require complete rebuilding or a complete reconstruction of the Demised Premises
or Store Premises building it shall be the duty of Landlord to commence within a
reasonable time the work of repairing or rebuilding the Demised Premises or
Store Premises building to their condition existing before the destruction;
provided, however, that throughout any period during which the Demised Premises
are fully or partially untenantable, by reason of fire or other casualty
resulting in either partial or total destruction, there shall be an abatement of
rent in proportion to the portion of the Demised Premises rendered untenantable.
Subject to paragraph 14 hereinabove, Tenant shall carry sufficient replacement
insurance to pay for rebuilding the Demised Premises, including all of Tenant's
fixtures and machinery and other personal property that it owns or leases
located in the Demised Premises.
20. CONDEMNATION. If the whole or any part of the Demised Premises is
taken or condemned, then Landlord or Tenant shall have the right to terminate
this Lease as of the date title thereto vests in the condemnor (or as soon
thereafter as is practicable under applicable laws and regulations) by giving to
the other party written notice of such termination; but should neither party so
terminate this Lease when a portion of the Demised Premises is so taken, this
Lease shall terminate as to the part taken, and the rent and other relevant
charges reserved herein shall be adjusted for the remainder of the Demised
Premises so that Tenant shall be required to pay for the balance of the term
that portion of the rent and other relevant charges reserved herein which the
value of the portion of the Demised Premises remaining after condemnation bears
to the value of the Demised Premises immediately prior to the date of
condemnation. The rental and other charges shall be apportioned as aforesaid by
agreement between the parties or by arbitration or legal proceedings, but
pending such determination or adjudication, Tenant shall
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pay at the time and in the manner above provided the rental herein reserved, and
all other charges herein required to be paid by Tenant, without deduction, and
on such determination or legal adjudication, Tenant shall be entitled to credit
for any excess rentals or other charges paid, together with interest at the
legal rate provided under applicable law.
21. QUIET ENJOYMENT. Landlord covenants that Landlord has full right to
lease the Demised Premises for the term aforesaid, and for the term of all
extensions permitted to the Tenant hereunder, and that Tenant upon payment of
rent and performing Tenant's obligations in this Lease may peaceably and quietly
have, hold, and enjoy the said Demised Premises for the same term and all
extensions thereof until terminated as provided in this Lease.
22. PERMITTED USE. Tenant may use, occupy, and operate the Demised
Premises for a branch bank (including related activities customarily carried on
in other supermarket branch banks of Tenant) and ATM facilities, and for no
other purpose initially. Tenant shall not use any portion of the Common Areas
for the conduct of its business without the prior written consent of Landlord or
as provided herein. Tenant agrees to conduct its business at all times to comply
with all applicable laws, ordinances and governmental regulations affecting the
Demised Premises. Tenant will comply with all lawful requirements of the local
Board of Health, Police, Fire Department, and governmental authorities
respecting the manner in which it uses the Demised Premises. The Tenant will
supply any apparatus, appliance, or material and will have done any work for,
in, or about the Demised Premises, which may be required or ordered by any law
or lawful authority.
23. STORE RULES TO BE FOLLOWED. Tenant and its employees shall at all
times during the term of this Lease or any extension hereof be governed by all
reasonable rules prescribed by Landlord for the management of its stores and
shall conduct operations with respect to the Branch and ATMs with due regard to
the rights of Landlord. Landlord shall provide Tenant with a copy of its store
rules. If any of the store rules are inconsistent with any of the terms of this
Lease, the Lease terms shall control.
24. ACCESS.
A. BY TENANT. Tenant's officers, employees and the Tenant's
customers and invitees shall have full and complete access to the Demised
Premises during Tenant's business hours. Landlord shall also permit
representatives from all appropriate federal and state bank regulatory
authorities, when duly authorized by Tenant, reasonable access to the Demised
Premises during normal business hours for inspections and for any other purposes
for which they have regulatory authority during normal business hours.
B. BY LANDLORD. Upon advance notice, Tenant shall allow Landlord
reasonable access to the Demised Premises, during Tenant's business hours or
other mutually agreed upon times to examine and exhibit the Demised Premises and
to make any necessary repairs or alterations to the Demised Premises. Landlord's
access, however, as well as its repairs and alterations, shall not unreasonably
interfere with the conduct of Tenant's business or breach any security measures
implemented by Tenant.
8
<PAGE>
25. OPERATION BY TENANT
A. CONTINUOUS OPERATION. Tenant agrees that Tenant shall at all
times, during the term of this Lease, operate and maintain an ATM that is full
service and shall be generally available twenty-four (24) hours a day with due
diligence and efficiency. Tenant shall continuously throughout the term hereof
provide at the Branch such services as are customarily available in Tenant's
supermarket branch banks and shall be open to the public at least ten (10)
daytime hours during each weekday, six (6) daytime hours during each Saturday,
and four (4) daytime hours during each Sunday. The ATMs shall be full service
machines, and shall be generally available twenty-four (24) hours a day.
Notwithstanding the foregoing, Tenant shall have the unconditional option to
remove an ATM's depository capability upon its advising Landlord of its intent
to do so. It is understood that the Tenant's ATM network is currently a member
of the Cirrus, Honor, PLUS, VISA and MasterCard networks; provided, however, no
guarantee is hereby given that Tenant will choose, or will be chosen, to
continue as a member of the Cirrus, Honor, PLUS, VISA and/or MasterCard networks
at any given -time in the future. Tenant agrees that, to the extent it has a
choice in the matter, it will remain a member of at least one (1) major ATM
network throughout the term of this Lease.
B. RIGHT TO TERMINATE. If for any reason Landlord or a
successor landlord elects to no longer operate a retail grocery store from
the Store Premises of which the Demised Premises are a part, then Tenant may
elect to terminate this Lease.
26. EMPLOYEE PARKING. Tenant and its employees shall park their motor
vehicles only in the areas of the Store Premises parking lots specifically
designated by landlord for that purpose; provided, however, that such areas
shall be sufficient for such purposes. In all events Landlord agrees to provide
a reasonable amount of employee parking on or adjacent to the Store Premises so
that the parking by employees of their cars shall not unduly restrict or limit
customer parking in the Store Premises.
27. ADVERTISING. Landlord acknowledges that Tenant intends to advertise
the Branch and ATM facilities and, subject to the approval of the Landlord
hereinafter specified, Landlord hereby authorizes Tenant to advertise the
existence of the Branch and ATM facilities and the services offered related
thereto in such media and in such manner as it deems desirable. Without limiting
the generality of the foregoing, Landlord authorizes Tenant to use Landlord's
name and logo in connection with such advertising and to identify the Landlord's
store at which the Branch and ATM facilities are located. Other than for
purposes of identifying the location of its place of business, Tenant and
Landlord agree not to refer to or mention in any way the other's facilities or
services provided thereby when advertising its own facilities or services unless
previously approved by the other party and unless appropriate procedures are
followed with respect to name protection, copyright protection and the like.
28. EXCLUSIVE RIGHT TO PROMOTE BANKING SERVICES. Tenant shall have the
exclusive right and privilege of promoting banking services, in such manner as
it deems most effective, and within the Store Premises building as it reasonably
selects, including, without limitation, through the use product signs and table
cards, through the use of public address announcements (by means of the Store
Premises PA system), and by "in person" promotions.
9
<PAGE>
Landlord covenants and agrees that during the term, of this Lease, no other
financial service provider competitive with Tenant shall be given the right or
permission to promote any banking or related financial services competitive with
those provided (or which may be provided) by Tenant
29. SIGNS. Tenant shall have the right and privilege of attaching,
affixing, painting, or exhibiting signs in the Demised Premises (to include,
without limitation, the right to hang banner type signs in front of the Branch
area) on the exterior of the Store Premises building in which the Demised
Premises are located, and as a part of any perimeter pedestal sign erected by
Landlord (if structurally possible) provided only: (a) that any and all signs
shall comply with the ordinances of the city or municipality in which the
property is located and the laws of the State of Kansas; (b) such signs shall
not change the structure of the Store Premises building; (c) such signs if and
when taken down shall not damage the Store Premises building and/or perimeter
pedestal sign; and (d) such signs shall be subject to the written approval of
the Landlord, which approval shall not be unreasonably withheld or delayed. It
is specifically agreed that Landlord may require such signs conform to
Landlord's exterior departmental signage style, size proportions and color.
30. DELAYS IN PERFORMANCE. The performance by Landlord and Tenant of any
of their respective obligations or undertakings provided for in this Lease
(except the payment of rent or any other sums of money payable by Tenant under
this Lease) shall be excused and no default shall be deemed to exist in the
event and so long as the performance of any such obligation or undertaking is
prevented, delayed or hindered by any act of God, fire, earthquake, flood,
explosion, action of the elements, war, riot, failure of transportation,
strikes, lockouts, action of labor unions, condemnation, laws, orders of
government or civil or military authorities, inability to procure labor,
equipment, materials, or supplies in the open market, or any other cause
directly beyond the control of Landlord or Tenant, as the case may be.
31. DELINQUENT PAYMENTS. If any rent or other sums due and payable by
Tenant under this Lease are not paid within ten (10) days after such rent or
other sums are due and payable, then such unpaid rent or other sums shall bear
interest at the rate of ten percent (10%) per annum from their respective due
dates until paid.
32. TENANT'S DEFAULT. If Tenant defaults in the payment of any rent or
other sums due and payable to Landlord under this Lease, and such default
continues for a period of five (5) days after written notice of such default has
been given by Landlord to Tenant, or if Tenant shall violate or default in the
performance of any material covenants, agreements, stipulations, or other
conditions contained herein (other than the payment of rent and other sums
payable under this Lease) and such violation or default continues for a period
of thirty (30) days after written notice of such violation or default has been
given by Landlord to Tenant (or, in the case of default not curable within
thirty (30) days, if Tenant shall fail to commence to cure the same within
thirty (30) days and thereafter proceed diligently to complete the cure
thereof), then Landlord at its option may reenter and repossess the Demised
Premises with process of law, and declare this Lease terminated and the term of
this Lease ended forthwith. Landlord may use such legal force as may be
necessary to remove all persons and property then located in the Demised
Premises. Notwithstanding such reentry and repossession by Landlord and the
holding of such
10
<PAGE>
fixtures, inventory, or other personal property, the liability of Tenant for the
payment of the rent and other sums due hereunder and for the performance of
Tenant's other obligations hereunder for the balance of the term of this Lease
shall not be relinquished or extinguished; and Landlord at any time may commence
such one or more actions as it may deem necessary to collect any sums due from
Tenant under this Lease. In the event of any such reentry and repossession,
Landlord shall have the right to relet all or any portion of the Demised
Premises upon such terms and conditions as Landlord may deem appropriate; and
any such reletting shall not relieve Tenant of any of its obligations to
Landlord under this Lease, except to the extent of any net rentals actually
received by Landlord from such reletting. after deducting all of Landlord's
expenses (including but not limited to legal expenses, brokerage commissions,
and the costs of remodeling the Demised Premises so as to render it suitable for
reletting) incurred in preparing for and accomplishing such reletting.
33. RIGHT TO CURE DEFAULT. If default shall be made by either party
(except for a default in the payment of rent by Tenant) in the performance of or
compliance with any of the terms, covenants, or conditions of this Lease, and
such default shall have continued for thirty (30) days after written notice
thereof from one party to the other, the person aggrieved, in addition to all
other remedies provided herein or now or hereafter provided by law, may, but
need not, perform such term, covenant, or condition, or make good such default,
and any amount advanced shall be repaid forthwith on demand, together with
interest at the rate of ten percent (10%) per annum, from date of advance.
34. SURRENDER OF PREMISES AT END OF TERM. Tenant agrees that upon the
termination of this Lease it will surrender, yield up, and deliver the Demised
Premises in good and clean condition, except the affects of reasonable wear and
tear and depreciation arising from lapse of time, or damage without fault or
liability of Tenant. Tenant shall remove its inventory, equipment, furniture and
fixtures and repair any damage occasioned thereby; and any personal property or
fixtures which Tenant in its discretion elects not to remove shall be presumed
to be abandoned and shall thereupon be the property of Landlord.
35. HOLDOVER. In the event that Tenant remains in possession of the
Demised Premises after the termination of this Lease without the exercise of an
option (if any exist) to extend the term of this Lease or without the execution
of a new lease in default of the provisions of this Lease, then Tenant shall be
deemed to be occupying the Demised Premises as a tenant from month to month,
subject to all of the conditions, provisions, and obligations. of this Lease,
but without any rights to remain in possession or extend the term of this Lease
and be liable to pay to Landlord two times the normal monthly rent.
36. TENANT'S ASSIGNMENT OR SUBLETTING. Tenant shall have the right to
assign this Lease to any successor or purchaser in the event of a merger,
consolidation, or sale of substantially all of the assets of the Tenant
corporation. Otherwise, Tenant shall not assign this Lease, or sublet the
Demised Premises, without the written consent of the Landlord, which consent the
Landlord will not unreasonably withhold. No assignment or subletting shall
release the Tenant from its Lease obligations and agreements hereunder. In no
event shall Tenant assign or sublet the Demised Premises or any portion thereof
for any use other than the use hereinbefore set forth without the specific
approval of Landlord.
11
<PAGE>
37. RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
method of computation of rent, nor any other provision contained herein, nor any
acts of the parties hereto shall be deemed to create any relationship between
the parties hereto other than the relationship of landlord and tenant.
38. NOTICES. Whenever under this Lease a provision is made for notice of
any kind, such notice and the service thereof shall be deemed sufficient if such
notice to Tenant is in writing addressed to Bank of Blue Valley, 11935 Riley, P.
0. Box 26128, Overland Park, Kansas 66225-6128, Attention: John K. Doull, and is
delivered personally or sent by certified mail with postage prepaid; and if such
notice to Landlord is in writing addressed to CMI, Inc. at Highway K7 and
Johnson Drive, Shawnee, Kansas 66216, and is delivered personally or sent by
certified mail with postage prepaid. Either party may by notice to the other
party change the address at which it wishes to receive any notice given under
this Lease.
39. TIME OF ESSENCE. Time is of the essence of this Lease, and all
provisions of this Lease relating to the time of performance of any
obligation under this Lease shall be strictly construed.
40. FURTHER ASSURANCES. Landlord and Tenant agree to execute and deliver
any instruments in writing necessary to carry out any agreement, term,
condition, or assurance in this Lease whenever occasion shall reasonably arise
and request for such instruments shall be reasonably made.
41. BROKERS COMMISSIONS. Tenant covenant's, warrants, and represents to
Landlord that there was no broker instrumental in consummating this Lease and
that no conversations or prior negotiations were had by Tenant with any broker
concerning the renting of the Demised Premises. Tenant agrees to indemnify and
hold Landlord harmless against and from all liabilities, including reasonable
attorney's fees, arising from any claims for brokerage commissions or finder's
fees resulting from or arising out of any conversations or negotiations had by
Tenant directly or indirectly with any broker. Landlord covenants, warrants, and
represents to Tenant that there was no broker instrumental in consummating this
Lease and that no conversations or prior negotiations were had by Landlord with
any broker concerning the renting of the Demised Premises. Landlord agrees to
indemnify and hold Tenant harmless against and from all liabilities, including
reasonable attorney's fees, arising from any claims for brokerage commissions or
finder's fees resulting from or arising out of any conversations or negotiations
had by Landlord directly or indirectly with any broker.
42. NUMBER AND GENDER. Where the context of this Lease requires,
singular words shall be read as if plural, plural words shall be read as if
singular, and words of neuter gender shall be read as if masculine or
feminine.
43. PARAGRAPH TITLES. The titles of the various paragraphs of this Lease
have been inserted merely as a matter of convenience and for reference only, and
shall not be deemed
12
<PAGE>
in any manner to define, limit, or describe the scope or intent of the
particular paragraphs to which they refer or to affect the meaning or
construction of the language contained in the body of such paragraphs.
44. SEVERABILITY. If any provision of this Lease shall be declared legally
invalid or unenforceable, then the remaining provisions of this Lease
nevertheless shall continue in full force and effect and shall be enforceable to
the fullest extent permitted by law.
45. CUMULATIVE RIGHTS. The rights, options, elections, and remedies of
both parties contained in this Lease shall be cumulative and may be exercised on
one or more occasions; and none of them shall be construed as excluding any
other or any additional right, priority, or remedy allowed or provided by law.
46. WAIVERS. One or more waivers by Landlord or Tenant of a breach of any
covenant or condition by the other of them shall not be construed as a waiver of
the subsequent breach of the same covenant or condition, and the consent or
approval by Landlord or Tenant to or of any act by either requiring the other's
consent or approval shall not be deemed to waiver or render unnecessary either
party's consent to or approval of any subsequent similar act by the other party.
47. BINDING AGREEMENT. All rights and liabilities herein given to or
imposed upon the respective parties hereto shall extend to and bind the
respective heirs, executors, administrators, personal representatives,
successors, and assigns of such parties. No rights, however, shall inure to the
benefit of any assigns of Tenant unless the assignment thereof to such assignee
has been approved by Landlord in writing, if such approval is required by this
Lease.
48. ENTIRE AGREEMENT. Tenant and Landlord hereby agree that this Lease as
written represents the entire agreement between the parties hereto and that
there are no other agreements, written or verbal, between the parties hereto
pertaining to the Demised Premises or the subject matter hereof. This Lease may
not be amended or supplemented orally but only by an agreement in writing which
has been signed by both parties.
49. EXECUTION REQUIRED. The submission of this document for
examination does not constitute an offer to lease, or a reservation of or
option for the Demised Premises and shall become effective only upon
execution by both Tenant and Landlord.
50. EXECUTION BY TENANT. The person(s) executing the Lease on behalf of
Tenant hereby covenant, represent, and warrant that Tenant is a duly constituted
state banking association under the laws of the United States of America and
authorized to transact business in the State of Kansas, and the person(s)
executing this Lease on behalf of Tenant is an officer or are officers of such
Tenant, and that he or they as such officer(s) is/are duly authorized to sign
and execute this Lease (a copy of a resolution of the same to be supplied to
Landlord upon request)
51. EXECUTION BY LANDLORD. The person(s) executing the Lease on behalf of
Landlord hereby covenant, represent, and warrant that Landlord is duly
incorporated under the
13
<PAGE>
laws of the state of Kansas and that the person(s) executing this Lease on
behalf of Landlord is an officer or are officers of such Landlord, and that he
or they as such officer(s) is/are duly authorized to sign and execute this Lease
(a copy of a resolution of the same to be supplied to Tenant upon request)
52. MULTIPLE COUNTERPARTS. This Lease may be executed in multiple
counterparts, each of which shall be deemed to be an original for all
purposes.
53. GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the state in which the Demised Premises are
located.
IN WITNESS WHEREOF, the parties hereto have set their hands the date and year
first above written.
LANDLORD:
CMI, INC.
By: /s/ Edward D. Roche II
Title: President
TENANT:
By: /s/ John K. Doull
John K. Doull
Title: Executive Vice President
14
<PAGE>
5600 Hedge Lane Terrace, Shawnee, Kansas 66226
Exhibit A
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31,
----------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Earnings
1. Income before income taxes $ 4,604 $ 4,202 $ 3,431 $ 2,540 $ 1,620
2. Plus interest expense 11,204 9,205 7,258 5,796 4,895
------- ------- ------- ------- --------
3. Earnings including interest on 15,808 13,407 10,689 8,336 6,515
deposits
4. Less interest on deposits 9,832 8,232 6,634 5,191 4,175
------- ------- ------- ------- --------
5. Earnings excluding interest on $ 5,976 $ 5,175 $ 4,055 $ 3,145 $ 2,340
deposits ======= ======= ======= ======= ========
Fixed Charges:
6. Including interest on deposits
excluding capitalized interest $ 11,204 $ 9,205 $ 7,258 $ 5,796 $ 4,895
7. Less interest on deposits 9,832 8,232 6,634 5,191 4,175
(Line 4)
------- ------- ------- ------- --------
8. Excluding interest on deposits $ 1,372 973 624 605 720
======= ======= ======= ======= ========
Ratio of Earnings to Fixed Charges:
Including interest on deposits
(Line 3 divided by Line 6) 1.41 1.46 1.47 1.44 1.33
======= ======= ======= ======= ========
Excluding interest on deposits
(Line 5 divided by Line 8) 4.36 5.32 6.50 5.20 3.25
======= ======= ======= ======= ========
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED
DECEMBER 31, 1999
-----------------------
(Dollars in thousands)
Earnings
1. Income before income taxes $ 4,604
2. Plus interest expense 11,204
------------
3. Earnings including interest on deposits 15,808
4. Plus interest expense on the junior subordinated 1,000
debentures
5. Less Historical Interest Expense on $7.3 million in 335
debt
------------
6. Earnings after debt issuance and retirement 16,473
7. Less interest on deposits 9,832
------------
8. Earnings excluding interest on deposits $ 6,641
============
Fixed Charges:
9. Including interest on deposits excluding capitalized $ 11,204
interest
10. Plus interest expense on the junior subordinated 1,000
debentures
11. Less Historical Interest Expense on $7.3 million of 335
debt (line 5)
------------
12. Fixed Charges after debt issuance and retirement 11,869
13. Less interest on deposits 9,832
------------
14. Excluding interest on deposits $ 2,037
============
Pro Forma Ratio of Earnings to Fixed Charges:
Including interest on deposits (Line 6 divided by Line 1.39
12) ============
Excluding interest on deposits (Line 8 divided by Line 3.26
14) ============
</TABLE>
Exhibit 21.1
Blue Valley Ban Corp.
Subsidiaries of the Registrant
Subsidiaries of Blue Valley Ban Corp.
1. Bank of Blue Valley - Incorporated in Kansas
2. Blue Valley Building Corp. - Incorporated in Kansas
3. BVBC Capital Trust I - Organized under the laws of the State of
Delaware
Subsidiary of Bank of Blue Valley
1. Blue Valley Investment Corporation - Incorporated in Kansas
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of our
report dated March 1, 2000, on our audits of the consolidated financial
statements of BLUE VALLEY BAN CORP. We also consent to the reference to our firm
under the caption "Experts."
/s/ Baird, Kurtz & Dobson
Kansas City, Missouri
April 7, 2000
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)
BLUE VALLEY BAN CORP
(Exact name of obligor as specified in its charter)
Kansas 48-1070996
(State of incorporation) (I.R.S. employer identification no.)
11935 Riley
Overland Park, Kansas 66225-6128
(Address of principal executive offices) (Zip Code)
Junior Subordinated Debentures of Blue Valley Ban Corp.
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
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 7th day
of April , 2000.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/Patricia A. Evans By: /s/James P. Lawler
Name: Patricia A. Evans Name: James P. Lawler
Title: Assistant Secretary Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
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, purchase, convey, mortgage or otherwise deal in
real and personal estate and
1
<PAGE>
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
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
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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 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
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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.
(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
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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:
(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;
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(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), 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.
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(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 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
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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 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
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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 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, agents 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
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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).
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) (1) 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
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Interested Stockholder, or any Affiliate of any Interested
Stockholder,
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 in
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 or 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.
(3) A person shall be the "beneficial owner" of any Voting Shares:
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(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 on 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.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any
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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."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
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 share 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. No more than two Directors may also
be employees of the Company or any affiliate thereof.
<PAGE>
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. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
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.
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.
2
<PAGE>
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 divisions of the Company as it may deem
advisable.
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
3
<PAGE>
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 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. 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.
(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 3. 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.
4
<PAGE>
(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 4. 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 5. 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
absent or disqualified member.
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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
Section 2. Certificates 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.
7
<PAGE>
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.
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
8
<PAGE>
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 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 or 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.
9
<PAGE>
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>
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: April 7, 2000 By: /s/James P. Lawler
Name: James P. Lawler
Title: Vice President
<PAGE>
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 December 31, 1999.
------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.....................................213,700
Interest-bearing balances................................................................... 0
Held-to-maturity securities...................................................................... 30,232
Available-for-sale securities..................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell...........................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 4,374,777
LESS: Allowance for loan and lease losses. . . . . . 71,368
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve......................4,303,409
Assets held in trading accounts........................................................................0
Premises and fixed assets (including capitalized leases).........................................122,273
Other real estate owned........................................................................... 576
Investments in unconsolidated subsidiaries and associated companies................................1,511
Customers' liability to this bank on acceptances outstanding...........................................0
Intangible assets................................................................................. 5,100
Other assets.....................................................................................133,449
Total assets...................................................................................6,829,789
CONTINUED ON NEXT PAGE
<PAGE>
LIABILITIES
Deposits:
In domestic offices............................................................................5,186,079
Noninterest-bearing . . . . . . . . 986,667
Interest-bearing. . . . . . . . . . 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343
Demand notes issued to the U.S. Treasury..........................................................95,000
Trading liabilities (from Schedule RC-D)...............................................................0
Other borrowed money:............................................................................///////
With original maturity of one year or less..............................................670,000
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)......................................................... 151,436
Total liabilities..............................................................................6,414,858
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...........................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172)
Total equity capital.............................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
</TABLE>
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)
BLUE VALLEY BAN CORP
BVBC CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Kansas 48-1070996
Delaware Applied For
(State of incorporation) (I.R.S. employer identification no.)
11935 Riley
Overland Park, Kansas 66225-6128
(Address of principal executive offices) (Zip Code)
Trust Preferred Securities of BVBC Capital Trust I
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
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 7th
day of April, 2000.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/Patricia A. Evans By: /s/James P. Lawler
Name: Patricia A. Evans Name: James P. Lawler
Title: Assistant Secretary Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
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, purchase, convey, mortgage or otherwise deal in
real and personal estate and
1
<PAGE>
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
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
2
<PAGE>
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 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
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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.
(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
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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:
(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;
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(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), 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.
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(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 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
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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 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
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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 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, agents 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
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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).
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) (1) 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
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Interested Stockholder, or any Affiliate of any Interested
Stockholder,
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 in
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 or 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.
(3) A person shall be the "beneficial owner" of any Voting Shares:
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(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 on 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.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any
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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."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
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 share 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. No more than two Directors may also
be employees of the Company or any affiliate thereof.
<PAGE>
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. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
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.
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.
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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 divisions of the Company as it may deem
advisable.
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
3
<PAGE>
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 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. 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.
(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 3. 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.
4
<PAGE>
(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 4. 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 5. 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
absent or disqualified member.
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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
Section 2. Certificates 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.
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<PAGE>
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.
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
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<PAGE>
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 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 or 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.
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<PAGE>
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.
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<PAGE>
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: April 7, 2000 By: /s/James P. Lawler
Name: James P. Lawler
Title: Vice President
<PAGE>
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 December 31, 1999.
------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.....................................213,700
Interest-bearing balances................................................................... 0
Held-to-maturity securities...................................................................... 30,232
Available-for-sale securities..................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell...........................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 4,374,777
LESS: Allowance for loan and lease losses. . . . . . 71,368
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve......................4,303,409
Assets held in trading accounts........................................................................0
Premises and fixed assets (including capitalized leases).........................................122,273
Other real estate owned........................................................................... 576
Investments in unconsolidated subsidiaries and associated companies................................1,511
Customers' liability to this bank on acceptances outstanding...........................................0
Intangible assets................................................................................. 5,100
Other assets.....................................................................................133,449
Total assets...................................................................................6,829,789
CONTINUED ON NEXT PAGE
<PAGE>
LIABILITIES
Deposits:
In domestic offices............................................................................5,186,079
Noninterest-bearing . . . . . . . . 986,667
Interest-bearing. . . . . . . . . . 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343
Demand notes issued to the U.S. Treasury..........................................................95,000
Trading liabilities (from Schedule RC-D)...............................................................0
Other borrowed money:............................................................................///////
With original maturity of one year or less..............................................670,000
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)......................................................... 151,436
Total liabilities..............................................................................6,414,858
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...........................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172)
Total equity capital.............................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
</TABLE>
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)
BLUE VALLEY BAN CORP
(Exact name of obligor as specified in its charter)
Kansas 48-1070996
(State of incorporation) (I.R.S. employer identification no.)
11935 Riley
Overland Park, Kansas 66225-6128
(Address of principal executive
offices) (Zip Code)
Guarantee of Trust Preferred Securities by Blue Valley Ban Corp.
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
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 7th day
of April , 2000.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/Patricia A. Evans By: /s/James P. Lawler
Name: Patricia A. Evans Name: James P. Lawler
Title: Assistant Secretary Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
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, purchase, convey, mortgage or otherwise deal in
real and personal estate and
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<PAGE>
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
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
2
<PAGE>
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 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
3
<PAGE>
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.
(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
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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:
(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;
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(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), 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.
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(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 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
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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 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
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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 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, agents 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
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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).
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) (1) 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
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Interested Stockholder, or any Affiliate of any Interested
Stockholder,
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 in
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 or 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.
(3) A person shall be the "beneficial owner" of any Voting Shares:
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(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 on 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.
(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any
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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."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
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 share 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. No more than two Directors may also
be employees of the Company or any affiliate thereof.
<PAGE>
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. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
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.
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.
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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 divisions of the Company as it may deem
advisable.
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
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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 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. 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.
(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 3. 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.
4
<PAGE>
(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 4. 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 5. 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
absent or disqualified member.
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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
Section 2. Certificates 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.
7
<PAGE>
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.
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
8
<PAGE>
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 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 or 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.
9
<PAGE>
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>
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: April 7, 2000 By: /s/James P. Lawler
Name: James P. Lawler
Title: Vice President
<PAGE>
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 December 31, 1999.
------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.....................................213,700
Interest-bearing balances................................................................... 0
Held-to-maturity securities...................................................................... 30,232
Available-for-sale securities..................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell...........................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 4,374,777
LESS: Allowance for loan and lease losses. . . . . . 71,368
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve......................4,303,409
Assets held in trading accounts........................................................................0
Premises and fixed assets (including capitalized leases).........................................122,273
Other real estate owned........................................................................... 576
Investments in unconsolidated subsidiaries and associated companies................................1,511
Customers' liability to this bank on acceptances outstanding...........................................0
Intangible assets................................................................................. 5,100
Other assets.....................................................................................133,449
Total assets...................................................................................6,829,789
CONTINUED ON NEXT PAGE
<PAGE>
LIABILITIES
Deposits:
In domestic offices............................................................................5,186,079
Noninterest-bearing . . . . . . . . 986,667
Interest-bearing. . . . . . . . . . 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase...................... 269,343
Demand notes issued to the U.S. Treasury..........................................................95,000
Trading liabilities (from Schedule RC-D)...............................................................0
Other borrowed money:............................................................................///////
With original maturity of one year or less..............................................670,000
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)......................................................... 151,436
Total liabilities..............................................................................6,414,858
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...........................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities..........................(34,172)
Total equity capital.............................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital............................6,829,789
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Appendix C to Item 601(c) of Regulation S-K
Bank Holding Companies and Savings and Loan Holding Companies \
Article 9 to Regulation S-X
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,460
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 48,646
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 250,410
<ALLOWANCE> 3,817
<TOTAL-ASSETS> 332,613
<DEPOSITS> 268,145
<SHORT-TERM> 17,450
<LIABILITIES-OTHER> 2,422
<LONG-TERM> 11,908
0
0
<COMMON> 2,138
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 332,613
<INTEREST-LOAN> 20,422
<INTEREST-INVEST> 2,755
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 23,608
<INTEREST-DEPOSIT> 9,832
<INTEREST-EXPENSE> 11,204
<INTEREST-INCOME-NET> 12,404
<LOAN-LOSSES> 2,144
<SECURITIES-GAINS> 3
<EXPENSE-OTHER> 0
<INCOME-PRETAX> 4,604
<INCOME-PRE-EXTRAORDINARY> 4,604
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,083
<EPS-BASIC> 1.45
<EPS-DILUTED> 1.42
<YIELD-ACTUAL> 8.99
<LOANS-NON> 487
<LOANS-PAST> 50
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,341
<CHARGE-OFFS> 772
<RECOVERIES> 104
<ALLOWANCE-CLOSE> 3,817
<ALLOWANCE-DOMESTIC> 3,817
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
