<PAGE>
As filed with Securities and Exchange Commission on May 9, 1997.
Registration Statement Nos. 333-_____.
333-_____.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
SBI Capital Trust Southwest Bancorp, Inc.
(Exact Name of Registrant as (Exact Name of Registrant as
Specified in its Charter) Specified in its Charter)
Delaware Applied For Oklahoma 73-1136584
(State or Other (IRS Employer (State or Other (IRS Employer
Jurisdiction of I.D. Number) Jurisdiction of I.D. Number)
Incorporation or Incorporation or
Organization Organization
608 South Main Street, Stillwater, Oklahoma 74074 (405) 372-2230
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
Robert L. McCormick, Jr., 608 South Main Street, Stillwater, Oklahoma 74074
(405) 372-2230
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies To:
James I. Lundy, III Esquire Frederick W. Scherrer, Esquire
Noel M. Gruber, Esquire Bryan Cave LLP
Kennedy & Baris, L.L.P. One Metropolitan Square
4719 Hampden Lane, Suite 300, 211 North Broadway, Suite 3600
Bethesda Maryland 20814 St. Louis, Missouri 63102-2750
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 of 1933, check
the following box. [_]
If the registrant elects to deliver a copy of its latest annual report to
security holders or a complete and legible facsimile thereof, pursuant to item
11(a)(1) of this form, 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, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ___________________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Title of Each Class
of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered Offering Price Per Unit Aggregate Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities of
SBI Capital Trust/(1)/ 1,000,500/(1)/ $25.00 $25,012,500/(1)/ $8,625/(2)/
- ---------------------------------------------------------------------------------------------------------------------------------
Subordinated Debentures of
Southwest Bancorp, Inc./(3)/
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Guarantee of Southwest Bancorp,
Inc. with respect to Preferred
Securities/(4)/
=================================================================================================================================
</TABLE>
(1) Includes 130,500 preferred securities which may be sold pursuant to the
over-allotment option granted to the Underwriter.
(2) Registration fee calculated in accordance with Rules 457(i) and 457(n).
(3) Subordinated Debentures in a principal amount equal to the aggregate
offering price of the Preferred Securities will be sold to SBI Capital
Trust with the proceeds of the sale of the Preferred Securities, and may
be distributed to the holders of the Preferred Securities without further
consideration upon dissolution of SBI Capital Trust.
(4) This Registration Statement relates to and shall be deemed to cover, in
addition to the securities referenced above, the rights of the holders
thereof under the Indenture for the Subordinated Debentures and the rights
of holders of Preferred Securities under the Trust Agreement, the
Guarantee, and the Expense Agreement. No separate consideration will be
received for the Guarantee.
The Registration hereby amends this registration statement on such date of dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR +
+MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED , 1997
870,000 Preferred Securities
SBI CAPITAL TRUST
% Cumulative Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
guaranteed, as described herein, by
SOUTHWEST BANCORP, INC.
------------------------------------
$21,750,000 % Subordinated Debentures of
SOUTHWEST BANCORP, INC.
------------------------------------
The % Cumulative Trust Preferred Securities (the "Preferred
Securities") offered hereby represent preferred undivided beneficial interests
in the assets of SBI Capital Trust, a statutory business trust created under the
laws of the State of Delaware ("SBI Capital"). Southwest Bancorp, Inc., an
Oklahoma corporation ("the Company"),
(continued on following page)
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market under the symbol "OKSBO".
------------------------------------
See "Risk Factors," commencing on page , for information that should be
considered by prospective investors.
------------------------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS,
ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF
THE COMPANY (EXCEPT TO THE EXTENT THAT PREFERRED SECURITIES ARE GUARANTEED BY
THE COMPANY AS DESCRIBED HEREIN), ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------------
<TABLE>
<CAPTION>
================================================================================
Price to Underwriting Proceeds to SBI
Public Commission/(1)/ Capital/(2)/
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security $25.00 (2) $25.00
- --------------------------------------------------------------------------------
Total/(3)/ $21,750,000 (2) $21,750,000
================================================================================
</TABLE>
(1) SBI Capital and the Company have each agreed to indemnify the
Underwriter against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) As the proceeds of the sale of the Preferred Securities will be
invested in the Subordinated Debentures, the Company has agreed to pay
the Underwriter $ per Preferred Security, or $ in the aggregate ($ if
the over-allotment option is exercised in full), as compensation for
its arranging the investment therein of such proceeds. See
"Underwriting." The Company has also agreed to pay the expenses of the
offering estimated to be $ .
(3) SBI Capital has granted the Underwriter an option exercisable within 30
days from the date of this Prospectus to purchase up to 130,500
additional Preferred Securities on the same terms and conditions set
forth above to cover over-allotments, if any. If all such additional
Preferred Securities are purchased, the Total Price to Public and
Proceeds to SBI Capital will be $25,012,500. See "Underwriting."
------------------------------------
The Preferred Securities are offered by the Underwriter subject to
receipt and acceptance by it, prior sale and the Underwriter's right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of certificates for the Preferred
Securities will be made on or about , 1997.
Stifel, Nicolaus & Company
Incorporated
May , 1997
<PAGE>
will own all the common securities (the "Common Securities" and, together with
the Preferred Securities, the "Trust Securities") representing undivided
beneficial interests in the assets of SBI Capital.
State Street Bank and Trust Company is the Property Trustee (as defined
herein) of SBI Capital. SBI Capital exists for the purpose of issuing the
Preferred Securities and investing the proceeds thereof in an equivalent amount
of % Subordinated Debentures (the "Subordinated Debentures") of the Company.
The Subordinated Debentures will mature on July 31, 2027, which date may be (i)
shortened to a date not earlier than July 31, 2002, or (ii) extended to a date
not later than July 31, 2046, in each case if certain conditions are met
(including, in the case of shortening the Stated Maturity (as defined herein),
the Company having received prior approval of the Board of Governors of the
Federal Reserve System ("Federal Reserve") to do so if then required under
applicable capital guidelines or policies of the Federal Reserve). The Preferred
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation, redemption or otherwise
over the Common Securities. See "Description of the Preferred Securities--
Subordination of Common Securities."
Holders of Preferred Securities are entitled to receive preferential
cumulative cash distributions, at the annual rate of % of the liquidation
amount of $25 per Preferred Security (the "Liquidation Amount"), accruing from
May , 1997, the date of original issuance, and payable quarterly in arrears on
the last day of January, April, July and October of each year, commencing July
31, 1997 (the "Distributions"). The Company has the right, so long as no
Debenture Event of Default (as defined herein) has occurred and is continuing,
to defer payment of interest on the Subordinated Debentures at any time or from
time to time for a period not to exceed 20 consecutive quarters with respect to
each deferral period (each, an "Extended Interest Payment Period"); provided
that no Extended Interest Payment Period may extend beyond the Stated Maturity
of the Subordinated Debentures. Upon the termination of any such Extended
Interest Payment Period and the payment of all amounts then due, the Company may
elect to begin a new Extended Interest Payment Period subject to the
requirements set forth herein. If interest payments on the Subordinated
Debentures are so deferred, Distributions on the Preferred Securities will also
be deferred, and the Company will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to its capital stock or debt securities that rank pari passu with or
junior to the Subordinated Debentures. During an Extended Interest Payment
Period, interest on the Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Preferred Securities are
entitled will accumulate) at the rate of % per annum, compounded quarterly,
and holders of the Preferred Securities will be required to include interest
income in their gross income for United States federal income tax purposes in
advance of receipt of the cash distributions with respect to such deferred
interest payments. A holder of Preferred Securities that disposes of its
Preferred Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from SBI Capital for the period
prior to such disposition) will nevertheless be required to include accrued but
unpaid interest on the Subordinated Debentures through the date of disposition
in income as ordinary income and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed of.
See "Description of the Subordinated Debentures--Option to Extend Interest
Payment Period," "Certain Federal Income Tax Consequences--Potential Extension
of Interest Payment Period and Original Issue Discount" and "--Disposition of
Preferred Securities."
The Company and SBI Capital believe that, taken together, the
obligations of the Company under the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein) provide, in the aggregate, a full, irrevocable and unconditional
guarantee, on a subordinated basis, of all of the obligations of SBI Capital
under the Preferred Securities. See "Relationship Among the Preferred
Securities, the Subordinated Debentures and the Guarantee--Full and
Unconditional Guarantee." The Guarantee of the Company guarantees the payment of
Distributions and payments on liquidation or redemption of the Preferred
Securities, but only in each case to the extent of funds held by SBI Capital, as
described herein. See "Description of the Guarantee--General." If the Company
does not make interest payments on the Subordinated Debentures held by SBI
Capital, SBI Capital will have insufficient funds to pay Distributions on the
Preferred Securities. The Guarantee does not cover payments of Distributions
when SBI Capital does not have sufficient funds to pay such Distributions. In
such event, a holder of Preferred Securities may institute a legal proceeding
directly against the
2
<PAGE>
Company pursuant to the terms of the Indenture to enforce payments of amounts
equal to such Distributions to such holder. See "Description of the Subordinated
Debentures--Enforcement of Certain Rights by Holders of the Preferred
Securities." The obligations of the Company under the Guarantee and the
Preferred Securities are subordinate and junior in right of payment to all
Senior Debt, Subordinated Debt and Additional Senior Obligations (each as
defined herein) of the Company. The Subordinated Debentures are unsecured
obligations of the Company and are subordinated to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company.
The Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve approval, if then required under
applicable capital guidelines or policies of the Federal Reserve, the
Subordinated Debentures are redeemable prior to maturity at the option of the
Company (i) on or after July 31, 2002, in whole at any time or in part from time
to time, or (ii) at any time, in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event (each as defined herein), in each case at a redemption
price equal to the accrued and unpaid interest on the Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. See "Description of the Preferred Securities--Redemption or Exchange."
The Company has the right at any time to dissolve, wind-up or terminate
SBI Capital, subject to the Company having received prior approval of the
Federal Reserve to do so, if then required under applicable capital guidelines
or policies of the Federal Reserve. In the event of the voluntary or involuntary
dissolution, winding up or termination of SBI Capital, after satisfaction of
liabilities to creditors of SBI Capital as required by applicable law, the
holders of Preferred Securities will be entitled to receive a Liquidation Amount
of $25 per Preferred Security, plus accumulated and unpaid Distributions thereon
to the date of payment, which may be in the form of a Subordinated Debenture
having an aggregate principal amount equal to the Liquidation Amount of such
Preferred Securities (and carrying with it accumulated interest in an amount
equal to the accumulated and unpaid Distributions then due on such Preferred
Securities), subject to certain exceptions. See "Description of the Preferred
Securities--Redemption or Exchange" and "--Liquidation Distribution Upon
Termination."
--------------------
The Company will provide to holders of the Preferred Securities
quarterly reports containing unaudited financial statements, to the extent and
in the form provided to holders of the Company's common stock, and annual
reports containing financial statements audited by the Company's independent
auditors. In addition, the Company will furnish annual reports on Form 10-K and
quarterly reports on Form 10-Q free of charge to shareholders who so request in
writing addressed to the Secretary of the Company.
--------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
3
<PAGE>
Southwest Bancorp, Inc.
Parent Company of
[Logo]
[Map and Table]
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere (or incorporated by reference) in this
Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriter's over-allotment option will not be exercised.
Prospective investors should carefully consider the information set forth under
the heading "Risk Factors."
Southwest Bancorp, Inc.
Southwest Bancorp, Inc. (the "Company") is a one-bank holding company
headquartered in Stillwater, Oklahoma, engaged in providing commercial and
consumer banking services through its sole subsidiary, Stillwater National Bank
& Trust Company (the "Bank"). The Company has six full-service banking offices,
two of which are located in each of Stillwater and Tulsa, Oklahoma, and one each
in Oklahoma City and Chickasha, Oklahoma, and two loan production offices, one
each in Oklahoma City and Tulsa. The Company pursues a decentralized community
banking strategy through three regional divisions -- the Stillwater Division,
the Central Oklahoma Division (which includes Oklahoma City and Chickasha) and
the Tulsa Division -- that offer commercial, consumer and real estate lending
services and retail and commercial deposit products in their market areas. The
Stillwater Division of the Bank serves the Stillwater market as a full-service
community bank emphasizing both commercial and consumer lending. The Central
Oklahoma Division and the Tulsa Division each have followed a more focused
marketing strategy, targeting managers and professionals and Oklahoma-based
businesses for lending and offering more specialized services. Each regional
division is managed by a senior officer with substantial flexibility over credit
and pricing decisions. In addition to the services offered through the regional
divisions, the Bank offers credit card, student and mortgage lending services
throughout the State of Oklahoma.
Over the past five years, the Company has achieved significant growth
in assets. From 1992 through 1996, the Company's loans grew at a 27% compound
annual growth rate, and increased by $31.9 million, or 5%, in the first three
months of 1997. Using the capital raised in the public offering of its Series A
Preferred Stock in 1995, and increased funding from deposit growth, the Company
increased the Bank's loan portfolio by 21% during 1996. The Company's ratio of
nonperforming assets to total loans receivable and other real estate declined
from 2.48% at December 31, 1992 to 1.04% at December 31, 1996. At
March 31, 1997, the Company's ratio of nonperforming assets to total loans
receivable and other real estate was 1.11%. The ratio of net loan charge-offs to
average loans receivable has declined from 0.51% in 1992 to 0.31% in 1996, but
increased to an annualized rate of 1.00% for the three months ended March 31,
1997. The increase in the first quarter of 1997 is largely attributable to the
impairment of a large commercial loan in that quarter. The Company has also had
a history of earnings growth. Net income and net income available to common
shareholders grew at compound annual growth rates of 21% and 14%, respectively,
from 1992 to 1996. During this period, the Company's net interest income grew at
a 21% compound annual growth rate. Although net interest income grew by 15%
during the three months ended March 31, 1997 compared to the three months ended
March 31, 1996, net income for the three months ended March 31, 1997 was
significantly less than the prior year's period, primarily as a result of a
$2.1 million increase in the provision for loan losses. This increase in the
provision for the first quarter of 1997 was the result of the impairment of a
$1.9 million commercial loan in the first quarter of 1997 and the Company's
regular evaluation of the adequacy of the allowance for loan losses. The
Company's annual return on average common equity has averaged 15.33% over the
five-year period from 1992 through 1996. For the five-year period from 1992 to
1996, the Company's average annual return on average assets was 1.01%. The
annualized return on average equity and the annualized return on average assets
for the three months ended March 31, 1997 were substantially less than for the
prior year's period. Net income, net income available to common shareholders,
and returns on average assets and average common equity are expected to be less
in 1997 than in 1996 as a result of the decline in income for the first quarter
of 1997.
5
<PAGE>
Financial Summary
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
----------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------------------- --------------------------------------------------------------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income.............................. $ 460 $ 1,932 $ 7,552 $ 6,092 $ 5,144 $ 4,196 $ 3,545
Earnings per common share............... 0.02 0.41 1.59 1.44 1.37 1.44 1.23
Total assets (at period end)............ 887,809 723,909 829,117 711,135 582,170 434,119 353,938
Total deposits (at period end).......... 814,537 654,667 753,945 634,387 525,560 394,521 329,162
Common shareholders' equity............. 47,157 43,894 47,650 42,975 37,888 34,570 21,589
Return on average assets................ 0.22% 1.08% 0.98% 0.93% 1.01% 1.07% 1.05%
Return on average shareholders' equity.. 2.86% 12.77% 12.15% 12.81% 14.17% 17.76% 17.94%
Return on average common equity......... 0.53% 14.18% 13.30% 13.48% 14.17% 17.76% 17.94%
</TABLE>
The Bank was founded in Stillwater and is currently in its 103rd year
of operation. The Company began offering loans in Oklahoma City in 1982 and in
Tulsa in 1985 by establishing loan production offices in these markets. The
Company's banking strategy includes the offering of multiple commercial and
consumer services to local businesses and their primary employees as well as to
other managers and professionals living and working in the Company's market
areas. Working within the branching limitations imposed by Oklahoma law, the
Company has developed a marketing strategy that does not rely on an extensive
branch network to deliver financial services to its target markets. The
Company's high customer service philosophy includes offering an array of
financial services, loan officers who often meet at the customer's home or place
of business to close loans and the use of third-party courier services to
collect commercial deposits.
Pursuant to the Company's decentralized approach to banking, the
Company's regional Division Managers, each of whom has significant lending
experience, exercise substantial flexibility in credit and pricing decisions.
The Company has designed and developed management information systems and loan
review policies which senior management uses to review and monitor the
origination and maturation of the loan portfolio. The Company believes this
decentralized management approach, coupled with the continuity of service of its
senior officers and its management information systems, enables the Company to
develop long-term customer relationships, maintain high quality service and
respond quickly to customer needs.
Recent Developments
In the first quarter of 1997, the Company received information
regarding events that had affected a borrower's ability to fully repay its
commercial loan, which had a carrying amount of approximately $1.9 million. As a
result of this event, and management's regular evaluation of the adequacy of the
allowance for loan losses relative to other loans in the portfolio, the Company
recorded a provision for loan losses of $3.0 million in the first quarter of
1997. Quarterly provisions for loan losses during 1996 ranged from $675,000 to
$875,000. The Company also charged-off a portion of the referenced loan against
the allowance for loan losses in the first quarter.
In the second quarter of 1997, the Company settled the obligations of
the borrower described above for cash, and recorded an additional, immaterial
charge relating to this loan to the allowance for loan losses. As a result, this
loan has been removed from the loan portfolio and from nonaccrual and total
nonperforming loans.
6
<PAGE>
SBI Capital Trust
SBI Capital is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement, dated as of , 1997, executed by
the Company, as depositor, and the trustees of SBI Capital (together with the
Property Trustee, the "Trustees"), and (ii) a certificate of trust filed with
the Secretary of State of the State of Delaware on , 1997. The
initial trust agreement will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement") substantially in the form filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The Trust Agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the
Preferred Securities, the purchasers thereof will own all of the Preferred
Securities. The Company will acquire all of the Common Securities, which will
represent an aggregate liquidation amount equal to at least 3% of the total
capital of SBI Capital. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities, except that upon
the occurrence and during the continuance of an Event of Default (as defined
herein) under the Trust Agreement resulting from a Debenture Event of Default,
the rights of the Company as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or otherwise
will be subordinated to the rights of the holders of the Preferred Securities.
See "Description of the Preferred Securities--Subordination of Common
Securities." SBI Capital exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
SBI Capital, (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debentures issued by the Company, and (iii) engaging in only those
other activities necessary, advisable, or incidental thereto. The Subordinated
Debentures and payments thereunder will be the only assets of SBI Capital and
payments under the Subordinated Debentures will be the only revenue of SBI
Capital. SBI Capital has a term of 55 years, but may terminate earlier as
provided in the Trust Agreement. The principal executive office of SBI Capital
is 608 South Main Street, Stillwater, Oklahoma 74074 and its telephone number is
(405) 372-2230.
The number of Trustees will, pursuant to the Trust Agreement, initially
be five. Three of the Trustees (the "Administrative Trustees") will be persons
who are employees or officers of, or who are affiliated with, the Company. The
fourth trustee will be a financial institution that is unaffiliated with the
Company, which trustee will serve as institutional trustee under the Trust
Agreement and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Property Trustee"). State Street
Bank and Trust Company, a state chartered trust company organized under the laws
of the Commonwealth of Massachusetts, will be the Property Trustee until removed
or replaced by the holder of the Common Securities. For purposes of compliance
with the provisions of the Trust Indenture Act, State Street Bank and Trust
Company will also act as trustee (the "Guarantee Trustee") under the Guarantee
and as Debenture Trustee (as defined herein) under the Indenture. The fifth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Wilmington Trust Company, a Delaware
chartered trust company, will act as Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for
the benefit of the holders of the Trust Securities and in such capacity will
have the power to exercise all rights, powers and privileges under the
Indenture. The Property Trustee will also maintain exclusive control of a
segregated non-interest-bearing bank account (the "Property Account") to hold
all payments made in respect of the Subordinated Debentures for the benefit of
the holders of the Trust Securities. The Property Trustee will make payments of
Distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities. The Company, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Trustee and to increase or
decrease the number of Trustees. The Company will pay all fees and expenses
related to SBI Capital and the offering of the Trust Securities.
The rights of the holders of the Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Trust Agreement, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
7
<PAGE>
The Offering
Securities Offered......... 870,000 Preferred Securities having a Liquidation
Amount of $25 per Preferred Security. The
Preferred Securities represent preferred undivided
beneficial interests in the assets of SBI Capital,
which will consist solely of the Subordinated
Debentures and payments thereunder. SBI Capital
has granted the Underwriter an option, exercisable
within 30 days after the date of this Prospectus,
to purchase up to an additional 130,500 Preferred
Securities at the initial offering price, solely
to cover over-allotments, if any.
Distributions.............. The Distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the Liquidation Amount of $25 per Preferred
Security, will be cumulative, will accrue from
May , 1997, the date of original issuance of the
Preferred Securities, and will be payable
quarterly in arrears, on January 31, April 30,
July 31 and October 31 of each year, commencing
July 31, 1997. See "Description of the Preferred
Securities--Distributions--Payment of
Distributions."
Option to Extend Interest
Payment Period........... The Company has the right, at any time, so long as
no Debenture Event of Default has occurred and is
continuing, to defer payments of interest on the
Subordinated Debentures for a period not exceeding
20 consecutive quarters; provided that no Extended
Interest Payment Period may extend beyond the
Stated Maturity of the Subordinated Debentures.
As a consequence of the extension by the Company
of the interest payment period, quarterly
Distributions on the Preferred Securities will be
deferred (though such Distributions would continue
to accrue with interest thereon compounded
quarterly, since interest will continue to accrue
and compound on the Subordinated Debentures)
during any such Extended Interest Payment Period.
During an Extended Interest Payment Period, the
Company will be prohibited, subject to certain
exceptions described herein, from declaring or
paying any cash distributions with respect to its
capital stock or debt securities that rank pari
passu with or junior to the Subordinated
Debentures. Upon the termination of any Extended
Interest Payment Period and the payment of all
amounts then due, the Company may commence a new
Extended Interest Payment Period, subject to the
foregoing requirements. See "Description of the
Preferred Securities--Distributions--Extended
Interest Payment Period" and "Description of the
Subordinated Debentures--Option to Extend Interest
Payment Period."
Should an Extended Interest Payment Period occur,
holders of Preferred Securities will be required
to include deferred interest income in their gross
income for United States federal income tax
purposes in advance of receipt of the cash
distributions with respect to such deferred
interest payments. See "Certain Federal Income
Tax Consequences--Potential Extension of Interest
Payment Period and Original Issue Discount."
8
<PAGE>
Early Redemption........... The Preferred Securities are subject to mandatory
redemption, in whole or in part, upon repayment of
the Subordinated Debentures at maturity or their
earlier redemption. Subject to Federal Reserve
approval, if then required under applicable
capital guidelines or policies of the Federal
Reserve, the Subordinated Debentures are
redeemable prior to maturity at the option of the
Company (i) on or after July 31, 2002, in whole at
any time or in part from time to time, or (ii) at
any time, in whole (but not in part), within 180
days following the occurrence of a Tax Event, a
Capital Treatment Event or an Investment Company
Event, in each case at the redemption price equal
to 100% of the principal amount of the
Subordinated Debenture, together with any accrued
but unpaid interest to the date fixed for
redemption. See "Description of the Subordinated
Debentures--Redemption or Exchange."
Distribution of
Subordinated Debentures.. The Company has the right at any time to terminate
the Preferred Securities and cause the
Subordinated Debentures to be distributed to
holders of Preferred Securities in liquidation of
SBI Capital, subject to the Company having
received prior approval of the Federal Reserve to
do so, if then required under applicable capital
guidelines or policies of the Federal Reserve. See
"Description of the Preferred Securities--
Redemption or Exchange" and "Description of the
Preferred Securities--Liquidation Distribution Upon
Termination."
Guarantee.................. The Company has guaranteed the payment of
Distributions and payments on liquidation or
redemption of the Preferred Securities, but only
in each case to the extent of funds held by SBI
Capital, as described herein. The Company and SBI
Capital believe that, taken together, the
obligations of the Company under the Guarantee,
the Trust Agreement, the Subordinated Debentures,
the Indenture and the Expense Agreement provide,
in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis,
of all of the obligations of SBI Capital under the
Preferred Securities. The obligations of the
Company under the Guarantee and the Preferred
Securities are subordinate and junior in right of
payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. If
the Company does not make principal or interest
payments on the Subordinated Debentures, SBI
Capital will not have sufficient funds to make
Distributions on the Preferred Securities; in
which event, the Guarantee will not apply to such
Distributions until SBI Capital has sufficient
funds available therefor. See "Description of the
Guarantee."
Voting Rights.............. The holders of the Preferred Securities will have
no voting rights except in limited circumstances.
See "Description of the Preferred Securities--
Voting Rights; Amendment of Trust Agreement."
9
<PAGE>
Use of Proceeds............ The proceeds from the sale of the Preferred
Securities will be used by SBI Capital to purchase
Subordinated Debentures from the Company. The net
proceeds to the Company from the sale of the
Subordinated Debentures will be used to increase
capital and for general corporate purposes,
including use in the Bank's lending and investment
activities, and, after September 1, 1998, possible
redemption, in whole or in part, of the Company's
9.20% Redeemable Cumulative Preferred Stock,
Series A (the "Series A Preferred Stock"). See
"Use of Proceeds."
Nasdaq National Market
Symbol................... Application has been made to have the Preferred
Securities approved for quotation on The Nasdaq
Stock Market's National Market under the symbol
"OKSBO".
10
<PAGE>
Summary Consolidated Financial Data
The summary consolidated financial data for the five years ended
December 31, 1996 set forth below are derived from the audited consolidated
financial statements of the Company. The data for the three month periods ended
March 31, 1996 and 1997 have been derived from unaudited interim financial
statements and include, in the opinion of management, all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the data for such period. The results of operations for the three month periods
ended March 31, 1997 and 1996 are not necessarily indicative of results which
may be expected for any other interim period or for the full year. The summary
consolidated financial data set forth below does not purport to be complete and
should be read in conjunction with, and is qualified in its entirety by, the
more detailed information contained in the consolidated financial statements of
the Company and related notes included herein and the discussion under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Three Months Ended March
31,
-----------------------------
1997 1996
-----------------------------
(dollars in thousands
except share data)
<S> <C> <C>
Operations data
Interest income........................ $ 17,851 $ 15,089
Interest expense....................... 9,259 7,586
-----------------------------
Net interest income.................... 8,592 7,503
Provision for loan losses.............. 3,001 875
-----------------------------
Net interest income after provision
for loan losses....................... 5,591 6,628
Gains on sales of securities and loans. 326 570
Other income........................... 1,088 1,032
Other expenses......................... 6,359 5,219
-----------------------------
Income before taxes.................... 646 3,011
Taxes on income........................ 186 1,079
-----------------------------
Net income............................. $ 460 $ 1,932
=============================
Net income available to common
shareholders.......................... $ 63 $ 1,535
=============================
Dividends declared
Preferred stock........................ $ 397 $ 397
Common stock........................... 301 263
Ratio of total dividends declared to
net income............................ 151.75% 34.15%
Per share data/(1)/
Earnings per common share.............. $ 0.02 $ 0.41
Common stock cash dividends declared... 0.08 0.07
Book value per common share/(2)/....... 12.52 11.68
Weighted average common shares
outstanding........................... 3,766,172 3,756,861
Financial condition data/(2)/
Investment securities/(3)/............. $ 149,684 $ 142,918
Loans/(4)/............................. 676,499 537,088
Total assets........................... 887,809 723,909
Total deposits......................... 814,537 654,667
Total shareholders' equity............. 64,539 61,276
Mortgage servicing portfolio........... 121,156 126,275
Selected ratios
Return on average assets/(5)/.......... 0.22% 1.08%
Return on average shareholders'
equity/(5)/........................... 2.86 12.77
Return on average common equity/(5)/... 0.53 14.18
Net interest margin/(5)/............... 4.23 4.38
Efficiency ratio/(6)/.................. 63.55 57.32
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------------------------------------------------------------
(dollars in thousands except share data)
<S> <C> <C> <C> <C> <C>
Operations data
Interest income........................ $ 64,668 $ 55,000 $ 37,654 $ 29,639 $ 28,049
Interest expense....................... 32,833 28,544 16,637 12,417 13,043
--------------------------------------------------------------------
Net interest income.................... 31,835 26,456 21,017 17,222 15,006
Provision for loan losses.............. 3,100 2,000 1,800 1,400 1,650
--------------------------------------------------------------------
Net interest income after provision
for loan losses....................... 28,735 24,456 19,217 15,822 13,356
Gains on sales of securities and loans. 2,137 1,026 1,450 931 709
Other income........................... 4,212 3,848 3,671 3,284 3,023
Other expenses......................... 23,226 19,902 16,440 13,733 11,906
--------------------------------------------------------------------
Income before taxes.................... 11,858 9,428 7,898 6,304 5,182
Taxes on income........................ 4,306 3,336 2,754 2,108 1,637
--------------------------------------------------------------------
Net income............................. $ 7,552 $ 6,092 $ 5,144 $ 4,196 $ 3,545
====================================================================
Net income available to common
shareholders.......................... $ 5,965 $ 5,426 $ 5,144 $ 4,196 $ 3,545
====================================================================
Dividends declared
Preferred stock........................ $ 1,587 $ 533 $ - $ - $ -
Common stock........................... 1,053 901 751 444 371
Ratio of total dividends declared to
net income............................ 34.96% 23.55% 14.60% 10.58% 10.47%
Per share data/(1)/
Earnings per common share.............. $ 1.59 $ 1.44 $ 1.37 $ 1.44 $ 1.23
Common stock cash dividends declared... 0.28 0.24 0.20 0.14 0.13
Book value per common share/(2)/....... 12.66 11.44 10.09 9.21 7.47
Weighted average common shares
outstanding........................... 3,760,370 3,755,228 3,755,228 2,910,535 2,886,996
Financial condition data/(2)/
Investment securities/(3)/............. $ 147,351 $ 147,688 $ 143,517 $ 83,442 $ 88,823
Loans/(4)/............................. 644,646 531,988 412,614 319,260 247,967
Total assets........................... 829,117 711,135 582,170 434,119 353,938
Total deposits......................... 753,945 634,387 525,560 394,521 329,162
Total shareholders' equity............. 65,032 60,357 37,888 34,570 21,589
Mortgage servicing portfolio........... 118,953 130,188 143,899 129,648 95,127
Selected ratios
Return on average assets/(5)/.......... 0.98% 0.93% 1.01% 1.07% 1.05%
Return on average shareholders'
equity/(5)/........................... 12.15 12.81 14.17 17.76 17.94
Return on average common equity/(5)/... 13.30 13.48 14.17 17.76 17.94
Net interest margin/(5)/............... 4.32 4.23 4.34 4.61 4.69
Efficiency ratio/(6)/.................. 60.83 63.52 62.90 64.06 63.54
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March
31,
------------------------------
1997 1996
------------------------------
<S> <C> <C>
Average assets per employee............ $ 2,341 $ 2,373
Asset quality ratios
Allowance for loan losses to loans/(2)/ 1.25% 1.16%
Nonperforming loans to loans/(2)(7)/... 1.04 1.03
Allowance for loan losses to
nonperforming loans/(2)(7)/........... 120.15 112.98
Nonperforming assets to loans and
other real estate owned/(2)(8)/....... 1.11 1.05
Net loan charge-offs to average
loans/(5)/............................ 1.00 0.35
Capital ratios
Average total shareholders' equity to
average assets........................ 7.55% 8.43%
Average common equity to average assets 5.55 6.04
Tier 1 capital to risk-weighted
assets/(2)(9)/........................ 9.47 10.15
Total capital to risk-weighted
assets/(2)(9)/........................ 10.78 11.52
Leverage ratio/(2)(9)/................. 7.37 8.13
Ratio of earnings to combined fixed
charges and preferred stock
dividends/(10)/
Including interest on deposits......... 1.06x 1.36x
Excluding interest on deposits......... 1.84 5.11
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------------------------------------------------------------
(dollars in thousands except share data)
<S> <C> <C> <C> <C> <C>
Average assets per employee............ $ 2,162 $ 2,204 $ 2,089 $ 1,917 $ 1,850
Asset quality ratios
Allowance for loan losses to loans/(2)/ 1.11% 1.09% 1.20% 1.24% 1.37%
Nonperforming loans to loans/(2)(7)/... 1.03 0.99 0.60 0.98 2.15
Allowance for loan losses to
nonperforming loans/(2)(7)/........... 107.37 110.12 199.16 126.07 63.72
Nonperforming assets to loans and
other real estate owned/(2)(8)/....... 1.04 1.03 0.67 1.13 2.48
Net loan charge-offs to average
loans/(5)/............................ 0.31 0.24 0.22 0.30 0.51
Capital ratios
Average total shareholders' equity to
average assets........................ 8.05 7.27 7.12 6.01 5.84
Average common equity to average assets 5.81 6.15 7.12 6.01 5.84
Tier 1 capital to risk-weighted
assets/(2)(9)/........................ 10.21 10.02 9.64 12.39 10.45
Total capital to risk-weighted
assets/(2)(9)/........................ 11.40 11.41 10.89 13.64 11.71
Leverage ratio/(2)(9)/................. 7.77 8.19 6.76 8.04 5.77
Ratio of earnings to combined fixed
charges and preferred stock
dividends/(10)/
Including interest on deposits......... 1.33x 1.32x 1.47x 1.50x 1.39x
Excluding interest on deposits......... 5.16 7.06 25.23 38.30 25.56
</TABLE>
- ---------------------
(1) All share and per share information has been restated to reflect the
fourteen-to-one stock split effected in the form of a stock dividend
paid November 15, 1993.
(2) At period end.
(3) Includes investment securities held for sale.
(4) Net of unearned discounts but before deduction of allowance for loan
losses.
(5) Ratios for the three month periods are annualized.
(6) The efficiency ratio = other expenses/(net interest income + gain on
sales of securities and loans + other income).
(7) Nonperforming loans consist of nonaccrual loans, loans contractually
past due 90 days or more plus loans with restructured terms.
(8) Nonperforming assets consist of nonperforming loans plus foreclosed
assets.
(9) Computed in accordance with regulatory guidelines as in effect
currently.
(10) For purposes of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends, earnings consist of income before
taxes plus interest and the portion of rent expense deemed to be
interest. Fixed charges consist of interest and the portion of rent
expense deemed to be interest.
12
<PAGE>
RISK FACTORS
Prospective investors should carefully consider, together with the
other information contained and incorporated by reference in this Prospectus,
the following risk factors in evaluating the Company and its business and SBI
Capital before purchasing the Preferred Securities offered hereby. Prospective
investors should note, in particular, that this Prospectus contains forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the Securities Act
of 1934, as amended (the "Exchange Act"), including statements of goals,
intentions, and expectations, regarding or based upon general economic
conditions, interest rates, developments in national and local markets, and
other matters, and which, by their nature, are subject to significant
uncertainties. Because of these uncertainties and the assumptions on which
statements in this Prospectus are based, the actual future results may differ
materially from those contemplated by such statements. The considerations listed
below represent certain important factors the Company believes could cause such
results to differ. These considerations are not intended to represent a complete
list of the general or specific risks that may affect the Company and SBI
Capital. It should be recognized that other risks may be significant, presently
or in the future, and the risks set forth below may affect the Company and SBI
Capital to a greater extent than indicated.
Risk Factors Relating to the Preferred Securities
Ranking of Subordinated Obligations Under the Guarantee and the Subordinated
Debentures
The obligations of the Company under the Guarantee issued for the
benefit of the holders of Preferred Securities and under the Subordinated
Debentures are unsecured and rank subordinate and junior in right of payment to
all Senior Debt, Subordinated Debt and Additional Senior Obligations of the
Company, whether now existing or hereafter incurred. At May , 1997, the
Company had no outstanding Senior Debt, Subordinated Debt and Additional Senior
Obligations. Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of the Bank upon the Bank's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Preferred Securities to benefit indirectly from such distribution) is
subject to the prior claims of creditors of the Bank, except to the extent that
the Company may itself be recognized as a creditor of the Bank. The Subordinated
Debentures, therefore, will be effectively subordinated to all existing and
future liabilities of the Bank and holders of Subordinated Debentures and
Preferred Securities should look only to the assets of the Company for payments
on the Subordinated Debentures. Neither the Indenture, the Guarantee nor the
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Debt, Subordinated Debt and Additional Senior
Obligations, that may be incurred by the Company. See "Description of the
Guarantee--Status of the Guarantee" and "Description of the Subordinated
Debentures--Subordination."
The ability of SBI Capital to pay amounts due on the Preferred
Securities is solely dependent upon the Company making payments on the
Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences; Market Price
Consequences
The Company has the right under the Indenture, so long as no Debenture
Event of Default has occurred and is continuing, to defer the payment of
interest on the Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extended
Interest Payment Period; provided that no Extended Interest Payment Period may
extend beyond the Stated Maturity of the Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by SBI Capital will be deferred (and the amount of Distributions to
which holders of the Preferred Securities are entitled will accumulate
additional Distributions thereon at the rate of % per annum, compounded
quarterly from the relevant payment date for such Distributions) during any such
Extended Interest Payment Period. During any such Extended Interest Payment
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock, (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that
13
<PAGE>
rank pari passu with or junior in interest to the Subordinated Debentures or
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with or junior in interest to the Subordinated Debentures (other than
payments under the Guarantee), or (iii) redeem, purchase or acquire less than
all of the Subordinated Debentures or any of the Preferred Securities. Prior to
the termination of any such Extended Interest Payment Period, the Company may
further defer the payment of interest; provided that no Extended Interest
Payment Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any Extended
Interest Payment Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of % compounded
quarterly, to the extent permitted by applicable law), the Company may elect to
begin a new Extended Interest Payment Period, subject to the above requirements.
Subject to the foregoing, there is no limitation on the number of times that the
Company may elect to begin an Extended Interest Payment Period. See "Description
of the Preferred Securities--Distributions--Extended Interest Payment Period"
and "Description of the Subordinated Debentures--Option to Extend Interest
Payment Period."
Should an Extended Interest Payment Period occur, each holder of
Preferred Securities will be required to accrue and recognize income (in the
form of original issue discount ("OID")) in respect of its pro rata share of the
interest accruing on the Subordinated Debentures held by SBI Capital for United
States federal income tax purposes. A holder of Preferred Securities must, as a
result, include such income in gross income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive the cash
related to such income from SBI Capital if the holder disposes of the Preferred
Securities prior to the record date for the payment of the related
Distributions. See "Certain Federal Income Tax Consequences--Potential Extension
of Interest Payment Period and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures. Should the Company elect, however, to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities during
an Extended Interest Payment Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Preferred
Securities. As a result of the existence of the Company's right to defer
interest payments, the market price of the Preferred Securities may be more
volatile than the market prices of other securities on which original issue
discount accrues that are not subject to such optional deferrals.
Tax Event, Capital Treatment Event or Investment Company Event; Redemption
The Company has the right to redeem the Subordinated Debentures in
whole (but not in part) within 180 days following the occurrence of a Tax Event,
a Capital Treatment Event or Investment Company Event (whether occurring before
or after July 31, 2002), and, therefore, cause a mandatory redemption of the
Preferred Securities. The exercise of such right is subject to the Company
having received prior approval of the Federal Reserve to do so, if then required
under applicable capital guidelines or policies of the Federal Reserve.
"Tax Event" means the receipt by SBI Capital of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) SBI Capital is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Subordinated Debentures, (ii) interest
payable by the Company on the Subordinated Debentures is not, or, within 90 days
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (iii) SBI Capital is, or will
be within 90 days of the date of the opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges. The Company must
request and receive an opinion with regard to such matters within a reasonable
period
14
<PAGE>
of time after it becomes aware of the possible occurrence of any of the events
described in clauses (i) through (iii) above. See "--Risk Factors Relating to
the Preferred Securities--Proposed Tax Legislation" for a discussion of certain
legislative proposals that, if adopted, could give rise to a Tax Event, which
may permit the Company to cause a redemption of the Preferred Securities prior
to July 31, 2002.
"Capital Treatment Event" means the receipt by SBI Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or any change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the aggregate
Liquidation Amount of the Preferred Securities (or any substantial portion
thereof) as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve, as then 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 of a Capital Treatment Event if such
inability results from the Company having cumulative preferred capital in excess
of the amount which may qualify for treatment as Tier 1 Capital under applicable
capital adequacy guidelines of the Federal Reserve.
"Investment Company Event" means the receipt by SBI Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, SBI Capital is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
becomes effective on or after the date of original issuance of the Preferred
Securities.
Shortening or Extension of Stated Maturity of Subordinated Debentures
The Company has the right, at any time, to shorten the maturity of the
Subordinated Debentures to a date not earlier than July 31, 2002. The exercise
of such right is subject to the Company having received prior approval of the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve. The Company also has the right to extend the
maturity of the Subordinated Debentures (whether or not SBI Capital is
terminated and the Subordinated Debentures are distributed to holders of the
Preferred Securities) to a date no later than July 31, 2046, the 49th
anniversary of the initial issuance of the Preferred Securities. Such right may
only be exercised, however, if at the time such election is made and at the time
of such extension (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Subordinated Debentures, (iii) SBI Capital is not
in arrears on payments of Distributions on the Preferred Securities and no
deferred Distributions are accumulated, and (iv) the Company has a Senior Debt
rating of investment grade. See "Description of the Subordinated Debentures--
General."
Rights Under the Guarantee
The Guarantee guarantees to the holders of the Preferred Securities,
to the extent not paid by SBI Capital, (i) any accrued and unpaid Distributions
required to be paid on the Preferred Securities, to the extent that SBI Capital
has funds available therefor at such time, (ii) the Redemption Price (as defined
herein) with respect to any Preferred Securities called for redemption, to the
extent that SBI Capital has funds available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding-up or liquidation of SBI
Capital (other than in connection with the distribution of Subordinated
Debentures to the holders of Preferred Securities or a redemption of all of the
Preferred Securities), the lesser of (a) the amount of the Liquidation
Distribution (as defined herein), to the extent SBI Capital has funds available
therefor at such time, and (b) the amount of assets of SBI Capital remaining
available for distribution to holders of the Preferred Securities in liquidation
of SBI Capital. The holders of not less than a majority in Liquidation Amount of
the Preferred Securities have the right to direct the time, method and place of
15
<PAGE>
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Preferred
Securities may institute a legal proceeding directly against the Company to
enforce its rights under the Guarantee without first instituting a legal
proceeding against SBI Capital, the Guarantee Trustee or any other Person (as
defined in the Guarantee). If the Company were to default on its obligation to
pay amounts payable under the Subordinated Debentures, SBI Capital would lack
funds for the payment of Distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of Preferred
Securities would not be able to rely upon the Guarantee for such amounts. In the
event, however, that a Debenture Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest on
or principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). The exercise by the
Company of its right, as described herein, to defer the payment of interest on
the Subordinated Debentures does not constitute a Debenture Event of Default. In
connection with such Direct Action, the Company will have a right of set-off
under the Indenture to the extent of any payment made by the Company to such
holder of Preferred Securities in the Direct Action. Except as described herein,
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Subordinated Debentures or assert
directly any other rights in respect of the Subordinated Debentures. See
"Description of the Subordinated Debentures--Enforcement of Certain Rights by
Holders of Preferred Securities," "Description of the Subordinated Debentures--
Debenture Events of Default" and "Description of the Guarantee." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
No Voting Rights Except in Limited Circumstances
Holders of Preferred Securities will have no voting rights except in
limited circumstances relating only to the modification of the Preferred
Securities and the exercise of the rights of SBI Capital as holder of the
Subordinated Debentures and the Guarantee. Holders of Preferred Securities will
not be entitled to vote to appoint, remove or replace the Property Trustee or
the Delaware Trustee, as such voting rights are vested exclusively in the holder
of the Common Securities (except upon the occurrence of certain events described
herein). The Property Trustee, the Administrative Trustees and the Company may
amend the Trust Agreement without the consent of holders of Preferred Securities
to ensure that SBI Capital will be classified for United States federal income
tax purposes as a grantor trust even if such action adversely affects the
interests of such holders. See "Description of the Preferred Securities--Voting
Rights; Amendment of Trust Agreement" and "Description of the Preferred
Securities--Removal of SBI Capital Trustees."
Proposed Tax Legislation
On March 19, 1996, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the 1996 Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress would have an effective date
that is no earlier than the date of "appropriate Congressional action." In
addition, subsequent to the publication of the Joint Statement, Senator Daniel
Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to Treasury Department officials concurring with the views expressed in
the Joint Statement. Neither the 1996 Proposed Legislation nor similar
legislation was enacted during the 104th Congress. On February 6, 1997,
President Clinton proposed in the administration's fiscal year 1998 budget
certain tax law changes (the "1997 Proposed Legislation") that would, among
other things, generally deny corporate issuers a deduction for interest or OID
in respect of certain debt obligations
16
<PAGE>
if such debt obligations have a maximum term in excess of 15 years and are not
shown as indebtedness on the issuer's applicable consolidated balance sheet.
The 1997 Proposed Legislation also contains a provision that would deny a
deduction to corporate issuers for interest or OID with respect to debt
instruments that have a maximum term of more than 40 years (including rights to
extend, renew or relend), or are payable in stock of the issuer or a related
party. The U.S. Treasury Department's summary of the 1997 Proposed Legislation
states that the above provisions regarding the deduction of interest would
generally be effective for instruments issued on or after the date of first
Congressional committee action with respect to the 1997 Proposed Legislation.
The Ways and Means Committee began a full committee hearing on the President's
fiscal 1998 budget on February 11, 1997. There can be no assurance that the
effective date guidance in the 1997 Proposed Legislation will be adopted if the
proposed change to the tax law is enacted, or that other legislation enacted
after the date hereof will not otherwise adversely affect the ability of the
Company to deduct the interest payable on the Subordinated Debentures.
Consequently, there can be no assurance that a Tax Event will not occur. A Tax
Event would permit the Company, upon approval of the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal Reserve,
to cause a redemption of the Preferred Securities before, as well as after, July
31, 2002. See "Description of the Subordinated Debentures--Redemption or
Exchange" and "Description of the Preferred Securities--Redemption or Exchange--
Tax Event Redemption, Capital Treatment Event Redemption or Investment Company
Event Redemption" and "Certain Federal Income Tax Consequences-- Effect of
Proposed Changes in Tax Laws."
Redemption; Exchange of Preferred Securities for Subordinated Debentures
The Company has the right at any time to dissolve, wind-up or
terminate SBI Capital and cause the Subordinated Debentures to be distributed to
the holders of the Preferred Securities in exchange therefor in liquidation of
SBI Capital. The exercise of such right is subject to the Company having
received prior approval of the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve. The Company
will have the right, in certain circumstances, to redeem the Subordinated
Debentures in whole or in part, in lieu of a distribution of the Subordinated
Debentures by SBI Capital, in which event SBI Capital will redeem the Trust
Securities on a pro rata basis to the same extent as the Subordinated Debentures
are redeemed by the Company. Any such distribution or redemption prior to the
Stated Maturity will be subject to prior approval of the Federal Reserve, if
then required under applicable capital guidelines or policies of the Federal
Reserve. See "Description of the Preferred Securities--Redemption or Exchange--
Tax Event Redemption, Capital Treatment Event Redemption or Investment Company
Event Redemption."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of SBI Capital would not be a
taxable event to holders of the Preferred Securities. If, however, SBI Capital
is characterized as an association taxable as a corporation at the time of the
dissolution of SBI Capital, the distribution of the Subordinated Debentures may
constitute a taxable event to holders of Preferred Securities. Moreover, upon
occurrence of a Tax Event, a dissolution of SBI Capital in which holders of the
Preferred Securities receive cash may be a taxable event to such holders. See
"Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures or
Cash Upon Liquidation of SBI Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution or liquidation of SBI Capital. The
Preferred Securities or the Subordinated Debentures, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Subordinated
Debentures, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debentures and should
carefully review all the information regarding the Subordinated Debentures
contained herein.
If the Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of SBI Capital, the Company will use
its best efforts to list the Subordinated Debentures on The Nasdaq Stock
Market's National Market or such stock exchanges, if any, on which the Preferred
Securities are then listed.
17
<PAGE>
Trading Price; Absence of Prior Public Market for the Preferred Securities
The Preferred Securities may trade at prices that do not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder of Preferred Securities that disposes of its
Preferred Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from SBI Capital for the period
prior to such disposition) will nevertheless be required to include accrued but
unpaid interest on the Subordinated Debentures through the date of disposition
in income as ordinary income and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed of.
Such holder will recognize a capital loss to the extent the selling price (which
may not fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include all accrued but unpaid interest). Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences--Disposition of Preferred Securities."
There is no current public market for the Preferred Securities.
Although application has been made to approve the Preferred Securities for
quotation on The Nasdaq Stock Market's National Market, there can be no
assurance that an active public market will develop for the Preferred Securities
or that, if such market develops, the market price will equal or exceed the
public offering price set forth on the cover page of this Prospectus. The public
offering price for the Preferred Securities has been determined through
negotiations between the Company and the Underwriter. Prices for the Preferred
Securities will be determined in the marketplace and may be influenced by many
factors, including prevailing interest rates, the liquidity of the market for
the Preferred Securities, investor perceptions of the Company and general
industry and economic conditions.
Preferred Securities Are Not Insured
The Preferred Securities are not insured by the Bank Insurance Fund
(the "BIF") or the Savings Association Insurance Fund (the "SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC") or by any other governmental
agency.
Risk Factors Relating to the Company
Credit Risk and Commercial Loan Growth
The greatest risk facing lenders generally is credit risk, that is the
risk of losing principal and interest due to a borrower's failure to perform
according to the terms of the loan agreement. The Bank continues to carry a
high percentage of commercial loans in relation to its assets. Commercial and
commercial real estate loans generally entail larger risks than residential real
estate loans or other bank-qualified investments since repayment of such loans
may be affected by the quality of the borrower's management and a number of
economic and other factors which may induce business failure and depreciate the
value of the business assets pledged to secure the loan. The dollar volume of
commercial and commercial real estate loans has increased substantially in
recent years, to $433.2 million at March 31, 1997, from $414.7 million at
December 31, 1996, $341.2 million at December 31, 1995 and $253.1 million at
December 31, 1994, comprising approximately 64.04%, 64.33%, 64.14% and 61.33% of
the Bank's total loan portfolio at such dates, respectively. The Company
believes that commercial and commercial real estate loans may continue to
increase as a percentage of its loan portfolio. Problems with commercial and
commercial real estate loans would not necessarily be expected to surface early
in their lives, and as the recent loans mature, the Company may experience
increased levels of nonperforming loans and charge-offs. In addition, because
the size of loans originated by the Bank, particularly the commercial and
commercial real estate loans, has been increasing, the Bank may experience
larger period-to-period fluctuations in its level of nonperforming loans as the
result of changes in circumstances of individual borrowers on larger loans.
Increases in nonperforming loans would result in a loss of earnings from these
loans during the period of nonperformance and may lead to loan charge-offs. At
any time, there are loans included in the Company's loan portfolio that will
result in losses to the Company, but that have not been identified as
nonperforming or potential problem loans. Because the loan portfolio contains a
significant number of commercial and commercial real estate loans with
relatively large balances, the unexpected deterioration of one or
18
<PAGE>
a few of such loans may cause a significant increase in nonperforming assets,
and lead to a material increase in charge-offs and the provision for loan
losses. Actual future losses could differ significantly from the amounts
estimated by management, adversely affecting net income. Earnings volatility
resulting from fluctuations in nonperforming asset levels may affect the future
trading prices of the Preferred Securities.
Exposure to Local Economic Conditions
Although the Bank makes loans throughout the State of Oklahoma, the
Company's commercial lending operations are concentrated primarily in the Bank's
service areas. Consequently, adverse changes in economic conditions in those
service areas would impair the Company's ability to collect loans and would
otherwise have a negative effect on the financial condition of the Company. The
Company has increased its loans in its Tulsa Division and Central Oklahoma
Division (which includes Oklahoma City) from approximately $202.8 million, or
49% of the total loan portfolio, at December 31, 1994, to approximately $411.2
million, or 61.2% of the total loan portfolio, at March 31, 1997, and the
Company's exposure to the economic conditions in those two areas has increased
accordingly. In addition, although the Oklahoma economy has diversified from its
traditional dependencies on the energy industries and agriculture, a substantial
decline in the price of oil or in agricultural commodity prices may have an
adverse effect on economic conditions in the Bank's service areas.
Loan Portfolio Concentrations
During the past several years, the Company has followed a business
strategy which has featured the offering of multiple commercial and consumer
lending services to managers and professionals living and working in its primary
market areas. As a result of this lending emphasis, the Company has originated
a substantial amount of loans to individuals and businesses involved in the
healthcare industry including loans to physicians, dentists and other healthcare
professionals, and to hospitals, nursing homes, suppliers and other healthcare-
related businesses. At March 31, 1997, the Company estimates that approximately
$79 million of loans, comprising approximately 12% of the total loan portfolio,
involved loans to individuals and businesses in the healthcare industry. Other
notable concentrations of credit include $23.8 million in hotel/motel loans,
$23.4 million in residential construction loans and $15.8 in restaurant loans,
which represented 4%, 3% and 2% percent, respectively, of the total loan
portfolio at March 31, 1997. These portfolio concentrations expose the Company
to the risk that adverse developments in these sectors could negatively affect
the abilities of these borrowers to repay their loans.
Interest Rate Risk
The Bank's earnings depend to a great extent upon the level of net
interest income, which is the difference between interest income earned on loans
and investments and the interest expense paid on its interest-bearing
liabilities, consisting principally of deposits. Although the Company believes
that the maturities of the Bank's assets are well balanced in relation to
maturities of liabilities (gap management), gap management is not an exact
science. Rather, it involves estimates as to how changes in the general level
of interest rates will affect the yields earned on assets and the rates paid on
liabilities. Moreover, rate changes can vary depending upon the level of rates
and competitive factors. From time to time, maturities of assets and
liabilities are not balanced, and a rapid increase or decrease in interest rates
could have an adverse effect on net interest margins and results of operations
of the Company.
Regulatory Risk
The banking industry is heavily regulated. These regulations are
primarily intended to protect the federal insurance funds and depositors, not
shareholders. The Bank is subject to regulation and supervision by the Office of
the Comptroller of the Currency ("OCC"), while the Company is subject to
regulation and supervision by the Federal Reserve. The burden imposed by federal
and state regulations puts banks at a competitive disadvantage compared to less
regulated competitors such as finance companies, mortgage banking companies and
leasing companies. The banking industry continues to lose market share to its
competitors. In addition, legislative reactions
19
<PAGE>
to the problems of the thrift industry have added to the regulatory burden on
banks and cause them to incur increased operating expenses. See "Description of
the Preferred Securities--Redemption or Exchange--Tax Event Redemption, Capital
Treatment Event Redemption or Investment Company Event Redemption."
Dividend Restrictions
The ability of the Company to pay amounts due on the Subordinated
Debentures is largely dependent on its receipt of dividends from the Bank. The
amount of dividends that the Bank may pay to the Company is limited by various
federal laws and by the regulations promulgated by their respective primary
regulators, which impose certain minimum capital requirements.
USE OF PROCEEDS
The proceeds from the sale of the Preferred Securities will be used by
SBI Capital to purchase the Subordinated Debentures from the Company. The net
proceeds to the Company from the sale of the Subordinated Debentures are
estimated to be $ (or $ if the Underwriter's over-allotment
option is exercised in full) after deducting the Underwriter's compensation and
estimated expenses. The proceeds of the Offering will strengthen the Company's
capital base and position the Bank to continue to remain a "well capitalized"
institution under federal banking regulations, which will allow the Company to
pursue future growth opportunities through expansion of its existing businesses
and possible acquisitions. The Company, however, does not have any specific
plans, arrangements, agreements or understandings with any other person for any
acquisitions at the current time. The Company proposes to use the net proceeds
for general corporate purposes, including use in the Bank's lending and
investment activities, and possible redemption, in whole or in part, of the
Series A Preferred Stock. Unlike interest payments on the Subordinated
Debentures, dividends on the Series A Preferred Stock are not deductible for
federal income tax purposes. Any redemption of the Company's Series A Preferred
Stock, which first becomes redeemable on September 1, 1998, would reduce the
capital base of the Company. Pending such uses, the net proceeds from the sale
of the Subordinated Debentures may be invested in a variety of interest-bearing
assets, including, but not limited to, government securities, federal funds
transactions, interest-bearing deposits in other banks and similar investments,
and securities, issued by other financial institutions and companies, with terms
similar to those of the Preferred Securities.
MARKET FOR THE PREFERRED SECURITIES
Application has been made to have the Preferred Securities approved
for quotation on the Nasdaq National Market under the symbol "OKSBO". There can
be no assurance that such approval will be obtained. Stifel, Nicolaus &
Company, Incorporated has informed the Company that it presently intends to make
a market in the Preferred Securities. There can be no assurance, however, that
an active and liquid trading market will develop for the Preferred Securities,
even if approval for listing is obtained, or, if developed, that such a market
will continue. The offering price and distribution rate have been determined by
negotiations among the Company and the Underwriter, and the offering price of
the Preferred Securities may not be indicative of the market price following the
offering. See "Underwriting."
ACCOUNTING TREATMENT
SBI Capital will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of SBI Capital will be
included in the consolidated financial statements of the Company. The Preferred
Securities will be presented as a separate category of long-term debt in the
consolidated statement of financial condition of the Company under the caption
"Guaranteed Preferred Beneficial Interests in the Company's Subordinated
Debentures," and appropriate disclosures about the Preferred Securities, the
Guarantee and the Subordinated Debentures will be included in the notes to
consolidated financial statements. The Company will record Distributions payable
on the Preferred Securities as an expense in the consolidated statements of
operations for financial reporting purposes.
20
<PAGE>
All future reports of the Company filed under the Exchange Act will
(a) present the Trust Securities issued by SBI Capital on the statement of
financial condition as a separate category of long-term debt entitled
"Guaranteed Preferred Beneficial Interests in the Company's Subordinated
Debentures," (b) include in a footnote to the financial statements disclosure
that the sole assets of SBI Capital are the Subordinated Debentures (including
the outstanding principal amount, interest rate and maturity date of such
Subordinated Debentures), and (c) include in a footnote to the financial
statements disclosure that the Company owns all of the Common Securities of SBI
Capital, the sole assets of SBI Capital are the Subordinated Debentures, and the
back-up obligations, in the aggregate, constitute a full and unconditional
guarantee by the Company of the obligations of SBI Capital under the Preferred
Securities.
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at March 31, 1997 and (ii) the consolidated capitalization of the
Company on an as adjusted basis giving effect to the issuance of the Preferred
Securities offered by SBI Capital hereby and the application by the Company of
the net proceeds therefrom, as if the sale of such securities had been
consummated on March 31, 1997, and assuming the Underwriter's over-allotment
option was not exercised. At March 31, 1997, the Company did not have any long-
term debt.
<TABLE>
<CAPTION>
At March 31, 1997
----------------------------
As
Actual Adjusted
----------- ---------------
<S> <C> <C>
(dollars in thousands)
Long-Term Debt:
Guaranteed preferred beneficial interests in
the Company's subordinated debentures....... $ - $21,750/(1)/
Shareholders' Equity:
Serial preferred stock--
Series A, 9.20% Redeemable, Cumulative
Preferred Stock
$1.00 par value; 1,000,000 shares authorized,
liquidation value $17,250; 690,000 shares
issued and outstanding........................ 690 690
Series B, $1 par value; 1,000,000 shares
authorized;
none issued................................... - -
Common Stock, par value $1.00 per share:
10,000,000 shares authorized; 3,766,515
shares issued and outstanding................ 3,767 3,767
Capital surplus................................. 24,377 24,377
Retained earnings............................... 35,803 35,803
Unrealized loss on investment securities
available for sale, net of tax................. (98) (98)
------- ------------
Total shareholders' equity/(2)/.............. $64,539 $ 64,539
======= ============
Capital Ratios:
Shareholders' equity to total assets (period
end)........................................... 7.27% 7.10%
Leverage ratio/(2)(3)/.......................... 7.37 7.19
Tier 1 capital to risk-weighted assets/(3)/..... 9.47 9.47
Total capital to risk-weighted assets/(3)/...... 10.78 14.02
- ----------------
</TABLE>
21
<PAGE>
(1) In connection with the issuance of the guaranteed preferred beneficial
interests in the Company's Subordinated Debentures, the Company estimates
it will incur expenses of $1,120,000 (including Underwriter's compensation
of $870,000). The Subordinated Debentures will mature on July 31, 2027,
which date may be, if certain conditions are met, (a) shortened to a date
not earlier than July 31, 2002, or (b) extended to a date not later than
July 31, 2046.
(2) The leverage ratio is Tier 1 capital divided by quarterly average total
assets less intangibles.
(3) The total risk-based capital ratio, as adjusted, is computed including the
total estimated net proceeds from the sale of the Preferred Securities.
Federal Reserve guidelines limit the amount of the Preferred Securities and
cumulative perpetual preferred stock included in Tier 1 capital to an
aggregate of 25% of Tier 1 capital, and accordingly the leverage and Tier 1
capital ratios, as adjusted, are computed excluding the Preferred
Securities and $1,522,000 of Series A Preferred Stock.
The Federal Reserve has allowed cumulative preferred stock meeting certain
criteria and issued by subsidiaries of bank holding companies to be included as
Tier 1 capital for purposes of regulatory capital calculations, up to a
maximum, along with other cumulative preferred stock issued by the bank holding
company, of 25% of Tier 1 capital. The Company believes the Preferred Securities
will meet the Federal Reserve's criteria for inclusion in Tier 1 capital,
subject to such 25% limitation.
THE COMPANY
Southwest Bancorp, Inc. (the "Company") is a one-bank holding company
headquartered in Stillwater, Oklahoma, engaged in providing commercial and
consumer banking services through its sole subsidiary, Stillwater National Bank
& Trust Company (the "Bank"). The Company has six full-service banking offices,
two of which are located in each of Stillwater and Tulsa, Oklahoma, and one each
in Oklahoma City and Chickasha, Oklahoma, and two loan production offices, one
each in Oklahoma City and Tulsa. The Company pursues a decentralized community
banking strategy through three regional divisions -- the Stillwater Division,
the Central Oklahoma Division (which includes Oklahoma City and Chickasha) and
the Tulsa Division -- that offer commercial, consumer and real estate lending
services and retail and commercial deposit products in their market areas. The
Stillwater Division of the Bank serves the Stillwater market as a full-service
community bank emphasizing both commercial and consumer lending. The Central
Oklahoma Division and the Tulsa Division each have followed a more focused
marketing strategy, targeting managers and professionals and Oklahoma-based
businesses for lending and offering more specialized services. Each regional
division is managed by a senior officer with substantial flexibility over credit
and pricing decisions. In addition to the services offered through the regional
divisions, the Bank offers credit card, student and mortgage lending services
throughout the State of Oklahoma. The principal executive offices of the
Company are located at 608 South Main Street, Stillwater, Oklahoma 74074, and
its telephone number is (405) 372-2230.
The Bank was founded in Stillwater and is currently in its 103rd year of
operation. The Company began offering loans in Oklahoma City in 1982 and in
Tulsa in 1985 by establishing loan production offices in these markets. The
Company's banking strategy includes the offering of multiple commercial and
consumer services to local businesses and their primary employees as well as to
other managers and professionals living and working in the Company's market
areas. Working within the branching limitations imposed by Oklahoma law, the
Company has developed a marketing strategy that does not rely on an extensive
branch network to deliver financial services to its target markets. The
Company's high customer service philosophy includes offering an array of
financial services, loan officers who often meet at the customer's home or place
of business to close loans and the use of third-party courier services to
collect commercial deposits.
Pursuant to the Company's decentralized approach to banking, the Company's
regional Division Managers, each of whom has significant lending experience,
exercise substantial flexibility in credit and pricing decisions. The Company
has designed and developed management information systems and loan review
policies which senior management uses to review and monitor the origination and
maturation of the loan portfolio. The Company believes this decentralized
management approach, coupled with the continuity of service of its senior
officers and its management information systems, enables the Company to develop
long-term customer relationships, maintain high quality service and respond
quickly to customer needs.
22
<PAGE>
The Company offers a wide variety of commercial and consumer lending and
deposit services. The commercial loans offered by the Company include (i)
commercial real estate loans, (ii) working capital and other commercial loans,
(iii) construction loans, and (iv) Small Business Administration ("SBA")
guaranteed loans. Consumer lending services include (i) government-guaranteed
student loans, (ii) residential real estate loans and mortgage banking services,
(iii) credit card loans, and (iv) personal lines of credit and other installment
loans. The Company also offers deposit and personal banking services, including
(i) commercial deposit services such as lock-box services, commercial checking
and other deposit accounts and merchant credit card services, (ii) retail
deposit services such as certificates of deposit, money market accounts,
checking accounts, NOW accounts, savings accounts and Automatic Teller Machine
("ATM") access, and (iii) personal brokerage and trust services.
Additional financial and other information regarding the Company and the
Bank and their respective businesses is presented herein under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," in the Company's consolidated financial statements included herein,
and in the documents incorporated by reference herein. Prospective investors
are urged to carefully consider all of the information contained in, and
incorporated by reference in, this Prospectus.
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data for the five years ended December
31, 1996 set forth below are derived from the audited consolidated financial
statements of the Company. The data for the three month periods ended March 31,
1996 and 1997 have been derived from unaudited interim financial statements and
include, in the opinion of management, all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the data for such
period. The results of operations for the three month periods ended March 31,
1997 and 1996 are not necessarily indicative of results which may be expected
for any other interim period or for the full year. The selected consolidated
financial data set forth below does not purport to be complete and should be
read in conjunction with, and is qualified in its entirety by, the more detailed
information contained in the consolidated financial statements of the Company
and related notes included herein and the discussion under "Management's
Discussion and Analysis of Financial Condition and Results of Operations." See
"Prospectus Summary--Recent Developments."
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
-----------------------------
<S> <C> <C>
Operations data
Interest income........................ $ 17,851 $ 15,089
Interest expense....................... 9,259 7,586
-----------------------------
Net interest income.................... 8,592 7,503
Provision for loan losses.............. 3,001 875
-----------------------------
Net interest income after provision
for loan losses....................... 5,591 6,628
Gains on sales of securities and loans. 326 570
Other income........................... 1,088 1,032
Other expenses......................... 6,359 5,219
-----------------------------
Income before taxes.................... 646 3,011
Taxes on income........................ 186 1,079
-----------------------------
Net income............................. $ 460 $ 1,932
=============================
Net income available to common
shareholders.......................... $ 63 $ 1,535
=============================
Dividends declared
Preferred stock........................ $ 397 $ 397
Common stock........................... 301 263
Ratio of total dividends declared to
net income............................ 151.75% 34.15%
Per share data/(1)/
Earnings per common share.............. $ 0.02 $ 0.41
Common stock cash dividends declared... 0.08 0.07
Book value per common share/(2)/....... 12.52 11.68
Weighted average common shares
outstanding........................... 3,766,172 3,756,861
Financial condition data/(2)/
Investment securities/(3)/............. $ 149,684 $ 142,918
Loans/(4)/............................. 676,499 537,088
Total assets........................... 887,809 723,909
Total deposits......................... 814,537 654,667
Total shareholders' equity............. 64,539 61,276
Mortgage servicing portfolio........... 121,156 126,275
Selected ratios
Return on average assets/(5)/.......... 0.22% 1.08%
Return on average shareholders'
equity/(5)/........................... 2.86 12.77
Return on average common equity/(5)/... 0.53 14.18
Net interest margin/(5)/............... 4.23 4.38
Efficiency ratio/(6)/.................. 63.55 57.32
Average assets per employee............ $ 2,341 $ 2,373
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands except share data)
Operations data
Interest income........................ $ 64,668 $ 55,000 $ 37,654 $ 29,639 $ 28,049
Interest expense....................... 32,833 28,544 16,637 12,417 13,043
--------------------------------------------------------------------
Net interest income.................... 31,835 26,456 21,017 17,222 15,006
Provision for loan losses.............. 3,100 2,000 1,800 1,400 1,650
--------------------------------------------------------------------
Net interest income after provision
for loan losses....................... 28,735 24,456 19,217 15,822 13,356
Gains on sales of securities and loans. 2,137 1,026 1,450 931 709
Other income........................... 4,212 3,848 3,671 3,284 3,023
Other expenses......................... 23,226 19,902 16,440 13,733 11,906
--------------------------------------------------------------------
Income before taxes.................... 11,858 9,428 7,898 6,304 5,182
Taxes on income........................ 4,306 3,336 2,754 2,108 1,637
--------------------------------------------------------------------
Net income............................. $ 7,552 $ 6,092 $ 5,144 $ 4,196 $ 3,545
====================================================================
Net income available to common
shareholders.......................... $ 5,965 $ 5,426 $ 5,144 $ 4,196 $ 3,545
====================================================================
Dividends declared
Preferred stock........................ $ 1,587 $ 533 $ - $ - $ -
Common stock........................... 1,053 901 751 444 371
Ratio of total dividends declared to
net income............................ 34.96% 23.55% 14.60% 10.58% 10.47%
Per share data/(1)/
Earnings per common share.............. $ 1.59 $ 1.44 $ 1.37 $ 1.44 $ 1.23
Common stock cash dividends declared... 0.28 0.24 0.20 0.14 0.13
Book value per common share/(2)/....... 12.66 11.44 10.09 9.21 7.47
Weighted average common shares
outstanding........................... 3,760,370 3,755,228 3,755,228 2,910,535 2,886,996
Financial condition data/(2)/
Investment securities/(3)/............. $ 147,351 $ 147,688 $ 143,517 $ 83,442 $ 88,823
Loans/(4)/............................. 644,646 531,988 412,614 319,260 247,967
Total assets........................... 829,117 711,135 582,170 434,119 353,938
Total deposits......................... 753,945 634,387 525,560 394,521 329,162
Total shareholders' equity............. 65,032 60,357 37,888 34,570 21,589
Mortgage servicing portfolio........... 118,953 130,188 143,899 129,648 95,127
Selected ratios
Return on average assets/(5)/.......... 0.98% 0.93% 1.01% 1.07% 1.05%
Return on average shareholders'
equity/(5)/........................... 12.15 12.81 14.17 17.76 17.94
Return on average common equity/(5)/... 13.30 13.48 14.17 17.76 17.94
Net interest margin/(5)/............... 4.32 4.23 4.34 4.61 4.69
Efficiency ratio/(6)/.................. 60.83 63.52 62.90 64.06 63.54
Average assets per employee............ $ 2,162 $ 2,204 $ 2,089 $ 1,917 $ 1,850
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31 Year Ended December 31,
------------------ -------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------------ -------------------------------------------
(dollars in thousands except share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Asset quality ratios
Allowance for loan losses to loans/(2)/.................... 1.25% 1.16% 1.11% 1.09% 1.20% 1.24% 1.37%
Nonperforming loans to loans/(2)(7)/....................... 1.04 1.03 1.03 0.99 0.60 0.98 2.15
Allowance for loan losses to nonperforming loans/(2)(7)/... 120.15 112.98 107.37 110.12 199.16 126.07 63.72
Nonperforming assets to loans and other real estate
owned/(2)(8)/............................................. 1.11 1.05 1.04 1.03 0.67 1.13 2.48
Net loan charge-offs to average loans/(5)/................. 1.00 0.35 0.31 0.24 0.22 0.30 0.51
Capital ratios
Average total shareholders' equity to average assets....... 7.55 8.43 8.05 7.27 7.12 6.01 5.84
Average common equity to average assets.................... 5.55 6.04 5.81 6.15 7.12 6.01 5.84
Tier 1 capital to risk-weighted assets/(2)(9)/............. 9.47 10.15 10.21 10.02 9.64 12.39 10.45
Total capital to risk-weighted assets/(2)(9)/.............. 10.78 11.52 11.40 11.41 10.89 13.64 11.71
Leverage ratio/(2)(9)/..................................... 7.37 8.13 7.77 8.19 6.76 8.04 5.77
Ratio of earnings to combined fixed charges and
preferred stock dividends/(10)/
Including interest on deposits............................. 1.06x 1.36x 1.33x 1.32x 1.47x 1.50x 1.39x
Excluding interest on deposits............................. 1.84 5.11 5.16 7.96 25.23 38.30 25.56
- ---------------------
</TABLE>
(1) All share and per share information has been restated to reflect the
fourteen-to-one stock split effected in the form of a stock dividend paid
November 15, 1993.
(2) At period end.
(3) Includes investment securities held for sale.
(4) Net of unearned discounts but before deduction of allowance for loan
losses.
(5) Ratios for the three month periods are annualized.
(6) The efficiency ratio = other expenses/(net interest income + gain on sales
of securities and loans + other income).
(7) Nonperforming loans consist of nonaccrual loans, loans contractually past
due 90 days or more plus loans with restructured terms.
(8) Nonperforming assets consist of nonperforming loans plus foreclosed assets.
(9) Computed in accordance with regulatory guidelines as in effect currently.
(10) For purposes of calculating the ratio of earnings to combined fixed charges
and preferred stock dividends, earnings consist of income before taxes plus
interest and the portion of rent expense deemed to be interest. Fixed
charges consist of interest and the portion of rent expense deemed to be
interest.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward Looking Statements. Portions of this Management's Discussion and
Analysis contain forward-looking statements, including statements of goals,
intentions, and expectations, regarding or based upon general economic
conditions, interest rates, developments in national and local markets, and
other matters, and which, by their nature, are subject to significant
uncertainties. Because of these uncertainties and the assumptions on which
statements in this Prospectus are based, the actual future results may differ
materially from those indicated in this report. Past results also are not
necessarily indicative of future performance.
The following presents management's discussion and analysis of the
Company's consolidated financial condition and results of operations at the
dates and for the periods indicated. This discussion should be read in
conjunction with "Selected Consolidated Financial Data," the Company's
consolidated financial statements and the accompanying notes, and other
financial data appearing elsewhere in this Prospectus.
General
Over the past five years, the Company has achieved significant growth in
assets. From 1992 through 1996, the Company's loans grew at a 27% compound
annual growth rate, and increased by $31.9 million, or 5%, in the first three
months of 1997. Using the capital raised in the public offering of its Series A
Preferred Stock in 1995, and increased funding from deposit growth, the Company
increased the Bank's loan portfolio by 21% during 1996. The Company's ratio of
nonperforming assets to total loans receivable and other real estate declined
from 2.48% at December 31, 1992 to 1.04% at December 31, 1996. At March 31,
1997, the Company's ratio of nonperforming assets to total loans receivable and
other real estate was 1.11%. The ratio of net loan charge-offs to average loans
receivable has declined from 0.51% in 1992 to 0.31% in 1996, but increased to an
annualized rate of 1.00% for the three months ended March 31, 1997. The increase
in the first quarter of 1997 is largely attributable to the impairment of a
large commercial loan in that quarter. See "Nonperforming Loans" and "Allowance
for Loan Losses."
The Company has also had a history of earnings growth. Net income and net
income available to common shareholders grew at compound annual growth rates of
21% and 14%, respectively, from 1992 to 1996. During this period, the Company's
net interest income grew at a 21% compound annual growth rate. Although net
interest income grew by 15% during the three months ended March 31, 1997
compared to the three months ended March 31, 1996, net income for the three
months ended March 31, 1997 was significantly less than the prior year's period,
primarily as a result of a $2.1 million increase in the provision for loan
losses. This increase in the provision for the first quarter of 1997 was the
result of the impairment of a $1.9 million commercial loan in the first quarter
of 1997 and the Company's regular evaluation of the adequacy of the allowance
for loan losses. The Company's annual return on average common equity has
averaged 15.33% over the five-year period from 1992 through 1996. For the five-
year period from 1992 to 1996, the Company's average annual return on average
assets was 1.01%. The annualized return on average equity and the annualized
return on average assets for the three months ended March 31, 1997 were
substantially less than for the prior year's period. Net income, net income
available to common shareholders, and returns on average assets and average
common equity are expected to be less in 1997 than in 1996 as a result of the
decline in income for the first quarter of 1997. See "Summary of Earnings."
The Company's growth over the past five years reflects growth in the
Oklahoma economy and has been aided by the consolidation in the Oklahoma banking
industry which has disrupted long-standing lending relationships and resulted in
fewer independent Oklahoma banks addressing the Bank's target market niches of
Oklahoma-based businesses and professionals. The consolidation within the
Oklahoma banking industry has particularly aided the Bank's expansion in the
metropolitan areas of Oklahoma City and Tulsa where the Company has been able to
attract experienced lending officers. The Company's future loan growth is
subject to a variety of economic and competitive considerations and no assurance
can be given that the Company's loan portfolio will continue to grow
consistently at historic rates.
26
<PAGE>
The Company's net interest income and net interest margin have benefited
from a high ratio of loans to deposits. Management's funding philosophy has
been to increase deposits from retail and commercial deposit sources as
necessary to fund loans within the limitations of the Bank's capital base. The
Company has operated for the past five years with average loan-to-deposit ratios
ranging from 73% to 83%, and had an average loan to deposit ratio of 85% for the
first quarter of 1997. Although a high loan-to-deposit ratio potentially limits
the liquidity available to the institution, the Company has available sources of
liquidity it believes adequate to meet its requirements. See "Liquidity."
Summary of Earnings
Net Income
Three months ended March 31, 1997 and 1996. For the first quarter of 1997,
the Company recorded net income of $460,000, 76% less than the $1.9 million
recorded for the first quarter of 1996. Net income available to common
shareholders, after deduction of dividends on preferred stock, was $63,000
($0.02 per share), compared with $1.5 million ($0.41 per share) for the first
quarter of 1996. The substantial decrease in quarterly earnings was primarily
the result of a $2.1 million increase in the provision for loan losses. Average
common shares outstanding were 3,766,172 and 3,756,861, respectively.
During the first quarter of 1997, the Company received information
regarding events that adversely affected a borrower's ability to fully repay its
commercial loan, which had a carrying amount of $1.9 million. As a result of
this event, and management's regular evaluation of the adequacy of the allowance
for loan losses relative to other loans in the portfolio, the Company recorded a
provision for loan losses of $3.0 million for the first quarter of 1997,
compared with a provision of $875,000 for the first quarter of 1996. See
"Provision for Loan Losses."
Net interest income increased $1.1 million, or 15%, for the first quarter
of 1997 compared to the same period in 1996. This increase in net interest
income, as well as an $893,000, or 83%, reduction in taxes, offset the $2.1
million, or 243%, increase in provision for loan losses, a $1.1 million, or 22%,
increase in other expenses and a $188,000, or 12% reduction in other income.
For the first quarter of 1997, the return on average total equity was 2.86% and
the return on average common equity was 0.53% compared to a 12.77% return on
average total equity and a 14.18% return on average common equity for the first
quarter of 1996.
Years ended December 31, 1996 and 1995. Net income for 1996 was $7.6
million, a 24% increase over the $6.1 million earned in 1995. The increase in
net income during 1996 was due principally to a $5.4 million, or 20%, increase
in net interest income. Net income for 1996 also benefited from a $1.5 million,
or 30% increase in other income. These increases in income offset a $3.3
million, or 17%, increase in other expenses, a $1.1 million, or 55%, increase in
the provision for loan losses, and a $970,000, or 29%, increase in taxes on
income. Net income available to common shareholders, after dividends on the
Series A Preferred Stock, was $6.0 million, an increase of $539,000, or 10%,
over 1995. Net income per common share also increased by 10% to $1.59 per share
for 1996 from $1.44 per share for 1995. Average common shares outstanding were
3,760,370 and 3,755,228 for 1996 and 1995, respectively.
Years ended December 31, 1995 and 1994. Net income for 1995 was $6.1
million, an 18% increase over the $5.1 million earned in 1994. The principal
contributor to the Company's increase in net income during 1995 was a $5.4
million, or 26%, increase in net interest income. This increase in income was
offset by a $3.5 million, or 21%, increase in other expenses, a $582,000, or
21%, increase in taxes on income, a $247,000, or 5%, decrease in other income,
and a $200,000, or 11%, increase in the provision for loan losses. Net income
available to common shareholders, after dividends on the Series A Preferred
Stock, was $5.4 million, an increase of $282,000, or 5%, over
27
<PAGE>
1994. Net income per common share increased by 5% in 1995 to $1.44 from $1.37
per share for 1994. Average common shares outstanding were the same for both
periods.
Net Interest Income
Three months ended March 31, 1997 and 1996. Net interest income increased
to $8.6 million for the first quarter of 1997 from $7.5 million for the same
period in 1996 as continued growth in the loan portfolio enabled the Company to
post a $2.8 million increase in interest income that exceeded the $1.7 million
increase in interest expense during the period. Yields on the Company's
interest-earning assets declined by 1 basis point, and the rates paid on the
Company's interest-bearing liabilities increased by 1 basis point, resulting in
a reduction in the interest rate spread to 3.48% for the first quarter of 1997
from 3.50% for the first quarter of 1996. The ratio of average interest-earning
assets to average interest-bearing liabilities declined to 116.46% for the first
quarter of 1997 from 119.78% for the first quarter of 1996, as a substantial
portion of the increase in loans was funded by time deposits.
Total interest income for the first quarter of 1997 was $17.9 million, up
18% from $15.1 million during the same period in 1996. The principal factor
providing greater interest income was the $128.8 million, or 24%, increase in
the volume of average loans outstanding. The Company's loan yields declined to
9.40% for the first quarter of 1997 from 9.55% in 1996. During the same period,
the Company's yield on investment securities increased to 6.19% from 6.12%.
Total interest expense for the first quarter of 1997 was $9.3 million, an
increase of 22% from $7.6 million for the same period in 1996. The increase in
total interest expense can be attributed to an increase in average interest-
bearing liabilities of $131.3 million, or 23%. During the same period, the
rates paid on average interest-bearing liabilities increased to 5.31% from
5.30%, as a 15 basis point decline in the average rate paid on time deposits (to
5.71%) was more than offset by a 64 basis point increase (to 4.14%) in the
average rate paid on money market accounts.
Years ended December 31, 1996 and 1995. Net interest income for 1996
increased to $31.8 million from $26.5 million in 1995, primarily as a result of
the increase in the Company's loan portfolio. Yields on the Company's interest-
earning assets declined by only 2 basis points during 1996, and the rates paid
on the Company's interest-bearing liabilities declined by 10 basis points,
resulting in an increase in the interest rate spread to 3.51% for 1996 from
3.43% for 1995. Net interest income benefited from an increase in the ratio of
average interest-earning assets to average interest-bearing liabilities to
118.30% for 1996 from 117.55% for 1995. The improvement in this ratio reflects
an increase in noninterest-bearing demand deposits, as well as an increase in
the Company's average shareholders' equity from the sale of Series A Preferred
Stock in July 1995 and retention of earnings.
Interest income for 1996 was $64.7 million, up from $55.0 million in 1995,
primarily as a result of growth in interest-earning assets, which offset the
slight decline in yields. Yields on total interest-earning assets were 8.78% in
1996 and 8.80% in 1995. Loan interest and fee income increased $9.6 million
because the greater volume of loans outstanding more than offset the effect of
the 14 basis point decline in loan yields. The Company generated growth of
$107.5 million in average loans to $580.6 million in 1996 from $473.1 million in
1995, a 23% increase. Interest income on investment securities increased by
$186,000 despite lower yields earned, due to an increase in the size of the
investment portfolio. The yield on the investment portfolio declined 8 basis
points. A decrease in interest income on federal funds sold and other short-
term investments was caused by slightly lower volumes in those areas. The
increase in interest-earning assets was funded by growth in deposits at the
Company's existing branches, the proceeds from the July 1995 offering and
retention of earnings.
Total interest expense for 1996 was $32.8 million, a $4.3 million increase
from $28.5 million in 1995. The increase in interest expense was primarily due
to a $93.5 million, or 18%, increase in average interest-bearing deposits from
$527.4 million for the year ended December 31, 1995 to $620.9 million for the
year ended December 31, 1996. Growth in average time deposits of $85.7 million,
or 21%, accounted for most of the increase in average
28
<PAGE>
interest-bearing deposits, although average NOW and money market accounts also
increased. Use of federal funds declined significantly for the year. Rates
paid on interest-bearing liabilities declined to 5.27% in 1996 from 5.37% in
1995.
Years ended December 31, 1995 and 1994. Net interest income increased to
$26.5 million for 1995 from $21.0 million in 1994 as continued growth in the
loan portfolio enabled the Company to post a $17.3 million increase in interest
income that significantly exceeded the $11.9 million increase in interest
expense during the year. Competitive factors and the Bank's use of time
deposits to fund loan growth, however, continued to put pressure on the
Company's net interest margin, which declined to 4.23% for fiscal 1995 compared
to 4.34% for 1994. Yields on the Company's interest-earning assets increased by
102 basis points during 1995, and the rates paid on the Company's interest-
bearing liabilities increased by 131 basis points, resulting in a reduction in
the interest rate spread to 3.43% for fiscal 1995 from 3.72% for 1994. The
Company attributed the narrowing of the spread to the significant increases in
time deposits during recent periods. The Bank funded its growth in interest-
earning assets with a higher percentage of time deposits, on which it paid
higher interest rates than transaction accounts and for which it encountered
greater competition. The Company's net interest margin was also adversely
affected by a decline in the excess of earning assets over interest-bearing
liabilities as the Company's asset growth continued to outstrip the growth in
funding from noninterest-bearing sources, notwithstanding the substantial
increase in shareholders' equity from the sale of Preferred Stock completed in
July 1995. The ratio of average interest-earning assets to average interest-
bearing liabilities declined to 117.55% for 1995 from 118.05% for 1994.
Total interest income for 1995 was $55.0 million, up 46% from $37.7 million
during the same period in 1994. The principal factors providing greater
interest income were the $116.8 million, or 33%, increase in the volume of
average loans outstanding and the increase in yields earned on loans and
investment securities. The Company's loan yields increased to 9.64% for 1995
from 8.44% in 1994. At the same time, the Company's yield on investment
securities increased to 6.20% from 6.01%.
Total interest expense for 1995 was $28.5 million, an increase of 72% from
$16.6 million for 1994, due to an increase in average interest-bearing
liabilities of $122.0 million, or 30%, and an increase in rates paid on average
interest-bearing liabilities to 5.37% from 4.06%. The increase in rates on
interest-bearing liabilities resulted from the increasing rate environment and
the Company's increased use of time deposits. As a percentage of average total
deposits, average time deposits increased to 70% for 1995 compared to 66% for
1994. The increase in the Bank's time deposits has generally involved deposits
with maturities of six months to one year.
29
<PAGE>
Changes in Interest Income and Expense/Volume and Rate Variances
The following table indicates the changes in interest income and interest
expense that are attributable to changes in average volume and average rates, in
comparison with the same period in the preceding year. The change in interest
due to the combined rate-volume variance has been allocated to rate and volume
changes in proportion to the absolute dollar amounts of the changes in each.
<TABLE>
<CAPTION>
Three Months Ended March 31, Year Ended December 31,
--------------------------------- ----------------------------------------------------------
1997 vs. 1996 1996 vs. 1995 1995 vs. 1994
Increase (Decrease) Attributable to Change in:
----------------------------------------------------------------------------------------------
Yield/ Net Yield/ Net Yield/ Net
Volume Rate Change Volume Rate Change Volume Rate Change
--------------------------------- --------------------------- ------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans receivable/(1)/........... $ 2,860 $ (176) $ 2,684 $10,201 $ (615) $ 9,586 $10,851 $ 4,650 $15,501
Investment securities........... 54 17 71 243 (57) 186 1,178 264 1,442
Federal funds sold.............. 7 - 7 (46) (58) (104) 266 137 403
--------------------------------- --------------------------- ------------------------------
Total interest income........ 2,921 (159) 2,762 10,398 (730) 9,668 12,295 5,051 17,346
--------------------------------- ---------------------------- -----------------------------
Interest paid on:
NOW accounts.................... 8 (2) 6 90 (16) 74 (52) 14 (38)
Money market accounts........... 117 129 246 332 (364) (32) 399 521 920
Savings accounts................ (5) - (5) (22) 3 (19) (47) (7) (54)
Time deposits................... 1,572 (158) 1,414 4,916 (477) 4,439 5,950 4,972 10,922
Federal funds purchased and
other short-term borrowings.... 12 - 12 (143) (30) (173) 92 65 157
--------------------------------- ---------------------------- -----------------------------
Total interest expense....... 1,704 (31) 1,673 5,173 (884) 4,289 6,342 5,565 11,907
--------------------------------- ---------------------------- -----------------------------
Net interest income.......... $ 1,217 $ (128) $ 1,089 $ 5,225 $ 154 $ 5,379 $ 5,953 $ (514) $ 5,439
==============================================================================================
</TABLE>
(1) Average balance includes nonaccrual loans. Fees included in interest
income on loans receivable are not considered material to any period
presented. Interest on tax-exempt loans and securities is not presented on
a tax-equivalent basis because such amounts are not considered material.
30
<PAGE>
Comparison of Consolidated Average Balance Sheets, Interest, Yields and Rates
The following table provides certain information relating to the Company's
average consolidated statements of financial condition and reflects the interest
income on interest-earning assets and interest expense of interest-bearing
liabilities for the periods indicated and the average yields earned and rates
paid for the periods indicated. These yields and costs are derived by dividing
income or expense by the average daily balance of the related assets or
liabilities, respectively, for the periods presented. Non-accrual loans have
been included in the average balances of loans receivable.
AVERAGE BALANCES
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
ASSETS
Interest-earning assets:
Loans receivable.................. $669,424 $15,516 9.40% $540,627 $12,832 9.55%
Investment securities............. 147,750 2,254 6.19 143,367 2,183 6.12
Federal funds sold................ 6,144 81 5.35 5,528 74 5.38
------------------------------ ------------------------------
Total Interest-Earning Assets....... 823,318 17,851 8.79 689,522 15,089 8.80
------------------------------ ------------------------------
Noninterest-earning assets:
Other assets...................... 40,566 31,953
---------- -----------
Total Assets........................ $863,884 $721,475
========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts...................... $ 36,658 $ 209 2.31% $ 34,912 $ 203 2.34%
Money market accounts............. 89,994 919 4.14 77,229 673 3.50
Savings accounts.................. 4,058 25 2.50 4,828 30 2.50
Time deposits..................... 571,205 8,036 5.71 454,560 6,622 5.86
------------------------------ ------------------------------
Total Interest-Bearing Deposits..... 701,915 9,189 5.31 571,529 7,528 5.30
Federal funds purchased and
other short-term borrowings.... 5,048 70 5.62 4,140 58 5.63
------------------------------ ------------------------------
Total Interest-Bearing Liabilities.. 706,963 9,259 5.31 575,669 7,586 5.30
------------------------------ ------------------------------
Noninterest-bearing liabilities:
Demand deposits................... 84,829 78,625
Other liabilities................. 6,877 6,351
Shareholders' equity.............. 65,215 60,830
---------- ----------
Total Liabilities and
Shareholders' Equity.............. $863,884 $721,475
========== ==========
Net interest income................. $ 8,592 $ 7,503
=========== ===========
Interest rate spread................ 3.48% 3.50%
======= ======
Net interest margin................. 4.23% 4.38%
======= ======
Ratio of average interest-earning
assets to average interest-
bearing liabilities............... 116.46% 119.78%
========= =========
</TABLE>
31
<PAGE>
<TABLE>
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------ ------------------------------- ----------------------------
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
------------------------------ ------------------------------- ----------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans receivable.................. $580,590 $55,177 9.50% $473,080 $45,591 9.64% $356,323 $30,090 8.44%
Investment securities............. 146,993 8,999 6.12 142,202 8,813 6.20 122,649 7,371 6.01
Federal funds sold................ 9,200 492 5.35 10,007 596 5.96 4,945 193 3.90
------------------------------ ------------------------------- ----------------------------
Total Interest-Earning Assets....... 736,783 64,668 8.78 625,289 55,000 8.80 483,917 37,654 7.78
------------------------------ ------------------------------- ----------------------------
Noninterest-earning assets:
Other assets...................... 34,999 29,197 25,819
------------ ----------- -----------
Total Assets........................ $771,782 $654,486 $509,736
============ =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts...................... $ 36,088 $ 838 2.32% $ 32,261 $ 764 2.37% $ 34,385 $ 802 2.33%
Money market accounts............. 81,939 3,129 3.82 77,147 3,161 4.10 66,245 2,241 3.38
Savings accounts.................. 4,580 114 2.49 5,441 133 2.44 7,378 187 2.53
Time deposits..................... 498,283 28,647 5.75 412,570 24,208 5.87 299,095 13,286 4.44
-----------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits..... 620,890 32,728 5.27 527,419 28,266 5.36 407,103 16,516 4.06
Federal funds purchased and
other short-term borrowings.... 1,940 105 5.41% 4,527 278 6.14% 2,823 121 4.29%
-----------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities.. 622,830 32,833 5.27% 531,946 28,544 5.37% 409,926 16,637 4.06%
-----------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits................... 79,739 68,540 56,175
Other liabilities................. 7,066 6,437 7,338
Shareholders' equity.............. 62,147 47,563 36,297
------------ ----------- -----------
Total Liabilities and
Shareholders' Equity.............. $771,782 $654,486 $509,736
============ =========== ===========
Net interest income................. $31,835 $26,456 $21,017
=========== =========== ===========
Interest rate spread................ 3.51% 3.43% 3.72%
======== ======== =======
Net interest margin................. 4.32% 4.23% 4.34%
======== ======== =======
Ratio of average interest-earning
assets to average interest-
bearing liabilities............... 118.30% 117.55% 118.05%
============ =========== ==========
</TABLE>
Provision for Loan Losses
The Company makes provisions for loan losses in amounts deemed necessary to
maintain the allowance for loan losses at an appropriate level. The adequacy of
the allowance for loan losses is determined by management based upon a number of
factors including, among others, analytical reviews of loan loss experience in
relationship to outstanding loans and commitments; unfunded loan commitments;
problem and nonperforming loans and other loans presenting credit concerns;
trends in loan growth, portfolio composition and quality; use of appraisals to
32
<PAGE>
estimate the value of collateral; and management's judgment with respect to
current and expected economic conditions and their impact on the existing loan
portfolio. Changes in the allowance may occur because of changing economic
conditions, and economic prospects or the financial position of borrowers. Based
upon its review, management established an allowance of $8.5 million, or 1.25%
of total loans, at March 31, 1997, compared to an allowance of $7.1 million, or
1.11% of total loans, at December 31, 1996, and an allowance of $5.8 million, or
1.09% of total loans, at December 31, 1995. During fiscal years 1996, 1995 and
1994, the provisions for loan losses were $3.1 million, $2.0 million and $1.8
million, respectively. During the first quarter of 1997, the Company received
information regarding events that adversely affected a borrower's ability to
fully repay its commercial loan, which had a carrying amount of $1.9 million.
As a result of this event, and management's regular evaluation of the adequacy
of the allowance for loan losses relative to other loans in the portfolio, the
Company recorded a provision for loan losses of $3.0 million for the first
quarter of 1997, compared with a provision of $875,000 for the first quarter of
1996. See "Net Income" and "Financial Condition, Capital Resources and
Liquidity--Allowance for Loan Losses."
Other Income
The following table sets forth the Company's other income for the periods
indicated.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
------------------- -------------------------------
1997 1996 1996 1995 1994
------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Service charges and fees... $ 752 $ 708 $2,985 $2,574 $2,440
Credit cards............... 193 207 869 901 903
Other noninterest income... 143 117 358 373 328
Gain on sales of loans
receivable................ 326 448 1,678 1,034 1,453
Gain/(loss) on sale of
investment securities.... - 122 459 (8) (3)
-------------------- -------------------------------
Total other income.... $1,414 $1,602 $6,349 $4,874 $5,121
==================== ===============================
</TABLE>
The Company has sought to develop sources of noninterest income through
credit card lending, student lending and mortgage banking, in addition to
traditional deposit and loan service charges and fees.
Three months ended March 31, 1997 and 1996. Other income declined by
$188,000 for the first quarter of 1997 compared to the first quarter of 1996
primarily as a result of a $122,000 decrease in gain on sales of loans
receivable and a $122,000 reduction in gain on sales of investment securities.
The decrease in the gain on sales of loans receivable in the first quarter of
1997 was primarily the result of lower sales of guaranteed student loans. A gain
on sale of investment securities occurred during the first quarter of 1996 when
$4.6 million in Agency securities classified as "held to maturity" and $7.7
million in Agency securities classified as "available for sale," originally
purchased at a discount, were called prior to their stated maturity date. No
securities were sold or called during the first three months of 1997.
Years ended December 31, 1996 and 1995. Total other income increased by
$1.5 million for fiscal year 1996 compared to 1995 primarily due to increased
gains on sales of student loans and residential mortgage loans, increased gains
on sales of investment securities and increased service charges attributable to
its higher deposit base. During 1996, the Company sold $46.7 million in student
loans compared to $40.2 million in such sales during 1995. The Company also was
able to increase its gain on sales of student loans by packaging its loans in a
manner than allowed it to obtain a higher premium from SLMA. The principal
balance of residential mortgage loans sold was $45.1 million during 1996
compared to $33.6 million during 1995.
33
<PAGE>
The gain on sales of investment securities during 1996 occurred when $4.6
million in Agency securities classified as "held to maturity", and $11.2 million
in Agency securities classified as "available for sale", originally purchased at
a discount, were called prior to their stated maturity date, and $150,000 in
corporate stock classified as "available for sale" was sold.
Years ended December 31, 1995 and 1994. Total other income declined by
$247,000 for fiscal 1995 compared to 1994 primarily due to decreased gains on
sales of student loans into the secondary market. This decrease was partially
offset by increased gains on sales of residential mortgage loans and increased
service charges attributable to its higher deposit base. During 1995, the
Company sold $40.7 million in student loans compared to $59.6 million in such
sales during 1994. Sales of residential mortgage loans declined in 1995 to
$34.0 million from $47.5 million in 1994, reflecting the decline in refinancing
activity during the comparatively higher interest rate environment which
generally prevailed during 1995. Residential mortgage loans were generally sold
with servicing released during fiscal 1995 which increased the gain on such
sales but may reduce future servicing income which is included in other
noninterest income.
During 1995, a loss on sales of investment securities occurred when the
Bank sold securities classified as "held to maturity". The Company concluded
that these securities were sold at a time near enough to their maturity dates
that interest rate risk was substantially eliminated as a pricing factor.
Other Expenses
The following table sets forth the Company's other expenses for the periods
indicated.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
-------------------- ----------------------------
1997 1996 1996 1995 1994
-------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Salaries and employee benefits $ 3,487 $ 2,828 $ 12,164 $ 10,057 $ 8,038
Occupancy..................... 1,043 759 3,671 3,080 2,509
FDIC and other insurance
expense...................... 63 132 859 856 1,056
Credit cards.................. 76 104 411 547 504
General and administrative.... 1,690 1,396 6,121 5,362 4,333
-------------------- ----------------------------
Total other expenses..... $ 6,359 $ 5,219 $ 23,226 $ 19,902 $ 16,440
==================== ============================
</TABLE>
The increase in the Company's other expenses during the past several years
reflects the Company's growth in asset size during this period. The Company
continues to experience increases in both salaries and employee benefits and
occupancy expense as it develops its markets.
Three months ended March 31, 1997 and 1996. The Company's other expenses
increased $1.1 million for the first quarter of 1997 compared to the first
quarter of 1996. This increase was primarily the result of an increase in
salaries and employee benefits, which increased $659,000 as a result of a 21%
increase in staffing. The increase in staffing is related to the expansion of
the Company's asset and deposit bases. In addition, general and administrative
expenses increased $287,000 and occupancy expense increased $284,000 compared to
1996. The increase in occupancy expense was due primarily to the leasing of
additional office space and the depreciation on furniture and equipment
purchased to furnish those new offices. These increases were offset by
reductions in both FDIC and other insurance and credit card expenses.
Years ended December 31, 1996 and 1995. The Company's other expenses
increased $3.3 million, or 17%, for fiscal year 1996 compared to fiscal year
1995. This increase was primarily the result of an increase in salaries
34
<PAGE>
and employee benefits, which increased $2.1 million, or 21%, as a result of a
20% increase in staffing. The increase in staffing is related to the expansion
of the Company's asset and deposit bases. In addition, occupancy expense
increased $591,000, due primarily to the leasing of additional office space and
the depreciation on furniture and equipment purchased to furnish those new
offices, and general and administrative expense increased $759,000. Included in
general and administrative expense was $139,000 in expenses related to an
unsuccessful effort to establish additional branches.
Despite the increase in the Company's deposit base, FDIC and other
insurance for 1996 increased only $3,000 compared to 1995. Regular deposit
insurance premium rates decreased beginning July 1, 1995 as the Bank Insurance
Fund ("BIF"), of which the Bank is a member, achieved its statutory reserve
ratio. However, legislation enacted by Congress required that the Bank pay a
one-time special assessment of $436,000 to the FDIC with respect to deposits it
acquired from a savings association in 1991. After the payment of this special
assessment, the insurance premiums related to these acquired deposits were also
reduced.
Years ended December 31, 1995 and 1994. The Company's other expenses
increased by $3.5 million, or 21%, during 1995 compared to 1994. This increase
was primarily the result of an increase in salaries and employee benefits, which
increased by $2.0 million, or 25%, as a result of a 22% increase in staffing.
The increase in staffing is related to the expansion of the Company's asset and
deposit bases. In addition, general and administrative expense increased by
$1.0 million and occupancy expense increased by $571,000 compared to 1994.
These increases were offset by a $200,000 reduction in FDIC and other insurance
expense. The increase in occupancy expense was due primarily to the leasing of
additional office space in Tulsa and Oklahoma City and the depreciation on
furniture and equipment purchased to furnish those new offices. The reduction
in FDIC and other insurance was due to a reduction in premiums as the BIF
achieved its statutory reserve ratio.
Taxes on Income
The Company's income tax expense for the first three months of 1997 and
1996 was $186,000 and $1.1 million, respectively. The Company's income tax
expense for fiscal years 1996, 1995 and 1994 was $4.3 million, $3.3 million and
$2.8 million, respectively. The increases in taxes on income during 1996 and
1995 reflect the Company's higher earnings. The Company's effective tax rates
have been lower than the 34% to 35% federal and 6% state statutory rates
primarily because of tax-exempt income on municipal obligations and loans.
Financial Condition, Capital Resources and Liquidity
Lending
Loans include commercial real estate, commercial, student, residential real
estate, construction and credit card and other consumer loans. Interest earned
on the Bank's loan portfolio is its primary source of income. Loans were $676.5
million at March 31, 1997, an increase of $31.9 million, or 5%, compared to
December 31, 1996. The Company experienced increases in the categories of
commercial mortgages ($12.5 million, or 6%), commercial loans ($6.1 million, or
3%), real estate construction loans ($4.8 million, or 9%), government-guaranteed
student loans ($4.1 million, or 7%), other consumer loans ($3.5 million, or
11%), and residential mortgages ($2.6 million, or 4%). These increases were
offset by a $1.7 million, or 8% reduction in credit card loans. The allowance
for loan losses increased by $1.3 million, or 19%, from December 31, 1996 to
March 31, 1997. At March 31, 1997, the allowance for loan losses was $8.5
million, or 1.25% of total loans, compared to $7.1 million, or 1.11% of total
loans, at December 31, 1996. Although the Bank's legal lending limit to any one
borrower was $10.4 million at December 31, 1996, the Bank's lending policy
generally limits loans to any one borrower to 90% of the Bank's legal lending
limit, although exceptions are made from time to time. The Bank's largest single
borrower, net of participations, at March 31, 1997 had outstanding loans of $9.8
million.
35
<PAGE>
- --------------------------------------------------------------------------------
For further information regarding the Bank's loan portfolio, including
information regarding concentrations of credit, see "Note 3. Loans Receivable,"
to the Consolidated Financial Statements.
The following table presents the composition of the Bank's loan portfolio,
net of unearned interest, at each of the dates indicated:
LOAN PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
At March 31, 1997 At December 31,
---------------------------------------------------------------------------------
1996 1995 1994
--------------------------------------------------------------
Amount % Amount % Amount % Amount %
-------------------- ------------------------------------------------------------
(dollars in thousands)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate mortgage:
Commercial............... $208,607 30.84% $196,163 30.43% $160,126 30.10% $132,297 32.06%
One-to-four family
residential............. 63,804 9.43 61,175 9.49 42,988 8.08 33,882 8.21
Real estate construction... 59,207 8.75 54,369 8.43 33,159 6.23 20,725 5.02
Commercial................. 224,589 33.20 218,515 33.90 181,081 34.04 120,781 29.27
Installment and consumer:
Guaranteed student loans. 66,027 9.76 61,959 9.61 67,388 12.67 61,752 14.97
Credit cards............. 19,137 2.83 20,839 3.23 21,869 4.11 20,958 5.08
Other.................... 35,128 5.19 31,626 4.91 25,377 4.77 22,219 5.39
-------------------- ------------------------------------------------------------
676,499 100.00% 644,646 100.00% 531,988 100.00% 412,614 100.00%
=========== =========== =========== ===========
Less:
Allowance for loan losses (8,484) (7,139) (5,813) (4,959)
---------- ----------- ----------- -----------
Total................. $668,015 $637,507 $526,175 $407,655
========== =========== =========== ===========
<CAPTION>
At December 31,
--------------------------------------
1993 1992
----------------------------------------
Amount % Amount %
----------------------------------------
<S> <C> <C> <C> <C>
Real estate mortgage:
Commercial............... $ 88,953 27.87% $ 64,111 25.86%
One-to-four family
residential............. 31,864 9.98 25,495 10.28
Real estate construction... 9,844 3.08 9,650 3.89
Commercial................. 80,732 25.29 55,666 22.45
Installment and consumer:
Guaranteed student loans. 69,739 21.84 60,171 24.27
Credit cards............. 19,189 6.01 16,943 6.83
Other.................... 18,939 5.93 15,931 6.42
----------------------------------------
319,260 100.00% 247,967 100.00%
=========== ===========
Less:
Allowance for loan losses (3,960) (3,393)
---------- ------------
Total................. $315,300 $244,574
========== ============
</TABLE>
36
<PAGE>
The following table sets forth the remaining maturities for certain loan
categories at December 31, 1996. Credit card and student loans, which do not
have stated maturities, are treated as due in one year or less.
LOAN PORTFOLIO MATURITY
<TABLE>
<CAPTION>
One Year One to Over
or Less Five Years Five Years Total
--------------------------------------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Real estate mortgage:
Commercial...................... $ 11,245 $ 37,790 $147,128 $196,163
One-to four-family residential.. 11,216 22,174 27,785 61,175
Real estate construction.......... 28,862 19,285 6,222 54,369
Commercial........................ 67,833 114,704 35,978 218,515
Installment and consumer:
Student loans................... 61,959 - - 61,959
Credit cards.................... 20,839 - - 20,839
Other consumer.................. 7,235 23,695 696 31,626
--------------------------------------------
Total........................ $209,189 $217,648 $217,809 $644,646
============================================
</TABLE>
The following table sets forth at December 31, 1996 the dollar amount of
all loans due more than one year after December 31, 1996.
LOAN PORTFOLIO SENSITIVITY
<TABLE>
<CAPTION>
Fixed Variable Total
------------------------------
<S> <C> <C> <C>
(dollars in thousands)
Real estate mortgage:
Commercial...................... $ 24,361 $160,557 $184,918
One-to four-family residential.. 12,870 37,089 49,959
Real estate construction.......... 8,451 17,056 25,507
Commercial........................ 33,798 116,884 150,682
Installment and consumer:
Student loans................... - - -
Credit cards.................... - - -
Other consumer.................. 21,908 2,483 24,391
------------------------------
Total........................ $101,388 $334,069 $435,457
==============================
</TABLE>
Nonperforming Loans. The Bank maintains a loan review department, which
reports directly to the Chief Financial Officer. The loan review department does
not have any lending authority. The Bank has retained, since late 1993, an
outside consultant to advise the loan review department and assist in the loan
review function. The loan review department recommends credits to the Executive
Loan Committee for inclusion on the watch list which is reviewed by the Loan
Quality Assurance Committee of the Board of Directors monthly. With the
concurrence of the Executive Loan Committee, credits also may be recommended to
the Loan Quality Assurance Committee for inclusion on the watch list by the
Chief Lending Officer, loan managers and individual loan officers. The
recognition of interest income on loans receivable is discontinued when, in
management's judgment, the interest will not be collectible in the normal course
of business. Generally, the Bank does not accrue interest on any asset (i) which
is maintained on a cash basis because of deterioration in the financial
condition of the borrower, (ii) for which payment in full of principal or
interest is not expected, or (iii) upon which principal or interest has been in
default for a period
37
<PAGE>
of 90 days or more unless the asset is both well secured and in the process of
collection. The Company does not have any material amounts of interest-earning
assets which would have been included in nonaccrual, past due or restructured
loans if such assets were loans.
Nonperforming loans consist of loans on a nonaccrual basis, loans which are
contractually past due 90 days or more, and loans, the original terms of which
have been restructured. Of the amounts included in nonperforming loans at March
31, 1997, approximately $723,000, or approximately 10% of the total loans
reported as nonperforming, are guaranteed by the federal government or an agency
thereof, or by a government sponsored corporation. The following table sets
forth the amounts of nonperforming loans at the end of the periods indicated:
38
<PAGE>
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
At March 31, At December 31,
-------------- ----------------------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Real estate mortgage
Commercial:
Nonaccrual............................ $ 27 $ 191 $ 107 $ 179 $ 261 $ 731
Past due 90 days or more.............. 665 614 88 - - 29
Restructured terms.................... 568 577 608 639 676 784
One-to four-family residential:
Nonaccrual............................ 31 265 18 58 95 346
Past due 90 days or more.............. 474 363 251 72 37 57
Restructured loans.................... - - - - - -
Real estate construction:
Nonaccrual.............................. - - - 86 101 123
Past due 90 days or more................ 192 119 - - - -
Restructured terms...................... - - - - - -
Commercial:
Nonaccrual.............................. 4,663 4,149 567 805 1,473 2,293
Past due 90 days or more................ 188 71 435 241 32 687
Restructured terms...................... - - 2,996 - 195 25
Installment and consumer:
Student loans:
Nonaccrual............................ - - - - - 3
Past due 90 days...................... 4 - - - 17 46
Restructured.......................... - - - - - -
Credit cards:
Nonaccrual............................ - - - - - -
Past due 90 days...................... 61 82 63 138 52 70
Restructured.......................... - - - - - 26
Other consumer:
Nonaccrual............................ 24 30 32 210 28 42
Past due 90 days or more.............. 164 188 114 62 174 63
Restructured terms.................... - - - - - -
-------------- ----------------------------------------------------
Total nonperforming loans............ 7,061 6,649 5,279 2,490 3,141 5,325
Other real estate owned................... 432 64 195 264 472 848
-------------- ----------------------------------------------------
Total nonperforming assets........... $ 7,493 $ 6,713 $ 5,474 $ 2,754 $ 3,613 $ 6,173
============== ====================================================
Loans receivable.......................... $676,499 $644,646 $531,988 $412,614 $319,260 $247,967
Summary:
Total nonaccrual........................ $ 4,745 $ 4,635 $ 724 $ 1,338 $ 1,958 $ 3,538
Total past due 90 days.................. 1,748 1,437 951 513 312 952
Total restructured...................... 568 577 3,604 639 871 835
-------------- ----------------------------------------------------
Total nonperforming loans............ 7,061 6,649 5,279 2,490 3,141 5,325
Other real estate owned................. 432 64 195 264 472 848
-------------- ----------------------------------------------------
Total nonperforming assets........... $ 7,493 $ 6,713 $ 5,474 $ 2,754 $ 3,613 $ 6,173
============== ====================================================
Allowance for loan losses to
loans receivable........................ 1.25% 1.11% 1.09% 1.20% 1.24% 1.37%
Nonperforming loans to loans receivable... 1.04 1.03 0.99 0.60 0.98 2.15
Allowance for loan losses to
nonperforming loans..................... 120.15 107.37 110.12 199.16 126.07 63.72
Nonperforming assets to loans receivable
and other real estate owned............. 1.11 1.04 1.03 0.67 1.13 2.48
</TABLE>
39
<PAGE>
The principal balance of loans for which accrual of interest has been
discontinued totaled approximately $4.7 million at March 31, 1997. During the
first three months of 1997, $103,000 in interest income was received on
nonaccruing loans. If interest on those loans had been accrued, total interest
income of $171,000 would have been recorded.
During the years ended December 31, 1996 and 1995, gross interest income of
$398,000 and $48,000, respectively, would have been recorded on loans accounted
for on a nonaccrual or restructured basis if such loans had been current
throughout the period. Interest on such loans included in income during such
periods amounted to approximately $37,000 and $367,000, respectively.
Those performing loans considered potential problem loans, as defined and
identified by management, amount to approximately $20.7 million at March 31,
1997, compared to $23.0 million at December 31, 1996. Although these are loans
where known information about the borrowers' possible credit problems cause
management to have doubts as to their ability to comply with the present loan
repayment terms, most are well collateralized and are not believed to present
significant risk of loss. These loans are subject to continuing management
attention and are considered by management in determining the level of the
allowance for loan losses. The Company's loan portfolio, however, contains a
significant number of commercial and commercial real estate loans with
relatively large balances. The deterioration of one or a few of such loans may
cause a significant increase in potential problem loans or in nonperforming
loans. Potential problem loans include $3.2 million in loans to individuals and
business in the healthcare industry and $1.8 million in restaurant loans. See
"Loan Concentrations."
No interest-bearing assets disclosed above, other than loans, were
classified as nonperforming at March 31, 1997 or December 31, 1996, or were
recognized by management as potential problem assets based upon known
information about possible credit problems of the borrower or issuer.
Loan Concentrations. The Bank extends commercial and consumer credit
primarily to customers in the State of Oklahoma which subjects the loan
portfolio to the general economic conditions within this area. At March 31,
1997, and December 31, 1996 and 1995, substantially all of the Bank's loans,
except for credit cards, were collateralized with real estate, inventory,
accounts receivable and/or other assets or guaranteed by agencies of the United
States Government.
Loans to individuals and businesses in the healthcare industry totaled
approximately $79 million, or 12% of total loans at March 31, 1997. Other
notable concentrations of credit within the loan portfolio at March 31, 1997
include $23.8 million, or 4% of total loans, in hotel/motel loans, $23.4
million, or 3% of total loans, in residential construction loans and $15.8
million, or 2% of total loans, in restaurant loans.
Allowance for Loan Losses. The allowance for loan losses is a valuation
reserve established by management in an amount it deems adequate to provide for
losses in the loan portfolio. Management assesses the adequacy of the allowance
for loan losses based upon a number of factors including, among others,
analytical reviews of loan loss experience in relationship to outstanding loans
and commitments; unfunded loan commitments; problem and nonperforming loans and
other loans presenting credit concerns; trends in loan growth, portfolio
composition and quality; use of appraisals to estimate the value of collateral;
and management's judgment with respect to current and expected economic
conditions and their impact on the existing loan portfolio. The allowance for
loan losses is increased by provisions for loan losses charged to expense.
Charge-offs of loan amounts determined by management to be uncollectible or
impaired decrease the allowance and recoveries of previous charge-offs, if any,
are added to the allowance. Management believes that the allowance for loan
losses was adequate at December 31, 1996 and March 31, 1997.
The amount of the allowance deemed appropriate by management, and the
levels of loan charge-offs and nonperforming loans, are affected by changing
economic conditions and economic prospects and the financial position of
borrowers. Management strives to carefully monitor credit quality and the
adequacy of the allowance for loan
40
<PAGE>
losses, and to identify loans that may become nonperforming. At any time,
however, there are loans included in the portfolio that will result in losses to
the Company, but that have not been identified as nonperforming or potential
problem loans. Because the loan portfolio contains a significant number of
commercial and commercial real estate loans with relatively large balances, the
unexpected deterioration of one or a few of such loans may cause a significant
increase in nonperforming assets, and lead to a material increase in charge-offs
and the provision for loan losses. Since problems with commercial and commercial
real estate loans do not necessarily appear early in their lives, the Company
may experience increased levels of nonperforming loans and loan charge-offs as
the relatively large volume of recently originated loans mature. In addition,
the OCC, as an integral part of its examination process, periodically reviews
the Bank's allowance for loan losses. Such agencies may require the Bank to
recognize additions to the allowance based upon judgments of the OCC examiners
about information available to them at the time of their examination.
The Company adopted Financial Accounting Standards Board ("FASB") Statement
of Financial Accounting Standards ("SFAS") No. 114, Accounting by Creditors for
Impairment of a Loan, as amended by SFAS No. 118, Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosure on January 1, 1995. The
allowance for loan losses related to loans that are identified for evaluation in
accordance with SFAS No. 114 is based on discounted cash flows using the loan's
initial effective interest rate or the fair value of the collateral for certain
collateral dependent loans. The amount of impairment determined in accordance
with SFAS No. 114 did not differ materially from amounts previously provided.
This evaluation is inherently subjective as it requires material estimates,
including the amounts and timing of future cash flows expected to be received on
impaired loans, that may be susceptible to significant change.The allowance for
loan losses is established through a provision for loan losses charged to
expense. A loan is considered to be impaired when, based on current information
and events, it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement. All of the
Company's nonaccrual loans have been defined as impaired loans. In addition,
SFAS No. 114 does not affect the comparability of the credit risk disclosures.
Based upon its review, management established an allowance of $8.5 million,
or 1.25% of total loans, at March 31, 1997, compared to an allowance of $7.1
million, or 1.11% of total loans, at December 31, 1996, and an allowance of $5.8
million, or 1.09% of total loans, at December 31, 1995. In establishing the
level of the allowance for March 31, 1997, management considered a number of
factors that tend to indicate a potential need for an increased allowance level,
including the increased risk inherent in the amount of commercial and commercial
real estate loans, which are viewed as entailing greater risk than certain other
categories of loans, recent charge-off history, and the amount of large loans
and of identified nonperforming loans at March 31, 1997, versus December 31,
1996. At March 31, 1997, total nonperforming loans were $7.1 million, or 1.04%
of total loans, compared to $6.6 million, or 1.03% of total loans, at December
31, 1996. Management also considered other factors, including the levels of
types of credits, such as residential mortgage loans, deemed to be of relatively
low risk, that tended to indicate the potential need for a lower allowance. The
Company determined the level of the allowance for loan losses at March 31, 1997
was appropriate as a result of balancing these and other factors it deemed
relevant to the adequacy of the allowance. Management conducted a similar
analysis in order to determine the appropriate allowance at March 31, 1996 and
December 31, 1996, 1995, and 1994.
In establishing this level of allowance for December 31, 1996, management
considered a number of factors that tend to indicate a potential need for an
increased allowance level, including the increased level of nonperforming loans
at December 31, 1996 versus December 31, 1995, the increased risk associated
with the level of real estate construction loans (8.4% of the loan portfolio at
December 31, 1996 and 6.2% of the portfolio at December 31, 1995), which are
viewed as entailing greater risk than certain other categories of loans.
Management also considered other factors, including the levels of types of
credits, such as the increased level of residential mortgage loans, deemed to be
of relatively low risk, and the level of loans which are guaranteed by the
federal government, its agencies or federally sponsored corporations, that
tended to indicate the potential need for a lower allowance. One-to four family
residential mortgage loans were 9.5% of the loan portfolio at December 31, 1996
versus 8.1% at December 31, 1995. Relatively lower risk student loans decreased
to 9.6% at year-end 1996 from 12.7% the previous
41
<PAGE>
year-end. The level of commercial loans, which comprise the largest category in
the portfolio, remained unchanged at approximately 34% of the total portfolio at
December 31, 1996 and 1995. The level of commercial mortgage loans, comprising
approximately 30% of the year-end portfolio, was similarly unchanged. Overall,
the loan portfolio, before deduction of the allowance for loan losses, increased
by $112.7 million or 21% from year-end 1995 to year-end 1996, while the
allowance grew by $1.3 million, or 23%. The Company determined the level of the
allowance for loan losses at December 31, 1996 was appropriate, as a result of
its balancing these and other factors it deemed relevant to the adequacy of the
allowance.
The Company's ratio of net charge-offs to average loans outstanding
increased to 0.31% for the year ended December 31, 1996 from 0.24% in 1995 and
0.22% in 1994. The 1996 increase in the net charge-off ratio reflected an
increase in commercial real estate mortgage and credit card loan charge-offs
relative to the balances of those loan categories and total loans. The Company's
ratio of net charge-offs to average loans outstanding increased to 1.00%, on an
annualized basis, for the first quarter of 1997, primarily as a result of the
impairment of the commercial loans described above.
At December 31, 1996, nonperforming loans were $6.6 million, or 1.03% of
the portfolio, compared with $5.3 million, or 0.99% of the portfolio at December
31, 1995. The allowance for loan losses equalled 107% and 110% of nonperforming
loans at December 31, 1996 and 1995, respectively. Large changes in the ratio of
the allowance to nonperforming loans may occur from period to period because of
variations in the amounts of nonperforming loans, which depend largely on the
condition of a small number of individual loans and borrowers relative to the
total loan portfolio. The $3.9 million increase in nonaccrual loans from year-
end 1995 was mainly the result of the classification as nonaccrual of a group of
related loans with a remaining net book value of $3.4 million at December 31,
1996 that had been classified as restructured at December 31, 1995.
At March 31, 1997, impaired loans totaled $4.9 million, and had been
allocated a related allowance for loan losses of $2.3 million. At December 31,
1996 and 1995, impaired loans totaled $4.8 million and $3.3 million, and had
been allocated a related allowance for loan losses of $2.0 million and $1.3
million, respectively.
Management strives to carefully monitor credit quality and the adequacy of
the allowance for loan losses, and to identify loans that may become
nonperforming. At any time, however, there are loans included in the portfolio
that will result in losses to the Company, but that have not been identified as
nonperforming or potential problem loans. Because the loan portfolio contains a
significant number of commercial and commercial real estate loans with
relatively large balances, the unexpected deterioration of one or a few of such
loans may cause a significant increase in nonperforming assets, and lead to a
material increase in charge-offs and the provision for loan losses.
42
<PAGE>
The following table sets forth an analysis of the Company's allowance for
loan losses for the periods indicated.
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
----------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Balance at beginning of period......... $ 7,139 $ 5,813 $ 5,813 $ 4,959 $ 3,960 $ 3,393 $ 2,901
Loans charged-off
Real estate mortgage
One-to four-family residential..... 78 9 80 7 16 58 76
Commercial......................... 26 - 68 - 156 14 317
Real estate construction - - - 1 - 13 26
Commercial........................... 1,350 294 1,064 1,101 461 675 364
Installment and consumer.............
Student loans...................... - - - - 1 8 17
Credit cards....................... 241 220 803 528 370 519 564
Other consumer..................... 77 110 286 166 199 129 267
----------------------- -----------------------------------------------------
Total charge-offs................. 1,772 633 2,301 1,803 1,203 1,416 1,631
----------------------- -----------------------------------------------------
Recoveries
Real estate mortgage
One-to four-family residential..... 35 2 15 33 23 15 31
Commercial......................... 1 1 10 119 34 251 117
Real estate construction............. - - - - - - -
Commercial........................... 50 103 288 334 94 76 143
Installment and consumer
Student loans...................... 1 - - 1 - 3 6
Credit cards....................... 20 28 106 111 139 130 76
Other consumer..................... 9 35 108 59 112 108 100
----------------------- -----------------------------------------------------
Total recoveries.................. 116 169 527 657 402 583 473
----------------------- -----------------------------------------------------
Net loans charged-off.................. 1,656 464 1,774 1,146 801 833 1,158
Provision for loan losses.............. 3,001 875 3,100 2,000 1,800 1,400 1,650
----------------------- -----------------------------------------------------
Balance at end of period............... $ 8,484 $ 6,224 $ 7,139 $ 5,813 $ 4,959 $ 3,960 $ 3,393
======================= =====================================================
Loans outstanding
Average.............................. $669,424 $540,627 $580,590 $473,080 $356,323 $277,099 $229,230
End of period........................ 676,499 537,088 644,646 531,988 412,614 319,260 247,967
Ratio of allowance for loan losses
to loans outstanding
Average............................ 1.27% 1.15% 1.23% 1.23% 1.39% 1.43% 1.48%
End of period...................... 1.25% 1.16% 1.11% 1.09% 1.20% 1.24% 1.37%
Ratio of net charge-offs to average
loans outstanding during the period.. 1.00% 0.35% 0.31% 0.24% 0.22% 0.30% 0.51%
======================= =====================================================
</TABLE>
43
<PAGE>
The following table allocates the allowance for loan losses by loan category
at the dates indicated. 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. The amounts shown in the column
labeled "Percent of Total Loans" are the percentages of loans outstanding in
each category of loans to total loans outstanding at the dates indicated.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
At December 31,
At March 31 ------------------------------------------------------------
1997 1996 1995 1994
---------------------- ------------------------------------------------------------
Percent Percent Percent Percent
of of of of
Total Total Total Total
Amount Loans Amount Loans Amount Loans Amount Loans
---------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Real estate mortgage
One- to four-family
residential............ $ 309 9.43% $ 294 9.49% $ 176 8.08% $ 178 8.21%
Commercial............... 371 30.84 584 30.43 538 30.10 941 32.06
Real estate construction... 543 8.75 457 8.43 310 6.23 195 5.02
Commercial................. 5,109 33.20 4,597 33.90 3,688 34.04 2,616 29.27
Installment and consumer
Guaranteed student loans. - 9.76 - 9.61 9 12.67 6 14.97
Credit cards............. 753 2.83 670 3.23 456 4.11 247 5.08
Other.................... 268 5.19 263 4.91 83 4.77 137 5.39
Unallocated................ 1,131 - 274 - 553 - 639 -
---------------------- ------------------------------------------------------------
Total allowance for
loan losses.............. $8,484 100.00% $7,139 100.00% $5,813 100.00% $4,959 100.00%
====================== ============================================================
<CAPTION>
At December 31,
-----------------------------------
1993 1992
-------------------------------------
Percent Percent
of of
Total Total
Amount Loans Amount Loans
-------------------------------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Real estate mortgage
One- to four-family
residential............ $ 103 9.98% $ 100 10.28%
Commercial............... 519 27.87 558 25.86
Real estate construction... 32 3.08 39 3.89
Commercial................. 1,302 25.29 1,329 22.45
Installment and consumer
Guaranteed student loans. 65 21.84 18 24.27
Credit cards............. 747 6.01 564 6.83
Other.................... 88 5.93 211 6.42
Unallocated................ 1,104 - 574 -
-------------------------------------
Total allowance for
loan losses.............. $3,960 100.00% $3,393 100.00%
=====================================
</TABLE>
44
<PAGE>
Investment Activities
The objectives of the investment portfolio are to provide the Company with a
source of liquidity (from scheduled maturities) as well as a source of earnings.
No significant gains or losses were realized from sales of securities during the
years ended December 31, 1996 or 1995 or the three months ended March 31, 1997.
The following table presents the composition of the investment portfolio by
major category at the dates indicated.
INVESTMENT SECURITIES PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
At March 31,
1997 At December 31,
---------------- ----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C> <C>
(dollars in thousands)
U.S. Government and agency
securities................. $114,497 $109,988 $110,785 $109,620
State and municipal
obligations................ 12,659 13,153 11,579 10,217
Mortgage-backed securities.. 21,388 23,061 24,222 22,972
Other securities............ 1,140 1,149 1,102 708
-------- -------- -------- --------
Total investment
securities............ $149,684 $147,351 $147,688 $143,517
======== ======== ======== ========
Available for sale (fair
value)..................... $ 64,897 $ 63,762 $ 73,044 $ 37,214
Held to maturity (amortized
cost)...................... 84,787 83,589 74,644 106,303
-------- -------- -------- --------
$149,684 $147,351 $147,688 $143,517
======== ======== ======== ========
</TABLE>
45
<PAGE>
The following table sets forth the maturities, carrying value (amortized
cost (in the case of investment securities being held to maturity) or fair value
(in the case of investment securities available for sale)), fair market values
and average yields for the Company's investment portfolio at March 31, 1997.
Yields are not presented on a tax-equivalent basis. Maturities of mortgage-
backed securities are based on expected maturities. 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.
The securities of no single issuer (other than the United States or its
agencies), or in the case of securities issued by state and political
subdivisions, no source or group of sources of repayment, accounted for more
than 10% of stockholders' equity of the Company at March 31, 1997.
MATURITY OF INVESTMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
One Year or Less One to Five Years Five to Ten Years
------------------ ------------------ ------------------
Carrying Average Carrying Average Carrying Average
Value Yield Value Yield Value Yield
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Held to Maturity
- ---------------------------
U.S. government and
agency securities....... $21,050 5.74% $ 52,301 6.20% - -
State and municipal
obligations............. 2,622 4.06% 8,814 4.34% - -
Mortgage-backed
securities.............. - - - - - -
Other securities......... - - - - - -
--------------------------------------------------------------
Total held to maturity. $23,672 5.56% $ 61,115 5.93% - -
==============================================================
Available for Sale
- ---------------------------
U.S. government and
agency securities....... $ 5,427 6.24% $ 27,964 6.63% $7,755 7.11%
State and municipal
obligations............. - - 1,223 5.07% - -
Mortgage-backed
securities.............. 6,476 6.53% 14,236 6.65% 676 7.40%
Other securities......... 1,140 14.84% - - - -
--------------------------------------------------------------
Total available for
sale.................. $13,043 7.14% $ 43,423 6.59% $8,431 7.13%
==============================================================
Total investment
securities.............. $36,715 6.12% $104,538 6.21% $8,431 7.13%
==============================================================
<CAPTION>
More than Ten Total Investment Securities
Years ----------------------------
-----------------
Carrying Average Carrying Fair Average
Value Yield Value Value Yield
-------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Held to Maturity
- ---------------------------
U.S. government and
agency securities....... - - $ 73,351 $ 73,161 6.07%
State and municipal
obligations............. - - 11,436 11,437 4.28%
Mortgage-backed
securities.............. - - - - -
Other securities......... - - - - -
-------------------------------------------------
Total held to maturity. - - $ 84,787 $ 84,598 5.83%
=================================================
Available for Sale
- ---------------------------
U.S. government and
agency securities....... - - $ 41,146 $ 41,146 6.67%
State and municipal
obligations............. - - 1,223 1,223 5.07%
Mortgage-backed
securities.............. - - 21,388 21,388 6.64%
Other securities......... - - 1,140 1,140 14.84%
-------------------------------------------------
Total available for
sale.................. - - $ 64,897 $ 64,897 6.77%
=================================================
Total investment
securities.............. - - $149,684 $149,495 6.24%
=================================================
</TABLE>
46
<PAGE>
At March 31, 1997 and December 31, 1996, the Company held mortgage-backed
securities with a book-value of $21.4 million and $23.1 million, respectively,
all of which were collateralized by single-family mortgage loans. It is the
Company's policy to purchase mortgage-backed securities issued by the Federal
Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association
or Fannie Mae ("FNMA"), or the Government National Mortgage Association or
Ginnie Mae ("GNMA"), when such securities can be acquired at attractive yields,
and where the investment characteristics of the securities complement the Bank's
asset/liability management objectives, primarily as to interest rate adjustments
and terms to maturity. FHLMC, FNMA and GNMA mortgage-backed securities have
lower risk weightings, and therefore require less capital, than residential
mortgage loans. Mortgage-backed securities also may be used as collateral for
borrowings and, through repayments, as a source of liquidity. At March 31, 1997,
December 31, 1996, 1995, and 1994, the Company had no investments in privately
issued mortgage-backed securities, and had no mortgage-related securities that
were rated "high risk" under regulatory guidelines.
Premises and Equipment
Premises and equipment at March 31, 1997 was $3.0 million greater than at
December 31, 1996 primarily due to the acquisition of land for a new Tulsa
Banking Center at 15th and Utica to be opened in late 1998. The Company intends
to construct a new facility for its Tulsa operations. Groundbreaking on this
42,000 square foot building is expected to occur in the third quarter of 1997,
with occupancy anticipated in the third quarter of 1998. When opened, the
building will include space for rental to third parties. The total cost of the
building is expected to be $8.0 million. A substantial portion of these costs
will be capitalized and, except for the cost of the land, will be expensed over
the useful life of the property.
Premises and equipment at December 31, 1996 was $3.4 million greater than
at December 31, 1995, primarily due to the acquisition of premises in Chickasha,
Oklahoma and the costs of remodeling existing properties.
Deposit Activity
The principal sources of funds for the Bank are core deposits (demand
deposits, interest-bearing transaction accounts, money market accounts, savings
deposits and certificates of deposit of less than $100,000) from the local
market areas surrounding each of the Bank's offices. Certificates of deposit of
$100,000 or more, which are also derived primarily from the local market areas
of the Bank's offices, and which are priced comparably to certificates of
deposit below $100,000, also constitute a significant source of funds for the
Bank. The Bank's deposit base includes transaction accounts, time and savings
accounts and accounts which customers use for cash management and which provide
the Bank with a source of fee income and cross-marketing opportunities as well
as a low-cost source of funds. Time and savings accounts, including money
market deposit accounts, also provide a relatively stable and low-cost source of
funding. The largest source of funds for the Bank remains certificates of
deposit.
The Bank offers a variety of cash management services to its commercial
deposit customers including the lock-box collections and deposit reconciliation
and verification. Commercial customers in Tulsa and Oklahoma City frequently
use third-party courier services to deliver deposits which has allowed the Bank
to effectively service these metropolitan areas from its current branch
locations.
The Company's deposits increased by $60.6 million, or 8%, from $753.9
million at December 31, 1996 to $814.5 million at March 31, 1997. This increase
occurred primarily in time deposits, which increased by $49.2 million, or 9%.
Interest-bearing demand deposits and money market accounts increased by $2.7
million and $6.6 million, respectively, or 8% each, from December 31, 1996 to
March 31, 1997.
The Bank's deposits grew by $120.0 million, or 19%, during 1996. Deposit
growth during 1996 came mainly from time deposits. The Bank has not solicited
brokered deposits as a source of funds, although its capitalization would permit
such activity on an unrestricted basis under current federal banking
regulations.
47
<PAGE>
The following table sets forth the distribution of the Bank's deposit
accounts at the dates indicated and the weighted average nominal interest rates
on each category of deposit.
DEPOSITS
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------
At March 31, 1997 1996 1995
---------------------------- --------------------------------------------------------
Percent Percent Percent
of of of
Amount Deposits Rate Amount Deposits Rate Amount Deposits Rate
------ -------- ---- ------ -------- ---- ------ -------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits............ $ 85,943 10.55% -% $ 83,729 11.11% -% $ 78,308 12.34% -%
NOW accounts............... 37,054 4.55 2.31 34,309 4.55 2.32 33,762 5.32 2.37
Money market deposits...... 93,467 11.47 4.14 86,910 11.53 3.82 75,330 11.87 4.10
Savings deposits 4,002 0.49 2.50 4,086 0.54 2.49 4,788 0.76 2.44
Time deposits of $100,000
or more................... 142,397 17.49 5.63 123,068 16.33 5.66 86,258 13.60 5.77
Other time deposits........ 451,674 55.45 5.73 421,843 55.94 5.77 355,941 56.11 5.89
-------- ------ -------- ------ -------- ------
Total Deposits.......... $814,537 100.00% $753,945 100.00% $634,387 100.00%
======== ====== ======== ====== ======== ======
<CAPTION>
At December 31,
---------------------------
1994
---------------------------
Percent
of
Amount Deposits Rate
------ -------- ----
<S> <C> <C> <C>
Demand deposits............ $ 66,661 12.69% -%
NOW accounts............... 31,236 5.94 2.33
Money market deposits...... 73,882 14.06 3.38
Savings deposits 6,669 1.27 2.53
Time deposits of $100,000
or more................... 64,661 12.30 4.19
Other time deposits........ 282,451 53.74 4.51
-------- ------
Total Deposits........ $525,560 100.00%
======== ======
</TABLE>
The following table indicates the amount of the Bank's certificates of
deposit of $100,000 or more by time remaining until maturity at March 31, 1997.
AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<TABLE>
<CAPTION>
Maturity Period Amount
--------------- ------
(dollars in thousands)
<S> <C>
Three months or less................... $ 60,345
Over three months through six months... 33,218
Over six months through twelve months.. 31,637
Over twelve months..................... 17,197
--------
Total................................ $142,397
========
</TABLE>
48
<PAGE>
Borrowings.
The Company uses various forms of short-term borrowings for cash management
and liquidity purposes on a limited basis. These forms of borrowings include
federal funds purchases and borrowings from the Federal Reserve Bank and Student
Loan Marketing Association ("SLMA"). The Bank has approved federal funds
purchase lines with three other banks. The Bank also carries interest-bearing
demand notes issued by the Bank to the U.S. Treasury as a participant in the
Treasury Tax and Loan note option program. The Bank has available a $20.0
million line of credit from SLMA, borrowings under which would be secured by
student loans. Borrowings under this line of credit may be used for any
permissible corporate purpose.
<TABLE>
<CAPTION>
At March 31, At December 31,
-------------------- -------------------------------------
1997 1996 1996 1995 1994
-------------------- -------------------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Amounts outstanding at end of period:
Treasury tax and loan note option.................... $ 1,500 $ 1,500 $ 1,185 $ 471 $ 1,500
Federal funds purchased and securities sold
under repurchase agreements......................... - - 1,800 2,800 12,900
Other short-term borrowings.......................... - - - 7,500 -
Weighted average rate paid on:
Treasury tax and loan note option.................... 5.67% 5.10% 4.99% 5.15% 5.20%
Federal funds purchased and securities sold
under repurchase agreements......................... - - 6.70% 5.75% 5.84%
Other short-term borrowings.......................... - - - 5.55% -
Maximum amount of borrowings outstanding at
any month end:
Treasury tax and loan note option.................... $ 1,500 $ 1,500 $ 1,500 $ 1,710 $ 1,976
Federal funds purchased and securities sold
under repurchase agreements......................... 1,000 2,300 2,300 11,200 12,900
Other short-term borrowings. ........................ 5,000 - - 12,500 -
Approximate average short-term borrowings
outstanding with respect to:
Treasury tax and loan note option.................... 1,203 1,162 1,135 1,152 1,117
Federal funds purchased and securities sold
under repurchase agreements......................... 849 753 251 1,536 1,177
Other short-term borrowings.......................... 2,996 2,225 554 1,839 507
Approximate average weighted rate paid on:
Treasury tax and loan note option.................... 4.76% 5.44% 4.96% 5.79% 3.78%
Federal funds purchased and securities sold
under repurchase agreements......................... 5.67% 5.76% 5.78% 6.05% 4.98%
Other short-term borrowings.......................... 5.84% 5.59% 5.59% 6.41% 3.97%
</TABLE>
Capital Resources
Shareholders' equity at March 31, 1997 of $64.5 million, increased $ 3.3
million, or 5%, over March 31, 1996, but decreased by $493,000, or 1%, from
December 31, 1996. The first quarter 1997 decrease was due to reduced earnings
for the first three months of 1997, which were less than dividends declared on
common and preferred stock, and a $303,000 decrease attributable to a change in
the unrealized gain/loss, net of taxes, on investment securities available for
sale. Shareholders' equity increased to $65.0 million at December 31, 1996 from
$60.4 million a year earlier. The increase was primarily attributed to the
earnings retained after common and preferred stock dividend payments. Net
unrealized gains on investment securities available for sale (net of tax)
49
<PAGE>
declined to $205,000 at December 31, 1996 compared to $612,000 at December 31,
1995. The Corporation also increased common stock and related surplus by
$170,000 through the issuance of common stock by the dividend reinvestment and
employee stock purchase plans.
The Bank meets the requirements for a well-capitalized institution. See
accompanying Notes to Consolidated Financial Statements for additional
information regarding the Company's and the Bank's actual capital requirements
and ratios.
Liquidity
Liquidity is measured by a financial institution's ability to raise funds
through deposits, borrowed funds, capital, or the sale of highly marketable
assets such as residential mortgage loans. The Company's portfolio of
government-guaranteed student loans and SBA loans are also readily salable.
Additional 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 capital and money markets. These 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 84%, 86% and 88% of total deposits at December 31, 1996, 1995 and
1994, respectively, and were 83% and 84% of total deposits at March 31, 1997 and
1996, respectively.
The Company uses various forms of short-term borrowings for cash management
and liquidity purposes on a limited basis. These forms of borrowings include
federal funds purchases and borrowings from the Federal Reserve Bank. The Bank
has approved federal funds purchase lines with three other banks. The Bank also
carries interest-bearing demand notes issued to the U.S. Treasury as a
participant in the Treasury Tax and Loan note program. In addition, the Bank
has available a $20.0 million line of credit from SLMA. Borrowings under the
SLMA line would be secured by student loans. During 1996 and 1995, and during
the first quarter of 1997, no category of borrowings averaged more than 30% of
ending shareholders' equity.
During the first three months of 1997, cash and cash equivalents increased
by $21.1 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $60.0 million and operating
activities of $4.3 million offset by $43.2 million in cash used in investing
activities.
Cash and cash equivalents, during the first three months of 1996, increased
by $8.5 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $19.7 million and investing
activities of $1.4 million offset by $12.6 million in cash used in operating
activities.
During the year 1996, cash and cash equivalents increased by $2.1 million
as compared to the year ended December 31, 1995. The increase was the result of
cash generated from financing activities (primarily increased deposits) of
$117.1 million offset by $114.5 million in cash used in investing activities and
$535,000 in cash used in operating activities.
During 1995, cash and cash equivalents increased by $4.4 million as
compared to the year ended December 31, 1994. The increase was the result of
cash generated from operating activities of $2.9 million and financing
activities (primarily increased deposits) of $123.8 million offset by $122.3
million in cash used in investing activities.
Asset/Liability Management
Net interest income, the primary component of the Company's net income,
arises from the difference between the yield on interest-earning assets and the
cost of interest-bearing liabilities and the relative amounts of such assets and
liabilities.
50
<PAGE>
The Company manages its assets and liabilities by coordinating the levels
of, or gap between, interest rate sensitive assets and liabilities to minimize
changes in net interest income despite changes in market interest rates. It is
the Company's goal to maintain a percentage of rate-sensitive assets to rate-
sensitive liabilities of between 75% and 125%. This percentage of rate-
sensitive assets to rate-sensitive liabilities presents a static position as of
a single day and is not necessarily indicative of the Company's position at any
other point in time and does not take into account the sensitivity of yields and
costs of specific assets and liabilities to changes in market rates. While the
Company's goal is to match the maturities of assets and liabilities on a dollar
for dollar basis, market forces such as the needs of depositors and borrowers,
and competition may cause it to operate close to the policy limits. The
asset/liability policy is intended to stabilize the long-run earning power of
the Company along an acceptable growth path. The Bank's Asset/Liability
Management Committee meets on a monthly basis to monitor compliance with its
objectives.
Generally, during a period of rising interest rates, a negative gap
position would adversely affect net interest income, while a positive gap would
result in an increase in net interest income, while, conversely, during a period
of falling interest rates, a negative gap would result in an increase in net
interest income and a positive gap would adversely affect net interest income.
Because of the Company's current gap position and the repricing and repayment
characteristics of its loan portfolio, which consists primarily of short-term
and floating-rate loans, management believes the Company's net interest income
will not be materially adversely affected by increases or decreases in market
interest rates. Increases in general interest rates, however, may affect other
sources of income such as gains on sales of mortgages.
The following table sets forth the Company's interest rate sensitivity at
March 31, 1997.
<TABLE>
<CAPTION>
0 to 3 4 to 12 Over 1 to Over
Months Months 5 Years 5 Years Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Interest-earning assets:
Loans receivable............................. $338,627 $208,828 $111,710 $ 17,334 $676,499
Investment securities........................ 8,094 22,116 99,106 20,368 149,684
Federal funds sold........................... 15,800 - - - 15,800
---------------------------------------------------------------------
Total...................................... 346,721 230,944 210,816 37,702 826,183
---------------------------------------------------------------------
Interest-bearing liabilities:
Money market deposit accounts................ 93,467 - - - 93,467
Time deposits................................ 194,441 322,343 77,198 89 594,071
Savings accounts............................. 4,002 - - - 4,002
NOW accounts................................. 37,054 - - - 37,054
Other........................................ 1,500 - - - 1,500
---------------------------------------------------------------------
Total...................................... 330,464 322,343 77,198 89 730,094
---------------------------------------------------------------------
Interest sensitivity gap...................... $ 16,257 $(91,399) $133,618 $ 37,613 $ 96,089
=====================================================================
Cumulative interest sensitivity gap........... $ 16,257 $(75,142) $ 58,476 $ 96,089 $ 96,089
=====================================================================
Percentage of interest-earning assets
to interest-bearing liabilities.............. 104.92% 71.65% 273.08% 42,361.80% 113.16%
=====================================================================
Percentage of cumulative gap to total assets.. 1.83% (8.46)% 6.59% 10.82% 10.82%
=====================================================================
</TABLE>
The foregoing analysis assumes that the Company's mortgage-backed
securities mature during the period in which they are estimated to prepay. No
other prepayment or repricing assumptions have been applied to the Company's
interest-earning assets.
51
<PAGE>
Effects of Inflation
The consolidated financial statements and related consolidated financial
data presented herein have been prepared in accordance with generally accepted
accounting principles and practices within the banking industry which require
the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial companies,
virtually all the assets and liabilities of a financial institution are monetary
in nature. As a result, interest rates have a more significant impact on a
financial institution's performance than the effects of general levels of
inflation.
Recently Adopted Accounting Standards
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
which establishes accounting standards for such assets. In May 1995, the FASB
also issued SFAS No. 122, Accounting for Mortgage Servicing Rights, which amends
the accounting for the rights to service mortgage loans, however acquired, and
requires the Company to recognize as separate assets those rights to service
mortgage loans for others. Moreover, SFAS No. 122 requires the Company to
evaluate whether amounts capitalized as mortgage servicing rights are impaired.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 establishes a fair value method and disclosure
standards for stock-based employee compensation arrangements, such as stock
purchase plans and stock options. SFAS No. 123 requires expanded disclosures of
stock-based compensation arrangements with employees and encourages, but does
not require, compensation cost to be measured based on the fair value of the
equity instrument awarded. As permitted by SFAS No. 123, the Company will
continue to follow the provisions of Accounting Principles Board Opinion ("APB")
No. 25 for such stock-based compensation arrangements and has disclosed the
proforma effects of applying SFAS No. 123 for 1995 and 1996 in these financial
statements.
The adoption of SFAS Nos. 121, 122 and 123 in the 1996 financial statement
did not have a material impact on the Company's consolidated financial position
or results of operations.
In February 1997, the FASB issued SFAS No. 129, Disclosure of Information
About Capital Structure. SFAS No. 129 establishes standards for disclosure of
information regarding an entity's capital structure. The adoption of SFAS No.
129 did not affect the Company's consolidated financial position or results of
operations.
Accounting Standards Issued But Not Yet Adopted
In June 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 125
requires the Company to recognize the financial and servicing assets it controls
and liabilities it has incurred, derecognize financial assets when control has
been surrendered, and derecognize liabilities when extinguished. In December
1996, the FASB adopted an amendment to SFAS No. 125 that will delay for one year
certain provisions of the Statement. As amended, SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1997. The Company will adopt SFAS No. 125 for
transfers and servicing of financial assets and extinguishments of liabilities
when required. Management believes that adoption of SFAS No. 125 will not have
a material impact on the Company's consolidated financial position or results of
operations.
In February 1997, the FASB issued SFAS No. 128, Earnings Per Share, which
establishes standards for computing and presenting earnings per share. SFAS No.
128 is effective for periods ending after December 15, 1997. Management believes
that SFAS No. 128 will not have a significant effect on the Company's
calculation of earnings
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per share considering its current capital structure and the capital structure
that would result from the issuance of the Preferred Securities.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, State Street Bank and Trust Company, will
act as indenture trustee for the Preferred Securities under the Trust Agreement
for purposes of complying with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Trust
Agreement and those made part of the Trust Agreement by the Trust Indenture Act.
The following summary of the material terms and provisions of the Preferred
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Agreement, the Trust Act, and the Trust Indenture Act. Wherever particular
defined terms of the Trust Agreement are referred to, but not defined herein,
such defined terms are incorporated herein by reference. The form of the Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
General
Pursuant to the terms of the Trust Agreement, the Trustees, on behalf of
SBI Capital, will issue the Trust Securities. All of the Common Securities will
be owned by the Company. The Preferred Securities will represent preferred
undivided beneficial interests in the assets of SBI Capital and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Trust
Agreement. The Trust Agreement does not permit the issuance by SBI Capital of
any securities other than the Trust Securities or the incurrence of any
indebtedness by SBI Capital.
The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities, except as described under
"--Subordination of Common Securities." Legal title to the Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Guarantee executed by the Company for the
benefit of the holders of the Preferred Securities will be a guarantee on a
subordinated basis with respect to the Preferred Securities, but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when SBI Capital does not have funds on
hand available to make such payments. State Street Bank and Trust Company, as
Guarantee Trustee, will hold the Guarantee for the benefit of the holders of the
Preferred Securities. See "Description of the Guarantee."
Distributions
Payment of Distributions. Distributions on each Preferred Security will be
payable at the annual rate of % of the stated Liquidation Amount of $25,
payable quarterly in arrears on January 31, April 30, July 31 and October 31 of
each year, to the holders of the Preferred Securities on the relevant record
dates (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). The record date will be the 15th day of the
month in which the relevant Distribution Date occurs. Distributions will
accumulate from May , 1997, the date of original issuance. The first
Distribution Date for the Preferred Securities will be July 31, 1997. The amount
of Distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional Distributions,
interest or other payment in respect of any such delay) with the same force and
effect as if made on the date such payment was originally due and payable.
"Business Day" means any day other than a Saturday or a Sunday, a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Debenture Trustee is closed for business.
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Extension Period. The Company has the right under the Indenture, so long as
no Debenture Event of Default has occurred and is continuing, to defer the
payment of interest on the Subordinated Debentures at any time, or from time to
time (each, an "Extended Interest Payment Period"), which, if exercised, would
defer quarterly Distributions on the Preferred Securities during any such
Extended Interest Payment Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate per annum of % thereof, compounded quarterly from the
relevant Distribution Date. "Distributions," as used herein, includes any such
additional Distributions. The right to defer the payment of interest on the
Subordinated Debentures is limited, however, to a period, in each instance, not
exceeding 20 consecutive quarters and no Extended Interest Payment Period may
extend beyond the Stated Maturity of the Subordinated Debentures. During any
such Extended Interest Payment Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company capital stock, (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank pari passu with or junior
in interest to the Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
the Subordinated Debentures (other than payments under the Guarantee), or (iii)
redeem, purchase or acquire less than all of the Subordinated Debentures or any
of the Preferred Securities. Prior to the termination of any such Extended
Interest Payment Period, the Company may further defer the payment of interest;
provided that such Extended Interest Payment Period may not exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Subordinated
Debentures. Upon the termination of any such Extended Interest Payment Period
and the payment of all amounts then due, the Company may elect to begin a new
Extended Interest Payment Period, subject to the above requirements. Subject to
the foregoing, there is no limitation on the number of times that the Company
may elect to begin an Extended Interest Payment Period.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
Source Of Distributions. The funds of SBI Capital available for
distribution to holders of its Preferred Securities will be limited to payments
under the Subordinated Debentures in which SBI Capital will invest the proceeds
from the issuance and sale of its Trust Securities. See "Description of the
Subordinated Debentures." Distributions will be paid through the Property
Trustee who will hold amounts received in respect of the Subordinated Debentures
in the Property Account for the benefit of the holders of the Trust Securities.
If the Company does not make interest payments on the Subordinated Debentures,
the Property Trustee will not have funds available to pay Distributions on the
Preferred Securities. The payment of Distributions (if and to the extent SBI
Capital has funds legally available for the payment of such Distributions and
cash sufficient to make such payments) is guaranteed by the Company. See
"Description of the Guarantee." Distributions on the Preferred Securities will
be payable to the holders thereof as they appear on the register of holders of
the Preferred Securities on the relevant record dates, which will be the 15th
day of the month in which the relevant Distribution Date occurs.
Redemption Or Exchange
General. The Subordinated Debentures will mature on July 31, 2027. The
Company will have the right to redeem the Subordinated Debentures (i) on or
after July 31, 2002, in whole at any time or in part from time to time, or (ii)
at any time, in whole (but not in part), within 180 days following the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event, in each case subject to receipt of prior approval by the Federal Reserve,
if then required under applicable capital guidelines or policies of the Federal
Reserve. The Company will not have the right to purchase the Subordinated
Debentures, in whole or in part, from SBI Capital until after July 31, 2002. See
"Description of the Subordinated Debentures--General."
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be applied by the Property Trustee to redeem a Like Amount (as
defined herein)
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of the Trust Securities, upon not less than 30 nor more than 60 days notice, at
a redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Trust Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date"). See "Description of
the Subordinated Debentures--Redemption or Exchange." If less than all of the
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption will be allocated to the
redemption of the Trust Securities pro rata.
Distribution of Subordinated Debentures. Subject to the Company having
received prior approval of the Federal Reserve, if so required under applicable
capital guidelines or policies of the Federal Reserve, the Company will have the
right at any time to dissolve, wind-up or terminate SBI Capital and, after
satisfaction of the liabilities of creditors of SBI Capital as provided by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of Trust Securities in liquidation of SBI Capital. See "--Liquidation
Distribution Upon Termination."
Tax Event Redemption, Capital Treatment Event Redemption or Investment
Company Event Redemption. If a Tax Event, a Capital Treatment Event or an
Investment Company Event in respect of the Trust Securities occurs and is
continuing, the Company has the right to redeem the Subordinated Debentures in
whole (but not in part) and thereby cause a mandatory redemption of such Trust
Securities at any time, in whole (but not in part,) at the Redemption Price,
within 180 days following the occurrence of such Tax Event, Capital Treatment
Event or Investment Company Event. In the event a Tax Event, a Capital Treatment
Event or an Investment Company Event in respect of the Trust Securities has
occurred and the Company does not elect to redeem the Subordinated Debentures
and thereby cause a mandatory redemption of such Trust Securities or to
liquidate SBI Capital and cause the Subordinated Debentures to be distributed to
holders of such Trust Securities in liquidation of SBI Capital as described
below under "--Liquidation Distribution Upon Termination," such Preferred
Securities will remain outstanding and Additional Interest (as defined herein)
may be payable on the Subordinated Debentures. "Additional Interest" means the
additional amounts as may be necessary in order that the amount of Distributions
then due and payable by SBI Capital on the outstanding Trust Securities will not
be reduced as a result of any additional taxes, duties and other governmental
charges to which SBI Capital has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture, which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Subordinated
Debentures to holders of Trust Securities in connection with a dissolution or
liquidation of SBI Capital, Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Subordinated Debentures are distributed. Each Subordinated Debenture
distributed pursuant to clause (ii) above will carry with it accumulated
interest in an amount equal to the accumulated and unpaid interest then due on
such Subordinated Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
After the liquidation date fixed for any distribution of Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no longer
be deemed to be outstanding, and (ii) any certificates representing Preferred
Securities will be deemed to represent the Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Preferred Securities,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Preferred Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities if a dissolution and liquidation of SBI Capital were to
occur. The Preferred Securities that an investor may purchase, or the
Subordinated Debentures that an investor may receive on dissolution and
liquidation of SBI Capital, may, therefore, trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
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Redemption Procedures
Preferred Securities redeemed on each Redemption Date will be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Preferred
Securities will be made and the Redemption Price will be payable on each
Redemption Date only to the extent that SBI Capital has funds on hand available
for the payment of such Redemption Price. See "--Subordination of Common
Securities."
If SBI Capital gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, eastern standard time, on the Redemption Date,
to the extent funds are available, the Property Trustee will irrevocably deposit
with the paying agent for the Preferred Securities funds sufficient to pay the
aggregate Redemption Price and will give the paying agent for the Preferred
Securities irrevocable instructions and authority to pay the Redemption Price to
the holders thereof upon surrender of their certificates evidencing such
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
will be payable to the holders of such Preferred Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption will
have been given and funds deposited as required, then upon the date of such
deposit, all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be outstanding. In
the event that any date fixed for redemption of Preferred Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day which is a Business Day (and without any
additional Distribution, interest or other payment in respect of any such delay)
with the same force and effect as if made on such date. In the event that
payment of the Redemption Price in respect of Preferred Securities called for
redemption is improperly withheld or refused and not paid either by SBI Capital,
or by the Company pursuant to the Guarantee, Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by SBI Capital for such Preferred
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price. See "Description of the
Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and, further provided that the Company does not and is
not continuing to exercise its right to defer interest payments, the Company or
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Subordinated Debentures to holders of Preferred Securities will
be made to the applicable recordholders thereof as they appear on the register
for the Preferred Securities on the relevant record date, which date will be the
date 15 days prior to the Redemption Date or liquidation date, as applicable.
If less than all of the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate Liquidation Amount of such Trust Securities to be
redeemed will be allocated pro rata to the Trust Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed will be selected by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption, by such
method as the Property Trustee deems fair and appropriate and which may provide
for the selection for redemption of portions (equal to $25 or an integral
multiple of $25 in excess thereof) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25. The Property Trustee will promptly
notify the registrar for the Preferred Securities in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of the Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities will relate to
the portion of the aggregate Liquidation Amount of Preferred Securities which
has been or is to be redeemed.
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Notice of any redemption will be mailed at least 30 days, but not more than
60 days, before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the redemption price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on such Subordinated Debentures or portions
thereof (and Distributions will cease to accrue on the related Preferred
Securities or portions thereof) called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price, the full amount of such Redemption
Price on all of the outstanding Preferred Securities then called for redemption,
will have been made or provided for, and all funds available to the Property
Trustee will first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Preferred Securities then due and
payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of the Common Securities will be deemed to have
waived any right to act with respect to any such Event of Default under the
Trust Agreement until the effect of all such Events of Default with respect to
the Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee will act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company, as holder of the Common Securities,
and only the holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.
Liquidation Distribution Upon Termination
The Company will have the right at any time to dissolve, wind-up or
terminate SBI Capital and cause the Subordinated Debentures to be distributed to
the holders of the Preferred Securities. Such right is subject, however, to the
Company having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve.
Pursuant to the Trust Agreement, SBI Capital will automatically terminate
upon expiration of its term and will terminate earlier on the first to occur of
(i) certain events of bankruptcy, dissolution or liquidation of the Company,
(ii) the distribution of a Like Amount of the Subordinated Debentures to the
holders of its Trust Securities, if the Company, as depositor, has given written
direction to the Property Trustee to terminate SBI Capital (which direction is
optional and wholly within the discretion of the Company, as depositor), (iii)
redemption of all of the Preferred Securities as described under "Description of
the Preferred Securities--Redemption or Exchange--Mandatory Redemption," or (iv)
the entry of an order for the dissolution of SBI Capital by a court of competent
jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv) of
the preceding paragraph, SBI Capital will be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of SBI Capital as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of SBI Capital available for distribution to holders,
after satisfaction of liabilities to creditors of SBI Capital as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
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Distribution"). If such Liquidation Distribution can be paid only in part
because SBI Capital has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by SBI
Capital on the Preferred Securities will be paid on a pro rata basis. The
Company, as the holder of the Common Securities, will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that, if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities will have a priority over the Common
Securities. See "--Subordination of Common Securities."
Under current United States federal income tax law and interpretations and
assuming, as expected, that SBI Capital is treated as a grantor trust, a
distribution of the Subordinated Debentures should not be a taxable event to
holders of the Preferred Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences--Receipt of Subordinated Debentures
or Cash Upon Liquidation of SBI Capital." If the Company elects neither to
redeem the Subordinated Debentures prior to maturity nor to liquidate SBI
Capital and distribute the Subordinated Debentures to holders of the Preferred
Securities, the Preferred Securities will remain outstanding until the repayment
of the Subordinated Debentures.
If the Company elects to liquidate SBI Capital and thereby causes the
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of SBI Capital, the Company will continue to have the right to
shorten or extend the maturity of such Subordinated Debentures, subject to
certain conditions. See "Description of the Subordinated Debentures--General."
Liquidation Value
The amount of the Liquidation Distribution payable on the Preferred
Securities in the event of any liquidation of SBI Capital is $25 per Preferred
Security plus accrued and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in Subordinated
Debentures, subject to certain exceptions. See "--Liquidation Distribution Upon
Termination."
Events of Default; Notice
Any one of the following events constitutes an event of default under the
Trust Agreement (an "Event of Default") with respect to the Preferred Securities
(whatever the reason for such Event of Default and whether voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of the
Subordinated Debentures--Debenture Events of Default"); or
(ii) default by SBI Capital in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or
(iii) default by SBI Capital in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clauses (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Trustee(s) by the holders of at least 25%
in aggregate Liquidation Amount of the outstanding Preferred Securities, a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Trust Agreement;
or
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(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company, as depositor, unless such Event of
Default has been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a preference over the Common Securities upon
termination of SBI Capital. See "--Liquidation Distribution Upon Termination."
The existence of an Event of Default does not entitle the holders of Preferred
Securities to accelerate the maturity thereof.
Removal of SBI Capital Trustees
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the holder of the Common Securities. If a
Debenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event, however, will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee will be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
Co-Trustees and Separate Property Trustee
Unless an Event of Default has occurred and is continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Company, as the holder
of the Common Securities, will have power along with the Property Trustee to
appoint one or more Persons (as defined in the Trust Agreement) either to act as
a co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property, or to act as separate trustee of any such Trust Property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone will have power to make
such appointment.
Merger or Consolidation of Trustees
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of SBI Capital
SBI Capital may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described below. SBI
Capital may, at the request of the Company, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, merge with or into,
consolidate,
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amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to, a trust organized as such under the laws
of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of SBI Capital with respect to the Preferred
Securities, or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee in its capacity as the holder of the Subordinated Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed (including,
if applicable, The Nasdaq Stock Market's National Market), (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (v) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither SBI Capital nor such successor entity will be
required to register as an "investment company" under the Investment Company
Act, and (vi) the Company owns all of the common securities of such successor
entity and guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee, the
Indenture, the Subordinated Debentures, the Trust Agreement and the Expense
Agreement. Notwithstanding the foregoing, SBI Capital will not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other Person or permit any other Person to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause SBI Capital or the successor entity to
be classified as other than a grantor trust for United States federal income tax
purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "Description of the Guarantee--
Amendments and Assignment" and as otherwise required by law and the Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) with respect to acceptance of
appointment by a successor trustee, (ii) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement (provided such amendment is not
inconsistent with the other provisions of the Trust Agreement), or (iii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as is necessary to ensure that SBI Capital will be classified for United States
federal income tax purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that SBI Capital will not be required to
register as an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (ii), such action may not adversely affect
in any material respect the interests of any holder of Trust Securities, and any
amendments of such Trust Agreement will become effective when notice thereof is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the Trustees and the Company with (i) the consent of holders representing not
less than a majority in the aggregate Liquidation Amount of the outstanding
Trust Securities, and (ii) receipt by the Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect SBI Capital's status
as a grantor trust for United States federal income tax purposes or SBI
Capital's exemption from status as an "investment company" under the Investment
Company Act. Notwithstanding anything in this paragraph to the contrary, without
the consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (a) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount
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of any Distribution required to be made in respect of the Trust Securities as of
a specified date, or (b) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
The Trustees will not, so long as any Subordinated Debentures are held by
the Property Trustee, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures will be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent is required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture requires the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Preferred
Securities. The Trustees may not revoke any action previously authorized or
approved by a vote of the holders of the Preferred Securities except by
subsequent vote of the holders of the Preferred Securities. The Property Trustee
will notify each holder of Preferred Securities of any notice of default with
respect to the Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Trustees must obtain an opinion of counsel experienced in
such matters to the effect that SBI Capital will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for SBI Capital to redeem and cancel its Preferred Securities in accordance with
the Trust Agreement.
Notwithstanding the fact that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
Payment and Paying Agency
Payments in respect of the Preferred Securities will be made by check
mailed to the address of the holder entitled thereto as such address will appear
on the register of holders of the Preferred Securities. The paying agent for the
Preferred Securities will initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees and the Company. The paying agent for the Preferred Securities may
resign as paying agent upon 30 days' written notice to the Property Trustee and
the Company. In the event that the Property Trustee no longer is the paying
agent for the Preferred Securities, the Administrative Trustees will appoint a
successor (which must be a bank or trust company acceptable to the
Administrative Trustees and the Company) to act as paying agent.
Registrar and Transfer Agent
The Property Trustee will act as the registrar and the transfer agent for
the Preferred Securities. Registration of transfers of Preferred Securities will
be effected without charge by or on behalf of SBI Capital, but upon payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. SBI Capital will not be required to register or cause to
be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
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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 such duties as
are specifically set forth in the Trust Agreement and, upon the occurrence and
during the continuance of an Event of Default, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as is directed by the
Company and if not so directed, will take such action as it deems advisable and
in the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate SBI Capital in such a way that SBI Capital will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. The Company and the Administrative Trustees are
authorized, in this connection, to take any action, not inconsistent with
applicable law, the certificate of trust of SBI Capital or the Trust Agreement,
that the Company and the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust Agreement and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Concurrently with the issuance of the Preferred Securities, SBI Capital
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Subordinated Debentures issued by the
Company. The Subordinated Debentures will be issued as unsecured debt under the
Indenture, to be dated as of , 1997 (the "Indenture"), between the
Company and State Street Bank and Trust Company, as trustee (the "Debenture
Trustee"). The Indenture will be qualified as an indenture under the Trust
Indenture Act. The following summary of the material terms and provisions of the
Subordinated Debentures and the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Indenture and
to the Trust Indenture Act. Wherever particular defined terms of the Indenture
are referred to, but not defined herein, such defined terms are incorporated
herein by reference. The form of the Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
General
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $22,402,500 (or $25,762,875 if the option described under the
heading "Underwriting" is exercised by the Underwriter), such amount being the
sum of the aggregate stated Liquidation Amount of the Trust Securities. The
Subordinated Debentures will bear interest at the annual rate of % of the
principal amount thereof, payable quarterly in arrears on January 31, April 30,
July 31, and October 31 of each year (each, an "Interest Payment Date")
beginning July
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31, 1997, to the Person (as defined in the Indenture) in whose name each
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the fifteenth day of the last month of the calendar
quarter. It is anticipated that, until the liquidation of SBI Capital, the
Subordinated Debentures will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Preferred Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded quarterly.
The term "interest," as used herein, includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Interest, as applicable.
The Subordinated Debentures will mature on July 31, 2027 (such date, as it
may be shortened or extended as hereinafter described, the "Stated Maturity").
Such date may be shortened at any time by the Company to any date not earlier
than July 31, 2002, subject to the Company having received prior approval of the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve. Such date may also be extended at any time at
the election of the Company but in no event to a date later than July 31, 2046,
provided that at the time such election is made and at the time of extension (i)
the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii)
the Company is not in default in the payment of any interest or principal on the
Subordinated Debentures, (iii) SBI Capital is not in arrears on payments of
Distributions on the Preferred Securities and no deferred Distributions are
accumulated, and (iv) the Company has a Senior Debt rating of investment grade.
In the event that the Company elects to shorten or extend the Stated Maturity of
the Subordinated Debentures, it will give notice thereof to the Debenture
Trustee, SBI Capital and to the holders of the Subordinated Debentures no more
than 180 days and no less than 90 days prior to the effectiveness thereof. The
Company will not have the right to purchase the Subordinated Debentures, in
whole or in part, from SBI Capital until after July 31, 2002, except if a Tax
Event, Capital Treatment Event or an Investment Company Event has occurred and
is continuing.
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations of the Company. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of the Bank, upon the Bank's liquidation or reorganization or otherwise (and
thus the ability of holders of the Subordinated Debentures to benefit indirectly
from such distribution), is subject to the prior claim of creditors of the Bank,
except to the extent that the Company may itself be recognized as a creditor of
the Bank. The Subordinated Debentures will, therefore, be effectively
subordinated to all existing and future liabilities of the Bank, and holders of
Subordinated Debentures should look only to the assets of the Company for
payments on the Subordinated Debentures. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Debt, Subordinated Debt and Additional Senior Obligations,
whether under the Indenture or any existing indenture or other indenture that
the Company may enter into in the future, or otherwise. See "--Subordination."
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
Option to Extend Interest Payment Period
The Company has the right under the Indenture at any time during the term
of the Subordinated Debentures, so long as no Debenture Event of Default has
occurred and is continuing, to defer the payment of interest at any time, or
from time to time (each, an "Extended Interest Payment Period"). The right to
defer the payment of interest on the Subordinated Debentures is limited,
however, to a period, in each instance, not exceeding 20 consecutive quarters
and no Extended Interest Payment Period may extend beyond the Stated Maturity of
the Subordinated Debentures. At the end of each Extended Interest Payment
Period, the Company must pay all interest then accrued
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and unpaid (together with interest thereon at the annual rate of %,
compounded quarterly, to the extent permitted by applicable law). During an
Extended Interest Payment Period, interest will continue to accrue and holders
of Subordinated Debentures (or the holders of Preferred Securities if such
securities are then outstanding) will be required to accrue and recognize income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment Period and Original Issue
Discount."
During any such Extended Interest Payment Period, the Company may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Subordinated Debentures (other than payments under the
Guarantee), or (iii) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities. Prior to the
termination of any such Extended Interest Payment Period, the Company may
further defer the payment of interest; provided that no Extended Interest
Payment Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any such
Extended Interest Payment Period and the payment of all amounts then due on any
Interest Payment Date, the Company may elect to begin a new Extended Interest
Payment Period subject to the above requirements. No interest will be due and
payable during an Extended Interest Payment Period, except at the end thereof.
The Company has no present intention of exercising its rights to defer payments
of interest on the Subordinated Debentures. The Company must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
election of such Extended Interest Payment Period at least two Business Days
prior to the earlier of (i) the next succeeding date on which Distributions on
the Trust Securities would have been payable except for the election to begin
such Extended Interest Payment Period, or (ii) the date the Trust is required to
give notice of the record date, or the date such Distributions are payable, to
The Nasdaq Stock Market's National Market (or other applicable self-regulatory
organization) or to holders of the Preferred Securities, but in any event at
least one Business Day before such record date. Subject to the foregoing, there
is no limitation on the number of times that the Company may elect to begin an
Extended Interest Payment Period.
Additional Sums
If SBI Capital or the Property Trustee is required to pay any additional
taxes, duties or other governmental charges as a result of the occurrence of a
Tax Event, the Company will pay as additional amounts (referred to herein as
"Additional Interest") on the Subordinated Debentures such additional amounts as
may be required so that the net amounts received and retained by SBI Capital
after paying any such additional taxes, duties or other governmental charges
will not be less than the amounts SBI Capital would have received had such
additional taxes, duties or other governmental charges not been imposed.
Redemption or Exchange
The Company will have the right to redeem the Subordinated Debentures prior
to maturity (i) on or after July 31, 2002, in whole at any time or in part from
time to time, or (ii) at any time in whole (but not in part), within 180 days
following the occurrence of a Tax Event, a Capital Treatment Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. Any such
redemption prior to the Stated Maturity will be subject to prior approval of the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve.
"Tax Event" means the receipt by SBI Capital of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws
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or regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities under the Trust Agreement, there is more than an insubstantial risk
that (i) interest payable by the Company on the Subordinated Debentures is not,
or within 90 days of the date of such opinion will not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes,
(ii) SBI Capital is, or will be within 90 days after the date of such opinion of
counsel, subject to United States federal income tax with respect to income
received or accrued on the Subordinated Debentures, or (iii) SBI Capital is, or
will be within 90 days after the date of such opinion of counsel, subject to
more than a de minimis amount of other taxes, duties, assessments or other
governmental charges. The Company must request and receive an opinion with
regard to such matters within a reasonable period of time after it becomes aware
of the possible occurrence of any of the events described in clauses (i) through
(iii) above.
"Capital Treatment Event" means the receipt by SBI Capital of an opinion of
counsel experienced in such matter to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the aggregate
Liquidation Amount of the Preferred Securities (or any substantial portion
thereof) as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company, 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 of a Capital
Treatment Event if such inability results from the Company having cumulative
preferred capital in excess of the amount which may qualify for treatment as
Tier 1 Capital under applicable capital adequacy guidelines of the Federal
Reserve.
"Investment Company Event" means the receipt by SBI Capital of an opinion
of counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, SBI Capital is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change becomes effective on or after the date of original
issuance of the Preferred Securities.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Subordinated Debentures to
be redeemed at its registered address. Unless the Company defaults in payment of
the redemption price for the Subordinated Debentures, on and after the
redemption date interest ceases to accrue on such Subordinated Debentures or
portions thereof called for redemption.
The Subordinated Debentures will not be subject to any sinking fund.
Distribution Upon Liquidation
As described under "Description of the Preferred Securities--Liquidation
Distribution Upon Termination," under certain circumstances involving the
termination of SBI Capital, the Subordinated Debentures may be distributed to
the holders of the Preferred Securities in liquidation of SBI Capital after
satisfaction of liabilities to creditors of SBI Capital as provided by
applicable law. Any such distribution will be subject to receipt of prior
approval by the Federal Reserve, if then required under applicable policies or
guidelines of the Federal Reserve. If the Subordinated Debentures are
distributed to the holders of Preferred Securities upon the liquidation of SBI
Capital, the Company will use its best efforts to list the Subordinated
Debentures on The Nasdaq Stock Market's National Market or such stock exchanges,
if any, on which the Preferred Securities are then listed. There can be no
assurance as to the market price of any Subordinated Debentures that may be
distributed to the holders of Preferred Securities.
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Restrictions on Certain Payments
If at any time (i) there has occurred a Debenture Event of Default, (ii)
the Company is in default with respect to its obligations under the Guarantee,
or (iii) the Company has given notice of its election of an Extended Interest
Payment Period as provided in the Indenture with respect to the Subordinated
Debentures and has not rescinded such notice, or such Extended Interest Payment
Period, or any extension thereof, is continuing, the Company will not (1)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock, (2) make any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any debt securities of the Company that rank pari
passu with or junior in interest to the Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
or junior in interest to the Subordinated Debentures (other than payments under
the Guarantee), or (3) redeem, purchase or acquire less than all of the
Subordinated Debentures or any of the Preferred Securities.
Subordination
The Indenture provides that the Subordinated Debentures issued thereunder
are subordinated and junior in right of payment to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshaling of
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceedings of the Company, the
holders of Senior Debt, Subordinated Debt and Additional Senior Obligations of
the Company will first be entitled to receive payment in full of principal of
(and premium, if any) and interest, if any, on such Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company before the holders of
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
In the event of the acceleration of the maturity of any Subordinated
Debentures, the holders of all Senior Debt, Subordinated Debt and Additional
Senior Obligations of the Company outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of the
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of or interest on the Subordinated Debentures.
No payments on account of principal or interest in respect of the
Subordinated Debentures may be made if there has occurred and is continuing a
default in any payment with respect to Senior Debt, Subordinated Debt or
Additional Senior Obligations of the Company or an event of default with respect
to any Senior Debt, Subordinated Debt or Additional Senior Obligations of the
Company resulting in the acceleration of the maturity thereof, or if any
judicial proceeding is pending with respect to any such default.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means, with respect to the Company, the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to
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the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Subordinated
Debentures or to other Debt which is pari passu with, or subordinated to, the
Subordinated Debentures; provided, however, that Senior Debt will not be deemed
to include (i) any Debt of the Company which when incurred and without respect
to any election under section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to the Company, (ii) any Debt of the
Company to any of its subsidiaries, (iii) any Debt to any employee of the
Company, (iv) any Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the holders of the
Subordinated Debentures as a result of the subordination provisions of the
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject,
and (v) Debt which constitutes Subordinated Debt.
"Subordinated Debt" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt, whether incurred on or prior to the date of the
Indenture or thereafter incurred, which is by its terms expressly provided to be
junior and subordinate to other Debt of the Company (other than the Subordinated
Debentures).
"Additional Senior Obligations" means, with respect to the Company, all
indebtedness, whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; provided, however, that Additional Senior Obligations do not
include claims in respect of Senior Debt or Subordinated Debt or obligations
which, by their terms, are expressly stated to be not superior in right of
payment to the Subordinated Debentures or to rank pari passu in right of payment
with the Subordinated Debentures. "Claim," as used herein, has the meaning
assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978,
as amended.
The Indenture places no limitation on the amount of additional Senior Debt,
Subordinated Debt or Additional Senior Obligations that may be incurred by the
Company. The Company expects from time to time to incur additional indebtedness
constituting Senior Debt, Subordinated Debt and Additional Senior Obligations.
At May __, 1997, the Company had no outstanding Senior Debt, Subordinated Debt
or Additional Senior Obligations. Because the Company is a holding company, the
Subordinated Debentures are effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, including obligations to depositors
of the Subsidiary Banks.
Payment and Paying Agents
Payment of principal of and any interest on the Subordinated Debentures
will be made at the office of the Company's paying agent in New York, New York,
except that, at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the Person entitled thereto as such
address appears in the register of holders of the Subordinated Debentures, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the register of holders of the Subordinated Debentures, provided
that proper transfer instructions have been received by the regular record date.
Payment of any interest on Subordinated Debentures will be made to the Person in
whose name such Subordinated Debenture is registered at the close of business on
the regular record date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional paying agents for
the Subordinated Debentures or rescind the designation of any paying agent for
the Subordinated Debentures. In the event that the Company fails to maintain a
paying agent in New York, New York, Subordinated Debentures may be presented for
payment of principal and interest at the Corporate Trust Office of the Debenture
Trustee in Boston, Massachusetts.
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Any moneys deposited with the Debenture Trustee or any paying agent for the
Subordinated Debentures, or then held by the Company in trust, for the payment
of the principal of or interest on the Subordinated Debentures and remaining
unclaimed for two years after such principal or interest has become due and
payable will be repaid to the Company on May 31 of each year or (if then held in
trust by the Company) will be discharged from such trust and the holder of such
Subordinated Debenture will thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.
Registrar and Transfer Agent
The Debenture Trustee will act as the registrar and the transfer agent for
the Subordinated Debentures. Subordinated Debentures may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), in New York, New
York or at the office of the registrar in Boston, Massachusetts. The Company
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts; provided that
the Company maintains a transfer agent in New York, New York. The Company may
at any time designate additional transfer agents with respect to the
Subordinated Debentures. In the event of any redemption, neither the Company nor
the Debenture Trustee will be required to (i) issue, register the transfer of or
exchange Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.
Modification of Indenture
The Company and the Debenture Trustee may, from time to time without the
consent of the holders of the Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of not less than a majority in principal amount of the
outstanding Subordinated Debentures, to modify the Indenture; provided, that no
such modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected by such proposed modification, (i) extend the
fixed maturity of the Subordinated Debentures, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or (ii) reduce the percentage of principal amount of Subordinated Debentures,
the holders of which are required to consent to any such modification of the
Indenture; provided that so long as any of the Preferred Securities remain
outstanding, no such modification may be made that requires the consent of the
holders of the Subordinated Debentures, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default may be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Preferred Securities and that if the consent of the
holder of each Subordinated Debenture is required, such modification will not be
effective until each holder of Trust Securities has consented thereto.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an event of default (each, a "Debenture Event of
Default") with respect to the Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Subordinated Debentures,
when due (subject to the deferral of any due date in the case of an Extended
Interest Payment Period); or
(ii) failure to pay any principal on the Subordinated Debentures when due
whether at maturity, upon redemption by declaration or otherwise; or
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(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to the
Company from the Debenture Trustee or the holders of at least 25% in aggregate
outstanding principal amount of the Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee, or the holders of not less than 25% in aggregate outstanding
principal amount of the Subordinated Debentures, may declare the principal due
and payable immediately upon a Debenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Subordinated Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of the Subordinated Debentures fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount of the Preferred Securities will have such right.
The Company is required to file annually with the Debenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Subordinated Debentures, and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Subordinated Debentures.
Enforcement of Certain Rights by Holders of the Preferred Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Preferred Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of Preferred
Securities in the Direct Action. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of the holders of all of the Preferred Securities. If the right to bring
a Direct Action is removed, SBI Capital may become subject to the reporting
obligations under the Exchange Act. The Company has the right under the
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Subordinated Debentures unless there has been an
Event of Default under the Trust Agreement. See "Description of the Preferred
Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Company may not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, and no Person may consolidate with or merge into the Company or sell,
convey, transfer or otherwise dispose of its properties and assets substantially
as an entirety to the Company, unless (i) in the event the Company consolidates
with or merges into another Person or conveys or transfers its
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properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any State or the
District of Columbia, and such successor Person expressly assumes by
supplemental indenture the Company's obligations on the Subordinated Debentures
issued under the Indenture, (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, has occurred and is continuing,
and (iii) certain other conditions as prescribed in the Indenture are met.
Satisfaction and Discharge
The Indenture will cease to be of further effect (except as to the
Company's obligations to pay certain sums due pursuant to the Indenture and to
provide certain officers' certificates and opinions of counsel described
therein) and the Company will be deemed to have satisfied and discharged the
Indenture when, among other things, all Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation (i) have become due and
payable, or (ii) will become due and payable at their Stated Maturity within one
year, or are to be called for redemption within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation, for the principal and interest to the date
of the deposit or to the Stated Maturity or redemption date, as the case may be.
Governing Law
The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Oklahoma.
Information Concerning the Debenture Trustee
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Miscellaneous
The Company has agreed, pursuant to the Indenture, for so long as Trust
Securities remain outstanding, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of SBI Capital (provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities), (ii) not to voluntarily
terminate, wind up or liquidate SBI Capital, except upon prior approval of the
Federal Reserve, if then so required under applicable capital guidelines or
policies of the Federal Reserve, and (a) in connection with a distribution of
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of SBI Capital, or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause SBI Capital to remain classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes.
DESCRIPTION OF THE GUARANTEE
The Preferred Securities Guarantee Agreement (the "Guarantee") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities, for the benefit of the holders of the Preferred
Securities. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Guarantee Trustee
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will act as indenture trustee under the Guarantee for purposes of complying with
the provisions of the Trust Indenture Act. The Guarantee Trustee, State Street
Bank and Trust Company, will hold the Guarantee for the benefit of the holders
of the Preferred Securities. The following summary of the material terms and
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee and the Trust Indenture Act. Wherever particular defined terms of the
Guarantee are referred to, but not defined herein, such defined terms are
incorporated herein by reference. The form of the Guarantee has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
General
The Company will, pursuant to the Guarantee, irrevocably agree to pay in
full on a subordinated basis, to the extent set forth therein, the Guarantee
Payments (as defined below) to the holders of the Preferred Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that SBI
Capital may have or assert other than the defense of payment. The following
payments with respect to the Preferred Securities, to the extent not paid by or
on behalf of SBI Capital (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that SBI Capital has funds available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption to the extent that SBI Capital has funds
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of SBI Capital (other than in connection
with the distribution of Subordinated Debentures to the holders of Preferred
Securities or a redemption of all of the Preferred Securities), the lesser of
(a) the amount of the Liquidation Distribution, to the extent SBI Capital has
funds available therefor at such time, and (b) the amount of assets of SBI
Capital remaining available for distribution to holders of Preferred Securities
in liquidation of SBI Capital. The obligation of the Company to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of the Preferred Securities or by causing SBI Capital to
pay such amounts to such holders.
The Guarantee will not apply to any payment of Distributions except to the
extent SBI Capital has funds available therefor. If the Company does not make
interest payments on the Subordinated Debentures held by SBI Capital, SBI
Capital will not pay Distributions on the Preferred Securities and will not have
funds available therefor.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company in the same
manner as the Subordinated Debentures. The Guarantee does not place a limitation
on the amount of additional Senior Debt, Subordinated Debt or Additional Senior
Obligations that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt, Subordinated
Debt and Additional Senior Obligations.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other Person). The Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent not
paid by SBI Capital or upon distribution of the Subordinated Debentures to the
holders of the Preferred Securities. Because the Company is a holding company,
the right of the Company to participate in any distribution of assets of the
Bank upon the Bank's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of the Bank, except to the extent the Company may
itself be recognized as a creditor of the Bank. The Company's obligations under
the Guarantee, therefore, will be effectively subordinated to all existing and
future liabilities of the Company's subsidiaries, and claimants should look only
to the assets of the Company for payments thereunder.
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Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. See "Description of the Preferred Securities--
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guarantee will bind the successors, assigns, receivers,
trustees and representatives of the Company and will inure to the benefit of the
holders of the Preferred Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against SBI Capital, the Guarantee Trustee
or any other Person.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities, unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon (a)
full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of SBI Capital, or (c)
distribution of the Subordinated Debentures to the holders of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of Oklahoma.
Expense Agreement
The Company will, pursuant to the Agreement as to Expenses and Liabilities
entered into by it under the Trust Agreement (the "Expense Agreement"),
irrevocably and unconditionally guarantee to each person or entity to
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whom SBI Capital becomes indebted or liable, the full payment of any costs,
expenses or liabilities of SBI Capital, other than obligations of SBI Capital to
pay to the holders of the Preferred Securities or other similar interests in SBI
Capital of the amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be. Third party
creditors of SBI Capital may proceed directly against the Company under the
Expense Agreement, regardless of whether such creditors had notice of the
Expense Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SUBORDINATED DEBENTURES
AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent SBI Capital has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." The Company and SBI Capital
believe that, taken together, the obligations of the Company under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of Distributions
and other amounts due on the Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the obligations of SBI Capital under the Preferred Securities. If and to the
extent that the Company does not make payments on the Subordinated Debentures,
SBI Capital will not pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of Distributions when SBI
Capital does not have sufficient funds to pay such Distributions. In such event,
the remedy of a holder of Preferred Securities is to institute a legal
proceeding directly against the Company for enforcement of payment of such
Distributions to such holder. The obligations of the Company under the Guarantee
are subordinate and junior in right of payment to all Senior Debt, Subordinated
Debt and Additional Senior Obligations of the Company.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and other payments due on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Trust Securities, (ii) the
interest rate and interest and other payment dates on the Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Preferred Securities, (iii) the Company will pay for all and any
costs, expenses and liabilities of SBI Capital (except the obligations of SBI
Capital to holders of the Preferred Securities), and (iv) the Trust Agreement
further provides that SBI Capital will not engage in any activity that is not
consistent with the limited purposes of SBI Capital.
Enforcement Rights of Holders of Preferred Securities
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, SBI Capital
or any other Person. A default or event of default under any Senior Debt,
Subordinated Debt or Additional Senior Obligations of the Company would not
constitute a default or Event of Default. In the event, however, of payment
defaults under, or acceleration of, Senior Debt, Subordinated Debt or Additional
Senior Obligations of the Company, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Subordinated Debentures
until such Senior Debt, Subordinated Debt or Additional Senior Obligations has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Subordinated Debentures would
constitute an Event of Default.
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Limited Purpose of SBI Capital
The Preferred Securities evidence a preferred undivided beneficial interest
in the assets of SBI Capital. SBI Capital exists for the exclusive purposes of
(i) issuing the Trust Securities representing undivided beneficial interests in
the assets of SBI Capital, (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debentures issued by the Company, and (iii)
engaging in only those other activities necessary, advisable, or incidental
thereto. A principal difference between the rights of a holder of a Preferred
Security and the rights of a holder of a Subordinated Debenture is that a holder
of a Subordinated Debenture is entitled to receive from the Company the
principal amount of and interest accrued on Subordinated Debentures held, while
a holder of Preferred Securities is entitled to receive Distributions from SBI
Capital (or from the Company under the Guarantee) if and to the extent SBI
Capital has funds available for the payment of such Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation of
SBI Capital involving the liquidation of the Subordinated Debentures, the
holders of the Preferred Securities will be entitled to receive, out of assets
held by SBI Capital, the Liquidation Distribution in cash. See "Description of
the Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the Property
Trustee, as holder of the Subordinated Debentures, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company (as set
forth in the Indenture), but entitled to receive payment in full of principal
and interest before any shareholders of the Company receive payments or
distributions. Since the Company is the guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of SBI Capital (other than
the obligations of SBI Capital to the holders of its Preferred Securities), the
positions of a holder of the Preferred Securities and a holder of the
Subordinated Debentures relative to other creditors and to shareholders of the
Company in the event of liquidation or bankruptcy of the Company are expected to
be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the material United States federal income tax
considerations that may be relevant to the purchasers of Preferred Securities
which has been passed upon by Kennedy & Baris, L.L.P., counsel to the Company
and SBI Capital, insofar as it relates to matters of law and legal conclusions.
The conclusions expressed herein are based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), regulations thereunder
and current administrative rulings and court decisions, all of which are subject
to change at any time, with possible retroactive effect. Subsequent changes may
cause tax consequences to vary substantially from the consequences described
below. Furthermore, the authorities on which the following summary is based are
subject to various interpretations, and it is therefore possible that the United
States federal income tax treatment of the purchase, ownership, and disposition
of Preferred Securities may differ from the treatment described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who are individual citizens or residents of the United States and who
acquire Preferred Securities on their original issue at their offering price and
hold Preferred Securities as capital assets. The discussion has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar, or the
tax consequences to shareholders, partners
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or beneficiaries of a holder of Preferred Securities. Further, it does not
include any description of any alternative minimum tax consequences, or the tax
laws of any state or local government or of any foreign government, that may be
applicable to the Preferred Securities. Accordingly, each prospective investor
should consult, and should rely exclusively on, such investor's own tax advisors
in analyzing the federal, state, local and foreign tax consequences of the
purchase, ownership or disposition of Preferred Securities.
Classification of the Subordinated Debentures
The Company intends to take the position that the Subordinated Debentures
will be classified for United States federal income tax purposes as indebtedness
of the Company under current law, and, by acceptance of a Preferred Security,
each holder covenants to treat the Subordinated Debentures as indebtedness and
the Preferred Securities as evidence of an indirect beneficial ownership
interest in the Subordinated Debentures. No assurance can be given, however,
that such position of the Company will not be challenged by the Internal Revenue
Service or, if challenged, that such a challenge will not be successful. The
remainder of this discussion assumes that the Subordinated Debentures will be
classified for United States federal income tax purposes as indebtedness of the
Company.
Classification of SBI Capital
Under current law and assuming full compliance with the terms of the Trust
Agreement and Indenture (and certain other documents described herein), SBI
Capital will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of Preferred
Securities generally will be treated as owning an undivided beneficial interest
in the Subordinated Debentures, and each holder will be required to include in
its gross income any original issue discount ("OID") accrued with respect to its
allocable share of the Subordinated Debentures whether or not cash is actually
distributed to such holder.
Potential Extension of Interest Payment Period and Original Issue Discount
Because the Company has the option, under the terms of the Subordinated
Debentures, to defer (so long as no Debenture Event of Default has occurred and
is continuing) payments of interest by extending interest payment periods for up
to 20 consecutive quarters, all of the stated interest payments on the
Subordinated Debentures will be treated as OID. Holders of debt instruments
issued with OID must include that discount in income on an economic accrual
basis before the receipt of cash attributable to the interest, regardless of
their method of tax accounting. Generally, all of a holder's taxable interest
income with respect to the Subordinated Debentures will be accounted for as OID.
Actual payments and distributions of stated interest will not, however, be
separately reported as taxable income. The amount of OID that accrues in any
quarter will approximately equal the amount of the interest that accrues on the
Subordinated Debentures in that quarter at the stated interest rate. In the
event that the interest payment period is extended, holders will continue to
accrue OID approximately equal to the amount of the interest payment due at the
end of the extended interest payment period on an economic accrual basis over
the length of the extended interest payment period.
Because income on the Preferred Securities will constitute interest income
generally and OID specifically, corporate holders of Preferred Securities will
not be entitled to a dividends-received deduction with respect to any income
recognized with respect to the Preferred Securities.
Market Discount and Acquisition Premium
Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Subordinated Debentures with "market discount"
or "acquisition premium" as such phrases are defined for United States federal
income tax purposes. Such
75
<PAGE>
holders are advised to consult their tax advisors as to the income tax
consequences of the acquisition, ownership and disposition of the Preferred
Securities.
Receipt of Subordinated Debentures or Cash upon Liquidation of SBI Capital
Under certain circumstances, as described under "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Termination," the Subordinated Debentures may be distributed to holders of
Preferred Securities upon a liquidation of SBI Capital. Under current United
States federal income tax law, such a distribution would be treated as a
nontaxable event to each such holder and would result in such holder having an
aggregate tax basis in the Subordinated Debentures received in the liquidation
equal to such holder's aggregate tax basis in the Preferred Securities
immediately before the distribution. A holder's holding period in the
Subordinated Debentures so received in liquidation of SBI Capital would include
the period for which such holder held the Preferred Securities.
If, however, a Tax Event occurs which results in SBI Capital being treated
as an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the Preferred Securities. Under certain
circumstances described herein, the Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder would recognize gain or loss as
if the holder sold such Preferred Securities for cash. See "Description of the
Preferred Securities--Redemption or Exchange" and "--Liquidation Distribution
Upon Termination."
Disposition of Preferred Securities
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the Preferred
Securities and the holder's adjusted tax basis in such Preferred Securities. A
holder's adjusted tax basis in the Preferred Securities generally will be its
initial purchase price increased by OID previously includable in such holder's
gross income to the date of disposition and decreased by payments received on
the Preferred Securities to the date of disposition. Such gain or loss will
generally be a capital gain or loss and will be a long-term capital gain or loss
if the Preferred Securities have been held for more than one year at the time of
sale.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder that disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which basis will include, in the form of OID, all
accrued but unpaid interest), a holder will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
Effect of Proposed Changes in Tax Laws
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "1996 Proposed Legislation") if such debt obligations have a maximum
term in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the 1996 Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress would have an effective date
that is no earlier than the date of "appropriate
76
<PAGE>
Congressional action." In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons
and Charles B. Rangel wrote letters to Treasury Department officials concurring
with the views expressed in the Joint Statement. Neither the 1996 Proposed
Legislation nor similar legislation was enacted during the 104th Congress. On
February 6, 1997, President Clinton proposed in the administration's fiscal year
1998 budget certain tax law changes (the "1997 Proposed Legislation") that
would, among other things, generally deny corporate issuers a deduction for
interest or OID in respect of certain debt obligations if such debt obligations
have a maximum term in excess of 15 years and are not shown as indebtedness on
the issuer's applicable consolidated balance sheet. The 1997 Proposed
Legislation also contains a provision that would deny a deduction to corporate
issuers for interest or OID with respect to debt instruments that have a maximum
term of more than 40 years (including rights to extend, renew or relend), or are
payable in stock of the issuer or a related party. The U.S. Treasury
Department's summary of the 1997 Proposed Legislation states that the above
provisions regarding the deduction of interest would generally be effective for
instruments issued on or after the date of first Congressional committee action
with respect to the 1997 Proposed Legislation. The Ways and Means Committee
began a full committee hearing on the President's fiscal 1998 budget on February
11, 1997. There can be no assurance that the effective date guidance in the
1997 Proposed Legislation will be adopted if the proposed change to the tax law
is enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Company to deduct the interest
payable on the Subordinated Debentures. Consequently, there can be no assurance
that a Tax Event will not occur. A Tax Event would permit the Company, upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, to cause a redemption of the
Preferred Securities before, as well as after, July 31, 2002. See "Description
of the Subordinated Debentures -- Redemption or Exchange" and "Description of
the Preferred Securities -- Redemption or Exchange -- Tax Event Redemption,
Capital Treatment Event Redemption or Investment Company Event Redemption."
Backup Withholding and Information Reporting
The amount of OID accrued on the Preferred Securities held of record by
individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Preferred Securities
by January 31 following each calendar year. Payments made on, and proceeds from
the sale of, the Preferred Securities may be subject to a "backup" withholding
tax (currently at 31%) unless the holder complies with certain identification
and other requirements. Any amounts withheld under the backup withholding rules
will be allowed as a credit against the holder's United States federal income
tax liability, provided the required information is provided to the Internal
Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED
SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
("Plans"), generally may purchase Preferred Securities, subject to the investing
fiduciary's determination that the investment in Preferred Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
In any case, the Company and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to
77
<PAGE>
certain Plans (generally, Plans maintained or sponsored by, or contributed to
by, any such persons with respect to which the Company or an affiliate is a
fiduciary, or Plans for which the Company or an affiliate provides services).
The acquisition and ownership of Preferred Securities by a Plan (or by an
individual retirement arrangement or other Plans described in Section 4975(e)(1)
of the Code) with respect to which the Company or any of its affiliates is
considered a party in interest or a disqualified person may constitute or result
in a prohibited transaction under ERISA or Section 4975 of the Code, unless such
Preferred Securities are acquired pursuant to and in accordance with an
applicable exemption.
As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities unless such Preferred Securities are acquired pursuant to
and in accordance with an applicable exemption. Any other Plans or other
entities whose assets include Plan assets subject to ERISA or Section 4975 of
the Code proposing to acquire Preferred Securities should consult with their own
counsel.
UNDERWRITING
Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), has agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, the
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, to purchase from SBI Capital 870,000 Preferred
Securities. The Underwriter has agreed in the Underwriting Agreement, subject to
the terms and conditions set forth therein, to purchase all the Preferred
Securities offered hereby if any of the Preferred Securities are purchased.
The Underwriter has advised SBI Capital that it proposes initially to offer
the Preferred Securities to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of $ per Preferred Security. The Underwriter may
allow, and such dealers may reallow, a discount not in excess of $ per
Preferred Security to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation to
the Underwriter for arranging the investment therein of such proceeds, $ per
Preferred Security (or $ in the aggregate, or $ in the aggregate if
the Underwriter's over-allotment option, described below, is exercised in full),
in immediately available funds.
SBI Capital has granted the Underwriter an option to purchase up to an
additional 130,500 Preferred Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriter
exercises its option to purchase additional Preferred Securities, SBI Capital
will issue and sell to the Company additional Common Securities in such
aggregate Liquidation Amount as is required for the Company to continue to hold
Common Securities in an aggregate Liquidation Amount equal to at least 3% of the
total capital of SBI Capital and the Company will issue and sell to SBI Capital
Subordinated Debentures in an aggregate principal amount equal to the total
aggregate Liquidation Amount of the additional Preferred Securities being
purchased pursuant to the option and the additional Common Securities.
During a period of 180 days from the date of this Prospectus, neither SBI
Capital nor the Company will, subject to certain exceptions, without the prior
written consent of the Underwriter, directly or indirectly, sell, offer to sell,
grant any option for sale of, or otherwise dispose of, any Preferred Securities,
any security convertible into or exchangeable into or exercisable for Preferred
Securities or Subordinated Debentures or any debt securities substantially
similar to the Subordinated Debentures or equity securities substantially
similar to the Preferred Securities (except for Subordinated Debentures and the
Preferred Securities offered hereby).
78
<PAGE>
Application has been made to have the Preferred Securities approved for
quotation on The Nasdaq Stock Market's National Market. The Underwriter has
advised SBI Capital that it presently intends to make a market in the Preferred
Securities after the commencement of trading on The Nasdaq Stock Market's
National Market, but no assurances can be made as to the liquidity of such
Preferred Securities or that an active and liquid trading market will develop
or, if developed, that it will continue. The offering price and distribution
rate have been determined by negotiations among representatives of the Company
and the Underwriter, and the offering price of the Preferred Securities may not
be indicative of the market price following the Offering. The Underwriter will
have no obligation to make a market in the Preferred Securities, however, and
may cease market-making activities, if commenced, at any time.
SBI Capital and the Company have agreed to indemnify the Underwriter
against, or contribute to payments that the Underwriter may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act.
The Underwriter engages in transactions with, and, from time to time, has
performed services for, the Company and its subsidiaries in the ordinary course
of business.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of SBI
Capital will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Company and SBI Capital. Certain legal matters for the Company
and SBI Capital, including the validity of the Guarantee and the Subordinated
Debentures, will be passed upon for the Company and SBI Capital by Kennedy &
Baris, L.L.P., Bethesda, Maryland, counsel to the Company and SBI Capital.
Certain legal matters will be passed upon for the Underwriter by Bryan Cave LLP,
St. Louis, Missouri. Kennedy & Baris, L.L.P. and Bryan Cave LLP will rely on the
opinion of Richards, Layton & Finger as to matters of Delaware law. Certain
matters relating to United States federal income tax considerations will be
passed upon for the Company by Kennedy & Baris, L.L.P.
EXPERTS
The consolidated financial statements at December 31, 1996 and 1995 and for
each of the three years in the period ended December 31, 1996 included and
incorporated by reference in this Prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are included
and incorporated by reference herein, and have been so included and incorporated
in reliance upon the report of such firm given their authority as experts in
accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Securities
and Exchange Commission (the "Commission") are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997;
(3) The Company's Current Reports on Form 8-K dated March 14, 1997 and
April 2, 1997.
All reports filed by the Company with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Preferred Securities offered
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated
79
<PAGE>
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Deborah T. Bradley, Secretary, Southwest Bancorp, Inc., 608 South Main Street,
Stillwater, Oklahoma 74074. Telephone requests may be directed to 405-372-2230.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-2
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and SBI Capital with the Commission under the
Securities Act, with respect to the Preferred Securities and the Subordinated
Debentures. This Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, although it does include a
summary of the material terms of the Indenture and the Trust Agreement.
Reference is made to such Registration Statement and to the exhibits relating
thereto for further information with respect to the Company, SBI Capital, the
Preferred Securities and the Subordinated Debentures. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated by
reference herein are not necessarily complete, and, in each instance, reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, DC 20549, upon payment of prescribed rates. The Commission maintains
in Internet web site that contains reports, proxy and information statements and
other information regarding issuers who file electronically with the Commission.
The address of that site is http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company may be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
No separate financial statements of SBI Capital have been included herein.
The Company does not consider that such financial statements would be material
to holders of Preferred Securities because (i) all of the voting securities of
SBI Capital will be owned by the Company, a reporting company under the Exchange
Act, (ii) SBI Capital has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in the
assets of SBI Capital and investing the proceeds thereof in Subordinated
Debentures issued by the Company, and (iii) the obligations of the Company
described herein to provide certain indemnities in respect of and be responsible
for certain costs, expenses, debts and liabilities of SBI Capital under the
Indenture and pursuant to the Trust Agreement, the Guarantee issued by the
Company with respect to the Preferred Securities, the Subordinated Debentures
purchased by SBI Capital and the related Indenture, taken together, constitute,
in the belief of the Company and SBI Capital, a full and unconditional guarantee
of payments due on the Preferred Securities. See "Description of the
Subordinated Debentures" and "Description of the Guarantee."
80
<PAGE>
SBI Capital is not currently subject to the information reporting
requirements of the Exchange Act. SBI Capital will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek and expects to receive an exemption therefrom.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Audited Consolidated Financial Statements for the Year Ended December 31, 1996
Independent Auditors' Report............................................... F-2
Consolidated Statements of Financial Condition at December 31, 1996
and 1995................................................................. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994......................................... F-4
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994......................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994......................................... F-6
Notes to Consolidated Financial Statements................................. F-7
Unaudited Consolidated Financial Statements for the Three Months Ended
March 31, 1997
Unaudited Consolidated Statements of Financial Condition at
March 31, 1997 and December 31, 1996..................................... F-23
Unaudited Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 ........................................... F-24
Unaudited Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996. .......................................... F-25
Unaudited Consolidated Statements of Shareholders' Equity for the Three
Months Ended March 31, 1997 and 1996..................................... F-26
Notes to Consolidated Financial Statements................................. F-27
</TABLE>
1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of Southwest Bancorp, Inc.:
We have audited the accompanying consolidated statements of financial
condition of Southwest Bancorp, Inc. and subsidiary (the "Company") as of
December 31, 1996 and 1995 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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, such consolidated financial statements present fairly,
in all material respects, the financial position of Southwest Bancorp, Inc. and
subsidiary at December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Oklahoma City, Oklahoma
January 27, 1997
F-2
<PAGE>
SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 22,914 $ 20,789
Federal funds sold - -
--------- ---------
Cash and cash equivalents 22,914 20,789
Investment securities:
Held to maturity, approximate fair value of
$83,963 (1996) and $75,202 (1995) 83,589 74,644
Available for sale, approximate amortized cost of
$63,419 (1996) and $72,023 (1995) 63,762 73,044
Loans receivable, net of allowance for loan losses
of $7,139 (1996) and $5,813 (1995) 637,507 526,175
Accrued interest receivable 7,400 7,117
Premises and equipment, net 9,649 6,224
Other assets 4,296 3,142
--------- ---------
Total assets $ 829,117 $ 711,135
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 83,729 $ 78,308
Interest-bearing demand 34,309 33,762
Money market accounts 86,910 75,330
Savings accounts 4,086 4,788
Time deposits 544,911 442,199
--------- ---------
Total deposits 753,945 634,387
--------- ---------
Income taxes payable 187 271
Accrued interest payable 5,061 4,266
Other liabilities 4,892 11,854
--------- ---------
Total liabilities 764,085 650,778
--------- ---------
Commitments and contingencies - -
Shareholders' equity:
Serial preferred stock -
Series A, 9.20% Redeemable, Cumulative Preferred
Stock; $1 par value; 1,000,000 shares authorized;
liquidation value $17,250,000; 690,000 shares
issued and outstanding 690 690
Series B, $1 par value; 1,000,000 shares authorized;
none issued - -
Common stock - $1 par value; 10,000,000 shares
authorized; issued and outstanding 3,764,216 (1996)
and 3,755,228 (1995) 3,764 3,755
Capital surplus 24,332 24,171
Retained earnings 36,041 31,129
Unrealized gain/(loss) on investment securities
available for sale, net of tax 205 612
--------- ---------
Total sharesholders' equity 65,032 60,357
--------- ---------
Total liabilities & shareholders' equity $ 829,117 $ 711,135
========= =========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 55,177 $ 45,591 $ 30,090
Investment securities:
U.S. Government and agency obligations 6,815 6,737 5,781
State and political subdivisions 577 477 336
Mortgage-backed securities 1,531 1,535 1,203
Other securities 76 64 51
Federal funds sold 492 596 193
-------- -------- --------
Total interest income 64,668 55,000 37,654
Interest expense:
Interest-bearing demand 838 764 802
Money market accounts 3,129 3,161 2,241
Savings accounts 114 133 187
Time deposits 28,647 24,208 13,286
Other borrowed money 105 278 121
-------- -------- --------
Total interest expense 32,833 28,544 16,637
-------- -------- --------
Net interest income 31,835 26,456 21,017
Provision for loan losses 3,100 2,000 1,800
-------- -------- --------
Net interest income after provision for loan losses 28,735 24,456 19,217
Other income:
Service charges and fees 2,985 2,574 2,440
Credit cards 869 901 903
Other noninterest income 358 373 328
Gain on sales of loans receivable 1,678 1,034 1,453
Gain/(loss) on sales of investment securities 459 (8) (3)
-------- -------- --------
Total other income 6,349 4,874 5,121
Other expenses:
Salaries and employee benefits 12,164 10,057 8,038
Occupancy 3,671 3,080 2,509
FDIC and other insurance 859 856 1,056
Credit cards 411 547 504
General and administrative 6,121 5,362 4,333
-------- -------- --------
Total other expenses 23,226 19,902 16,440
-------- -------- --------
Income before taxes 11,858 9,428 7,898
Taxes on income 4,306 3,336 2,754
-------- -------- --------
Net income $ 7,552 $ 6,092 $ 5,144
======== ======== ========
Net income available to common shareholders $ 5,965 $ 5,426 $ 5,144
======== ======== ========
Earnings per common share $ 1.59 $ 1.44 $ 1.37
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
Unrealized '
Gain (Loss) Total
on Available Share-
Preferred Stock Common Stock Capital Retained for Sale holders'
Share Amount Share Amount Surplus Earnings Securities Equity
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1994 - - 3,755,228 $3,755 $ 8,539 $22,077 $ 199 $34,570
Cash dividends paid:
Common, $0.15 per share - - - - - (563) - (563)
Cash dividends declared:
Common, $0.05 per share - - - - - (187) - (187)
Change in unrealized gain
(loss) on available for sale
securities, net of tax - - - - - - (1,076) (1,076)
Net income - - - - - 5,144 - 5,144
---------------------------------------------------------------------------------------------
Balance,
December 31, 1994 - - 3,755,228 3,755 8,539 26,471 (877) 37,888
Cash dividends paid:
Common, $0.18 per share - - - - - (676) - (676)
Preferred, $0.7731 per share - - - - - (533) - (533)
Cash dividends declared:
Common, $0.06 per share - - - - - (225) - (225)
Issuance of preferred stock,
net of offering costs 690,000 $690 - - 15,632 - - 16,322
Change in unrealized gain
(loss) on available for sale
securities, net of tax - - - - - - 1,489 1,489
Net income - - - - - 6,092 - 6,092
---------------------------------------------------------------------------------------------
Balance,
December 31, 1995 690,000 690 3,755,228 3,755 24,171 31,129 612 60,357
Cash dividends paid:
Common, $0.21 per share - - - - - (790) - (790)
Preferred, $2.30 per share - - - - - (1,587) - (1,587)
Cash dividends declared:
Common, $0.07 per share - - - - - (263) - (263)
Common stock issued:
Employees Stock Purchase
Plan - - 3,552 4 64 - - 68
Dividend Reinvestment Plan - - 5,436 5 97 - - 102
Change in unrealized gain
(loss) on available for sale
securities, net of tax - - - - - - (407) (407)
Net Income - - - - - 7,552 - 7,552
---------------------------------------------------------------------------------------------
Balance,
December 31, 1996 690,000 $690 3,764,216 $3,764 $24,332 $36,041 $205 $65,032
============================================================================================
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Operating activities:
Net income $ 7,552 $ 6,092 $ 5,144
Adjustments to reconcile net income to net
cash provided from operating activities:
Provision for loan losses 3,100 2,000 1,800
Depreciation and amortization expense 1,254 1,026 767
Amortization of premiums and accretion of
discount on securities, net 244 248 740
Amortization of intangibles 174 174 187
(Gain) Loss on sales of securities (459) 8 3
(Gain) Loss on sales of loans receivable (1,678) (1,034) (1,453)
(Gain) Loss on sales of premises/equipment (10) 3 (10)
(Gain) Loss on other real estate owned, net (2) (52) 3
Proceeds from sales of residential mortgage
loans 45,519 34,002 47,497
Residential mortgage loans originated for
resale (48,469) (34,947) (46,371)
Changes in assets and liabilities:
Accrued interest receivable (283) (1,240) (1,034)
Other assets (1,188) (986) 447
Income taxes payable (84) 78 (24)
Accrued interest payable 795 1,632 1,212
Other liabilities (7,000) (4,078) 12,453
--------- --------- ---------
Net cash (used in) provided from operating activities (535) 2,926 21,361
--------- --------- ---------
Investing activities:
Proceeds from sales of held to maturity securities - 5,993 -
Proceeds from sales of available for sale securities 438 - 102
Proceeds from principal repayments and maturities:
Held to maturity securities 25,388 17,193 27,537
Available for sale securities 28,969 6,286 6,339)
Purchases of held to maturity securities (34,538) (23,363) (71,183)
Purchase of available for sale securities (20,383) (8,054) (25,406)
Loans originated and principal repayments, net (157,591) (159,226) (153,424)
Proceeds from sales of guaranteed student loans 47,768 40,738 59,617
Purchases of premises and equipment (4,693) (1,936) (1,870)
Proceeds from sales of premises and equipment 24 18 38
Proceeds from sales of other real estate 152 68 184
--------- --------- ---------
Net cash used in investing activities (144,466) (122,283) (158,066)
--------- --------- ---------
Financing activities:
Net increase in deposits 119,558 108,827 131,039
Net proceeds from issuance of common stock 170 - -
Net proceeds from issuance of preferred stock - 16,322 -
Common stock dividends paid (1,015) (864) (697)
Preferred stock dividends paid (1,587) (533) -
--------- --------- ---------
Net cash provided from financing activities 117,126 123,752 130,342
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 2,125 4,395 (6,363)
Cash and cash equivalents,
Beginning of year 20,789 16,394 22,757
--------- --------- ---------
End of year $ 22,914 $ 20,789 $ 16,394
========= ========= =========
</TABLE>
See note to consolidated financial statements.
F-6
<PAGE>
SOUTHWEST BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS - Southwest Bancorp, Inc. ("the
Company") was incorporated in 1981 as a bank holding company headquartered in
Stillwater, Oklahoma engaged primarily in commercial and consumer banking
services in the State of Oklahoma. The accompanying consolidated financial
statements include the accounts of Stillwater National Bank and Trust Company
(the "Bank"), a wholly owned subsidiary, established in 1894. The Company has
six full-service banking offices, two of which are located in each of Stillwater
and Tulsa, Oklahoma, with one each in Oklahoma City and Chickasha, Oklahoma, and
two loan production offices, one in Oklahoma City and one in Tulsa. The Company
pursues a decentralized community banking strategy and operates through three
regional divisions. All significant intercompany balances and transactions have
been eliminated.
BASIS OF PRESENTATION - In preparing its financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities as of the dates shown on the consolidated statements of
financial position and revenues and expenses during the periods reported. Actual
results could differ significantly from those estimates. Changes in economic
conditions could impact the determination of material estimates such as the
allowance for loan losses and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans.
INVESTMENT SECURITIES - Investments in debt and equity securities are
identified as held to maturity, trading, and available for sale based on
management considerations of asset/liability strategy, changes in interest rates
and prepayment risk, the need to increase capital and other factors. Under
certain circumstances (including the deterioration of the issuer's
creditworthiness, a change in tax law, or statutory or regulatory requirements),
the Company may change the investment security classification. The
classifications the Company utilizes determines the related accounting treatment
for each category of investments. Investments classified as trading are
accounted for at fair value, available for sale are accounted for at fair value
with unrealized gains or losses, net of taxes, excluded from earnings and
reported as a separate component of shareholders' equity, and held to maturity
are accounted for at amortized cost.
All held to maturity investment securities are adjusted for
amortization of premiums and accretion of discounts. Amortization of premiums
and accretion of discounts are recorded to income over the contractual maturity
or estimated life of the individual investment on the level yield method. The
Company has the ability and intent to hold to maturity its investment securities
classified as held to maturity; accordingly, no adjustment has been made for the
excess, if any, of amortized cost over market. Gain or loss on sale of
investments is based upon the specific identification method. Income earned on
the Company's investments in state and political subdivisions is not taxable.
LOANS RECEIVABLE - Interest on loans is accrued and credited to income
based upon the principal amount outstanding. In general, interest income on
impaired loans is written off after the loan is 90 days past due; subsequent
interest income is recorded when cash receipts are received from the borrower.
The Bank originates real estate mortgage loans and guaranteed student loans for
portfolio investment or sale in the secondary market. During the period of
origination, real estate mortgage loans are designated as held either for
investment purposes or sale. Mortgage loans held for sale are generally sold
within a one-month period from loan closing at amounts approximating par value
of the loans. Guaranteed student loans are generally sold after the Company has
been notified of the borrower's change from deferment status, which can range
from one to five years, or longer. Real estate mortgage loans held for sale and
guaranteed student loans are carried at cost, which does not exceed market.
Gains or losses recognized upon the sales of loans are determined on a specific
identification basis.
ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is
established through a provision for loan losses charged to expense. Loans which
are determined to be impaired are charged against this allowance and recoveries,
if any, are added
F-7
<PAGE>
to the allowance. A loan is considered to be impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. All of the Company's nonaccrual loans have been defined as impaired
loans. The adequacy of the allowance for loan losses is determined by
management based upon a number of factors including, among others, analytical
reviews of loan loss experience in relationship to outstanding loans and
commitments; unfunded loan commitments; problem and nonperforming loans and
other loans presenting credit concerns; trends in loan growth, portfolio
composition and quality; use of appraisals to estimate the value of collateral;
and management's judgment with respect to current and expected economic
conditions and their impact on the existing loan portfolio. Changes in the
allowance may occur because of changing economic conditions and economic
prospects or financial position of borrowers. While there can be no assurance
that the allowance for loan losses will be adequate to cover all losses from all
loans, management believes that the allowance for loan losses is adequate.
While management uses all available information to estimate the adequacy of the
allowance for loan losses, the ultimate collectability of a substantial portion
of the loan portfolio and the need for future additions to the allowance will be
based upon changes in economic conditions and other relevant factors. Recovery
of the carrying value of such loans is dependent to a great extent on conditions
that may be beyond the Company's control. Actual future losses could differ
significantly from the amounts estimated by management adversely affecting net
income.
The Company adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 114, Accounting by
Creditors for Impairment of a Loan, as amended by SFAS No. 118, Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosure on January
1, 1995. The allowance for loan losses related to loans that are identified for
evaluation in accordance with SFAS No. 114 is based on discounted cash flows
using the loan's initial effective interest rate or the fair value of the
collateral for certain collateral dependent loans. Smaller balance, homogeneous
loans, including mortgage student and consumer, are collectively evaluated for
impairment. The amount of impairment determined in accordance with SFAS No. 114
did not differ materially from amounts previously provided. In addition, SFAS
No. 114 does not affect the comparability of the credit risk disclosures. This
evaluation is inherently subjective as it requires material estimates including
the amounts and timing of future cash flows expected to be received on impaired
loans that may be susceptible to significant change.
LOAN SERVICING INCOME - The Company earns fees for servicing real
estate mortgages owned by others. These fees are generally calculated on the
outstanding principal balance of the loans serviced and are recorded as income
when received.
PREMISES AND EQUIPMENT - Premises and equipment are stated at cost
less accumulated depreciation and amortization. Major additions or improvements
are charged to the asset account while normal maintenance and repairs are
expensed as incurred. Depreciation and amortization are computed using the
straight-line and declining-balance methods based on asset lives which vary from
three to forty years.
OTHER REAL ESTATE OWNED - Other real estate owned is initially
recorded at fair value less the estimated costs to sell the asset. Write-downs
of carrying value required at the time of foreclosure are recorded as a charge
to the allowance for loan losses. Costs related to the development of such real
estate are capitalized whereas those related to holding the property are
expensed. Foreclosed property is subject to periodic reevaluation based upon
estimates of fair value. In determining the valuation of other real estate
owned, management obtains independent appraisals for significant properties.
Valuation adjustments are provided, as necessary, by charges to operations. The
net cost of operating other real estate owned, including provision for losses,
rental income, and gains and losses on sales of real estate, is not significant.
Profit from sales of foreclosed property by the Company is recognized
in accordance with the provisions of SFAS No. 66, Accounting for Sales of Real
Estate. Losses are recognized as incurred.
INTANGIBLES - Intangibles consist of a core deposit intangible,
goodwill and mortgage servicing rights. The core deposit intangible is amortized
over the estimated life of the assumed deposits, ranging from four to seven
years using the level yield method. Goodwill is amortized using the straight-
line method over 15 years. Mortgage servicing rights are capitalized based upon
the observable market price at the point of origination. The servicing rights
are amortized on an individual loan by loan basis in proportion to, and over the
F-8
<PAGE>
period of, estimated net servicing income. The capitalized amounts,
amortization and impairment of the mortgage servicing rights is not material At
December 31, 1996 and 1995, the Bank has recorded cumulative amortization of
$1.0 million and $829,000, respectively.
TAXES ON INCOME - The Company and its subsidiary file consolidated
income tax returns. Deferred income taxes arise from temporary differences
between financial and tax bases of certain assets and liabilities. A valuation
allowance will be established if it is more likely than not that some portion of
the deferred tax asset will not be realized.
EARNINGS PER COMMON SHARE - Earnings per common share is computed
based upon net income, after deducting the dividend requirements of preferred
stock, divided by the weighted average number of common shares outstanding
during each period. The impact of stock options on earnings per common share is
not materially dilutive. The weighted average of outstanding common shares for
the years ended December 31, 1996, 1995 and 1994 was 3,760,370, 3,755,228 and
3,755,228, respectively.
TRUST - The Company offers trust services to customers through its
relationship with the Trust Company of Oklahoma, a trust services company.
Property (other than cash on deposit) held by the Bank in a fiduciary or agency
capacity for its customers is not included in the consolidated statements of
financial condition as it is not an asset or liability of the Bank.
CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, amounts due from depository
institutions, and federal funds sold. Federal funds sold are sold for one day
periods.
LIQUIDITY - The Bank is required by the Federal Reserve Bank to
maintain average reserve balances. Cash and due from banks in the consolidated
statements of financial condition include restricted amounts of $5.1 and $6.2
million at December 31, 1996 and 1995, respectively.
At December 31, 1996, the Bank had available unsecured lines of credit
from correspondent banks and the Student Loan Marketing Association ("SLMA")
totaling $15.0 million and $20.0 million, respectively. Short-term borrowings
outstanding on these lines of credit totaled $1.8 million and $10.3 million,
with weighted average rates of 6.70% and 5.60% at December 31, 1996 and 1995,
respectively. The average balances outstanding on these lines of credit were not
material for either year.
RECLASSIFICATIONS - Certain reclassifications have been made to the
prior year amounts to conform to the current year presentation.
F-9
<PAGE>
2. INVESTMENT SECURITIES
A summary of the amortized cost and fair values of investment securities
follows:
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------------------
Amortized Gross Unrealized Approximate
Cost Gains Losses Fair Value
------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Held to Maturity:
U.S. Government and
agency obligations $ 72,345 $ 467 $ 100 $ 72,712
Obligations of state and
political subdivisions 11,244 52 45 11,251
-------- ------- ------- --------
Total $ 83,589 $ 519 $ 145 $ 83,963
======== ======= ======= ========
Available for Sale:
U.S. Government and
agency obligations $ 37,440 $ 253 $ 50 $ 37,643
Obligations of state and
political subdivisions 1,892 17 0 1,909
Mortgage-backed securities 23,108 56 103 23,061
Other securities 979 170 0 1,149
-------- ------- ------- --------
Total $ 63,419 $ 496 $ 153 $ 63,762
======== ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
------------------------------------------------------
Amortized Gross Unrealized Approximate
Cost Gains Losses Fair Value
------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Held to Maturity:
U.S. Government and
agency obligations $ 65,573 $ 641 $ 114 $ 66,100
Obligations of state and
political subdivisions 9,071 58 27 9,102
-------- ------- ------- --------
Total $ 74,644 $ 699 $ 141 $ 75,202
======== ======= ======= ========
Available for Sale:
U.S. Government and
agency obligations $ 44,473 $ 763 $ 24 $ 45,212
Obligations of state and
political subdivisions 2,481 27 - 2,508
Mortgage-backed securities 24,092 210 80 24,222
Other securities 977 135 10 1,102
-------- ------- ------- --------
Total $ 72,023 $ 1,135 $ 114 $ 73,044
======== ======= ======= ========
</TABLE>
F-10
<PAGE>
As required by law, investment securities are pledged to secure public
and trust deposits. Securities with an amortized cost of $134.9 million and
$78.8 million were pledged to meet such requirements of $15.4 million and $15.8
million at December 31, 1996 and 1995, respectively. Any amount overpledged can
be released at any time.
A comparison of the amortized cost and approximate fair value of the
Company's investment securities by maturity date at December 31, 1996 follows:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
----------------------- ----------------------
Amortized Approximate Amortized Approximate
Cost Fair Value Cost Fair Value
--------- ----------- --------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
One year or less $11,957 $11,956 $18,701 $18,740
Two years through five years 36,901 37,000 64,888 65,223
Five years through ten years 13,575 13,650 - -
More than ten years 7 7 - -
Other securities not due
at a single maturity date 979 1,149 - -
------- ------- ------- -------
Total $63,419 $63,762 $83,589 $83,963
======= ======= ======= =======
</TABLE>
Realized gross gains/(losses) on sales of investment securities were
$459,000, $(8,000) and $(3,000) during 1996, 1995 and 1994, respectively. The
gross proceeds from such sales of investment securities totaled approximately
$438,000, $6.0 million and $102,000 during 1996, 1995 and 1994, respectively. A
portion of the gain on sales of investment securities during 1996 occurred when
$4.6 million in Agency securities classified as "held to maturity" and $11.2
million in Agency securities classified as "available for sale", originally
purchased at a discount, were called prior to their stated maturity date.
In November 1995, the FASB issued a special report on A Guide to
Implementation of SFAS No. 115 on Accounting for Certain Investments in Debt and
Equity Securities - Questions and Answers (the "Guide"). The Guide provided the
Company a one-time opportunity to transfer securities from the held to maturity
category during the period November 15 through December 31, 1995. After
reconsideration of its original classifications, the Company reclassified $32.7
million of investment securities from held to maturity to available for sale.
The fair value of such securities at the date of transfer was $33.3 million and
the net unrealized gain was $675,000.
F-11
<PAGE>
3. LOANS RECEIVABLE
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
-------- --------
(dollars in thousands)
<S> <C> <C>
Real estate mortgage:
Commercial $196,163 $160,126
One-to-four family residential 61,175 42,988
Real estate construction 54,369 33,159
Commercial 218,515 181,081
Installment and consumer:
Guaranteed student loans 61,959 67,388
Credit Cards 20,839 21,869
Other 31,626 25,377
-------- --------
644,646 531,988
Allowance for loan losses (7,139) (5,813)
-------- --------
Loans receivable, net $637,507 $526,175
======== ========
</TABLE>
The Bank extends commercial and consumer credit primarily to customers
in the State of Oklahoma which subjects the loan portfolio to the general
economic conditions within this area. At December 31, 1996 and 1995,
substantially all of the Bank's loans, except for credit cards, are
collateralized with real estate, inventory, accounts receivable and/or other
assets or guaranteed by agencies of the United States Government.
Loans to individuals and businesses in the healthcare industry totaled
approximately $74.5 million, or 12% of total loans. Other notable
concentrations of credit within the loan portfolio include $25.2 million in
residential construction loans, $23.9 million in hotel/motel loans and $13.4
million in restaurant loans. In the event of total nonperformance by the
borrowers, the Company's accounting loss would be limited to the recorded
investment in the loans receivable reduced by proceeds received from disposition
of the related collateral.
The Company had loans which were held for sale of $12.3 million and
$4.6 million at December 31, 1996 and 1995, respectively. These loans are
carried at cost, which does not exceed market. Guaranteed student loans are
generally sold to a single servicer. A substantial portion of the one-to-four
family residential loans and loan servicing rights are sold to two servicers.
The principal balance of loans for which accrual of interest has been
discontinued totaled approximately $4.6 million and $724,000 at December 31,
1996 and 1995, respectively. If interest on those loans had been accrued, the
interest income as reported in the accompanying consolidated statements of
operations would have increased by approximately $398,000, $48,000 and $443,000
for 1996, 1995 and 1994, respectively. The $3.9 million increase in nonaccrual
loans from year-end 1995 was mainly the result of the classification as
nonaccrual of a group of related loans with a remaining net book value of $3.4
million at December 31, 1996. Management believes these loans are either
adequately secured or have specific reserves allocated to them.
Floating rate loans with original repricing terms within two years
were approximately $468.8 million and $401.8 million at December 31, 1996 and
1995, respectively.
The unpaid principal balance of real estate mortgage loans serviced
for others totaled $119.0 million and $130.2 million at December 31, 1996 and
1995, respectively. The Bank maintained escrow accounts totaling $366,000 and
$697,000 for real estate mortgage loans serviced for others at December 31, 1996
and 1995, respectively.
F-12
<PAGE>
The allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1996 1995 1994
------ ------ ------
(dollars in thousands)
<S> <C> <C> <C>
Beginning balance $5,813 $4,959 $3,960
Provision for loan losses 3,100 2,000 1,800
Loans charged off (2,301) (1,803) (1,203)
Recoveries 527 657 402
------ ------ ------
Total $7,139 $5,813 $4,959
====== ====== ======
</TABLE>
As of December 31, 1996 and 1995, impaired loans totaled $4.8 million
and $3.3 million and had been allocated a related allowance for loan loss of
$2.0 million and $1.3 million, respectively. The average balance of impaired
loans totaled $3.8 million and $3.9 million and interest income recognized on
impaired loans totaled $37,000 and $367,000, respectively, for the years ended
December 31, 1996 and 1995.
Directors and officers of the Company and the Bank were customers of,
and had transactions with, the Bank in the ordinary course of business, and
similar transactions are expected in the future. All loans included in such
transactions 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 did not involve more than normal risk of loss or present other
unfavorable features. Certain officers, directors, employees, and companies in
which they have partial ownership had indebtedness to the Bank totaling $1.0
million and $2.2 million at December 31, 1996 and 1995, respectively. During
1996, $1.8 million of new loans were made to these persons and repayments
totaled $3.0 million.
4. PREMISES AND EQUIPMENT
These consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
------- -------
(dollars in thousands)
<S> <C> <C>
Land $ 1,214 $ 883
Buildings and improvements 3,869 3,540
Furniture, fixtures, and equipment 12,024 8,052
------- -------
17,107 12,475
Accumulated depreciation and amortization (7,458) (6,251)
------- -------
Premises and equipment, net $ 9,649 $ 6,224
======= =======
</TABLE>
F-13
<PAGE>
5. INCOME TAXES
The components of taxes on income follow:
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1996 1995 1994
---------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Current tax expense:
Federal $ 4,275 $ 3,366 $ 2,786
State 667 508 380
Deferred tax benefit:
Federal (543) (458) (350)
State (93) (80) (62)
------- ------- -------
$ 4,306 $ 3,336 $ 2,754
======= ======= =======
</TABLE>
The taxes on income reflected in the accompanying statements of operations
differs from the expected U.S. Federal income tax rates for the following
reasons:
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1996 1995 1994
---------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Computed tax expense at 34% $ 4,032 $ 3,206 $ 2,685
Increase (decrease) in income
tax resulting from:
Benefit of income not subject to
U.S. Federal income tax (210) (202) (129)
State income taxes, net of
Federal income tax benefit 379 281 212
Other 105 51 (14)
------- ------- -------
Taxes on income $ 4,306 $ 3,336 $ 2,754
======= ======= =======
</TABLE>
Deferred tax expense (benefit) relating to temporary differences includes
the following components:
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1996 1995 1994
---------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Provision for loan losses $ (754) $ (494) $ (462)
Accelerated depreciation 135 56 59
Intagibles (26) (25) (31)
Sales of other real estate owned 225 - 91
Other (216) (75) (69)
------- ------- -------
Total $ (636) $ (538) $ (412)
======= ======= =======
</TABLE>
Deferred tax assets of $2.2 million and $1.3 million at December 31, 1996
and 1995, respectively, are reflected in the accompanying consolidated
statements of financial condition in other
F-14
<PAGE>
assets. There were no valuation allowances at December 31, 1996 or 1995.
Temporary differences that give rise to the deferred tax assets and
(liabilities) include the following:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1996 1995
------------------------------------
(dollars in thousands)
<S> <C> <C>
Allowance for loan losses $2,353 $1,599
Accumulated depreciation (676) (541)
Write-down on other real
estate owned 35 260
Deferred compensation accrual 88 127
Intangibles 162 136
Other 401 146
------ ------
2,363 1,727
Deferred taxes (payable) receivable on
investment securities available for sale (137) (408)
------ ------
Total $2,226 $1,319
====== ======
</TABLE>
6. SHAREHOLDERS' EQUITY
At the 1996 annual shareholders' meeting, the shareholders of the
Company approved an amendment to the Company's Certificate of Incorporation to
increase the authorized shares of capital stock from 7,000,000 to 12,000,000,
consisting of 10,000,000 shares of common stock, par value $1.00 per share
("Common Stock"), and an aggregate of 2,000,000 shares of serial preferred
stock, par value $1.00 per share. The Company's Board of Directors can determine
the voting powers, dividend rights, liquidation preferences and other
limitations on the preferred stock prior to issuance. On July 31, 1995, the
Company issued 690,000 shares of 9.20% Redeemable, Cumulative Preferred Stock,
Series A (the "Shares"), and received net proceeds of $16.3 million. The
liquidation preference of the Shares is $25 per share plus an amount equal to
accrued and unpaid dividends. The Shares may not be redeemed by the Company
prior to September 1, 1998. Subject to prior regulatory approval, the Shares may
be redeemed at the option of the Company, in whole or in part, on or after
September 1, 1998, at a price equal to $25 per share plus accumulated unpaid
dividends to the redemption date. Such dividends are cumulative from the date of
issuance and payable quarterly at the rate of 9.20% of the original liquidation
preference, or $2.30 per annum per share. For the year ended December 31, 1996,
the cumulative dividend requirement was $1.6 million, $1.5 million of which was
declared and paid.
The Company has reserved for issuance 200,000 shares of common stock
pursuant to the terms of Dividend Reinvestment and Employee Stock Purchase
Plans. The Dividend Reinvestment Plan allows shareholders of record a convenient
and economical method of increasing their equity ownership of the Company. The
Employee Stock Purchase Plan allows Company employees to acquire additional
common shares through payroll deductions. At December 31, 1996, 8,988 shares had
been issued by these plans.
7. CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital
requirements administered by the 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 and the Bank'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 the Company's and the Bank's
assets,
F-15
<PAGE>
assets, liabilities, and certain off-balance sheet items as calculated under
regulatory accounting principles. The Company's and the Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
The most recent notification from regulatory agencies 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 I risk-based, and Tier I leverage ratios as set forth in the
table below. Since the notification, there are no conditions or events that have
changed the Bank's category.
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 I capital (as defined in the
regulations) to risk-weighted assets and Tier I capital to average assets (all
as defined). The Company and the Bank meet all capital adequacy requirements to
be classified as well-capitalized as of December 31, 1996.
The Company's and Bank's actual capital amounts and ratios are presented
below.
<TABLE>
<CAPTION>
To Be Well Capitalized
Under Prompt Corrective For Capital
Actual Action Provisions Adequacy Purposes
-------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital (to risk-weighted assets)
Company $ 71,376 11.40% N/A N/A $ 50,077 8.00%
Bank 69,139 11.06% $ 62,490 10.00% 49,992 8.00%
Tier I Capital (to risk-weighted assets)
Company 63,886 10.21% N/A N/A 25,039 4.00%
Bank 62,000 9.92% 37,494 6.00% 24,996 4.00%
Leverage (Tier I capital to average assets)
Company 63,886 7.77% N/A N/A 32,889 4.00%
Bank 62,000 7.56% 41,026 5.00% 32,804 4.00%
As of December 31, 1995:
Total Capital (to risk-weighted assets)
Company $ 64,801 11.41% N/A N/A $ 45,435 8.00%
Bank 61,324 10.81% $ 56,729 10.00% 45,383 8.00%
Tier I Capital (to risk-weighted assets)
Company 56,888 10.02% N/A N/A 22,710 4.00%
Bank 55,511 9.79% 34,021 6.00% 22,681 4.00%
Leverage (Tier I capital to average assets)
Company 56,888 8.19% N/A N/A 27,784 4.00%
Bank 55,511 8.05% 34,479 5.00% 27,583 4.00%
</TABLE>
The approval of the Comptroller of the Currency is required if the total of
all dividends declared by the Bank in any calendar year exceeds the total of its
net profits of that year combined with its retained net profits of the preceding
two years. In addition, the Bank may not pay a dividend if, after paying the
dividend, the Bank would be under-capitalized. The Bank's maximum amount of
dividends available for payment totaled approximately $12.8 million at December
31, 1996. Dividends declared by the Bank for the years ended December 31, 1996,
1995 and 1994 did not exceed the threshold requiring regulatory approval.
8. STOCK OPTION PLAN
The Southwest Bancorp, Inc. 1994 Stock Option Plan (the "Stock Plan")
provides selected key employees with the opportunity to acquire common stock. At
December 31, 1996, the Company has reserved 375,522 shares under the Stock Plan,
of which 247,000 shares are under option at a weighted average exercise price of
F-16
<PAGE>
$15.95 per share; none of the options have been exercised. During 1996 and
1995, the Company granted 35,000 and 30,000 shares, respectively. The exercise
price of each option equals the market price of the Company's common stock on
the date of the grant. An option's maximum term is ten years. At December 31,
1996, there were four stock option arrangements outstanding:
<TABLE>
<CAPTION>
Option
Number of Price, Range
Shares Per Share
-----------------------------
<S> <C> <C>
Outstanding at January 1, 1994 - -
Granted 182,000 $12.75
Exercised - -
Canceled/expired - -
------------ ------------
Outstanding at December 31, 1994 182,000 12.75
Granted 30,000 13.38
Exercised - -
Canceled/expired - -
------------ ------------
Outstanding at December 31, 1995 212,000 12.84
Granted 35,000 18.50-19.25
Exercised - -
Canceled/expired - -
------------ ------------
Outstanding at December 31, 1996 247,000 $15.95
============ ============
Total exercisable at December 31, 1995 72,000 $12.75-13.38
============ ============
Total exercisable at December 31, 1996 116,500 $12.75-19.25
============ ============
</TABLE>
The Company has estimated the fair value of the options granted using
the minimum value method prescribed by SFAS No. 123, Accounting for Stock-Based
Compensation. Had compensation cost been determined based on the fair value at
the grant date for the Company's stock options in accordance with SFAS No. 123,
the proforma net income and earnings per common share would have been $7.458
million and $1.56 for 1996 and $5.911 million and $1.40 for 1995, respectively.
The Company has elected to continue to account for its stock options
using the intrinsic value method prescribed by APB Opinion No. 25 and related
interpretations. Accordingly, no compensation cost has been recognized for its
stock option plans.
9. EMPLOYEE BENEFITS
The Company, at the discretion of its Board of Directors, may, under its
profit-sharing plan, contribute annually an amount not exceeding 15% of the
total annual compensation of all participants. The Company made contributions of
$671,000, $680,000 and $589,000 in 1996, 1995 and 1994, respectively.
The Company has a deferred compensation plan for key management
employees. The Board of Directors of the Company administered the plan and
awarded performance units ("Units") at its discretion. Employees awarded Units
were entitled to receive compensation from the Bank based on the earnings of the
Company. The ultimate amount payable to employees is based on cumulative
earnings of the Company over certain five year periods. The 1996, 1995 and 1994
amounts charged to compensation expense under these plans were $45,000, $86,000
and $132,000, respectively. The final payout under this plan will be made in
1997, after which, no further Units will be outstanding.
F-17
<PAGE>
10. OPERATING LEASES
The Company leases certain equipment and facilities for its
operations. Future minimum annual rental payments required under operating
leases that have initial or remaining lease terms in excess of one year as of
December 31, 1996 follow:
<TABLE>
<CAPTION>
<S> <C>
1997 $957,000
1998 619,000
1999 362,000
2000 223,000
2001 141,000
</TABLE>
The total rental expense was $1.0 million, $803,000 and $616,000 in
1996, 1995 and 1994, respectively.
11. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures About Fair Value of Financial Instruments. The estimated fair value
amounts have been determined by the Company using available market information
and appropriate valuation methodologies. However, considerable judgment is
necessarily required to interpret market data to develop the estimates of fair
value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a current market
exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
CASH AND CASH EQUIVALENTS - For cash and cash equivalents, the
carrying amount is a reasonable estimate of fair value.
INVESTMENT SECURITIES - The fair value of U.S. Government and agency
obligations, other securities and mortgage-backed securities is estimated based
on quoted market prices or dealer quotes. The fair value for other investments
such as obligations of state and political subdivisions is estimated based on
quoted market prices for similar investment instruments.
LOANS RECEIVABLE - Fair values are estimated for certain homogeneous
categories of loans adjusted for differences in loan characteristics. The Bank's
loans have been aggregated by categories consisting of commercial, real estate,
student, credit card and other consumer. The fair value estimate for student
loans is the current historical cost carrying value as such loans are typically
sold in the secondary market at par value. The fair value of all other loans is
estimated by discounting the cash flows using credit and interest rate risks
inherent in the loan category and interest rates currently offered for loans
with similar terms and credit risks.
ACCRUED INTEREST RECEIVABLE - The carrying amount is a reasonable
estimate of fair value for accrued interest receivable.
DEPOSITS - The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the statement
of financial condition date. The fair value of fixed-maturity certificates of
deposits is estimated using the rates currently offered for deposits of similar
remaining maturities.
SHORT-TERM BORROWINGS - The fair values of short-term borrowings and
federal funds purchased are the amounts payable at the statement of financial
condition date, as the carrying amount is a reasonable estimate of fair value.
OTHER LIABILITIES AND ACCRUED INTEREST PAYABLE - The estimated fair
value of other liabilities, which primarily include trade accounts payable, and
accrued interest payable approximates their carrying value.
COMMITMENTS - Commitments to extend credit, standby letters of credit
and financial guarantees written or other items have short maturities and
therefore have no significant fair values.
F-18
<PAGE>
The carrying values and estimated fair values of the Company's
financial instruments follow:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------------- ------------------------
Carrying Fair Carrying Fair
Values Values Values Values
----------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Cash and cash equivalents $22,914 $22,914 $20,789 $20,789
Investment securities:
Held to maturity 83,589 83,963 74,644 75,202
Available for sale 63,762 63,762 73,044 73,044
Loans receivable 637,507 643,927 526,175 536,064
Accrued interest receivable 7,400 7,400 7,117 7,117
Deposits 753,945 756,093 634,387 637,840
Accrued interest payable 5,061 5,061 4,266 4,266
Other liabilities 4,892 4,892 11,854 11,854
Commitments - - - -
</TABLE>
12. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Company makes use of a number of
different financial instruments to help meet the financial needs of its
customers. In accordance with generally accepted accounting principles, these
transactions are not presented in the accompanying consolidated financial
statements and are referred to as off-balance sheet instruments. These
transactions and activities include commitments to extend lines of commercial
and real estate mortgage credit, standby and commercial letters of credit and
available credit card lines of credit. The following table provides a summary of
the Company's off-balance sheet financial instruments:
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
--------------------------
(dollars in thousands)
<S> <C> <C>
Commitments to extend commercial and
real estate mortgage credit $154,041 $86,563
Standby and commercial letters of credit 4,214 3,578
Credit card lines of credit 348,144 347,455
--------- ---------
Total $506,399 $437,596
========= =========
</TABLE>
A loan commitment is a binding contract to lend up to a maximum amount
for a specified period of time provided there is no violation of any financial,
economic or other terms of the contract. A standby letter of credit obligates
the Company to honor a financial commitment by issuing a guarantee to a third
party should the Company's customer fail to perform. Many loan commitments and
most standby letters of credit expire unfunded, and, therefore, total
commitments do not represent future funding obligations of the Company. Loan
commitments and letters of credit are made under normal credit terms, including
interest rates and collateral prevailing at the time, and usually require the
payment of a fee by the customer. Commercial letters of credit are commitments
generally issued to finance the movement of goods between buyers and sellers.
The Bank's exposure to credit loss, assuming commitments are funded, in the
event of nonperformance by the other party to the financial instrument is
represented by the contractual amount of those instruments. The Bank has an
agreement with another financial institution to purchase $285.0 million and
$284.9 million of unadvanced credit card lines of credit at December 31, 1996
and 1995, respectively, if such credit card lines of credit are funded. Such
F-19
<PAGE>
commitments are made with the same terms as similarly funded extensions of
credit including collateral, rates and maturities. The Bank does not anticipate
any material losses as a result of the commitments.
13. COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions normally associated with
financial institutions, the aggregate of which, in management's and legal
counsel's opinion, would not be material to the consolidated financial condition
or results of operations of the Company.
At periodic intervals, the Office of the Comptroller of the Currency and
the Federal Reserve Bank routinely examine the Company's and the Bank's
financial statements as part of their legally prescribed oversight of the
banking industry. Based on these examinations, the regulators can direct that
the Company's and the Bank's financial statements be adjusted in accordance with
their findings.
The Bank has adopted a Severance Compensation Plan (the "Plan") for the
benefit of certain officers and key members of management. The Plan's purpose is
to protect and retain certain qualified employees in the event of a change in
control (as defined) and to reward those qualified employees for loyal service
to the Bank by providing severance compensation to them upon their involuntary
termination of employment after a change in control of the Bank. At December 31,
1996, the Bank has not recorded any amounts in the consolidated financial
statements relating to the Plan. If a change of control were to occur, the
maximum amount payable to certain officers and key members of management would
approximate $934,000.
14. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
1996 1995 1994
----------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Cash paid for interest $32,038 $26,913 $15,425
Cash paid for taxes on income 4,390 3,600 2,817
Loans originated to finance the sale of
other real estate owned - 68 -
Loans transferred to other real estate owned 21 15 -
Reclassification of investment securities
from held to maturity to available for sale - 32,672 -
Unrealized gain/(loss) on investment
securities available for sale, net of tax (407) 1,489 (1,076)
</TABLE>
15. ACCOUNTING STANDARD ISSUED BUT NOT YET ADOPTED
In June 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 125
requires the Company to recognize the financial and servicing assets it controls
and liabilities it has incurred, derecognize financial assets when control has
been surrendered, and derecognize liabilities when extinguished. In December
1996, the FASB adopted an amendment to SFAS No. 125 that will delay for one year
certain provisions of the Statement. As amended, SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1997. The Company will adopt SFAS No. 125 for
transfers and servicing of financial assets and extinguishments of liabilities
when required. Management believes that adoption of SFAS No. 125 will not have a
material impact on the Company's consolidated financial position or results of
operations.
F-20
<PAGE>
16. PARENT COMPANY CONDENSED FINANCIAL INFORMATION
Following are the condensed financial statements of Southwest Bancorp,
Inc. ("Parent Company only") for the periods indicated:
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
-----------------------
(dollars in thousands)
<S> <C> <C>
Statements of Financial Condition
Assets:
Cash and due from banks $754 $297
Investment in subsidiary bank 62,808 56,878
Investment securities, available for sale 1,446 2,984
Other assets 423 435
------- -------
Total $65,431 $60,594
======= =======
Liabilities $ 399 $ 237
Shareholders' Equity
Preferred 17,382 17,382
Common 47,650 42,975
------- -------
Total $65,431 $60,594
======= =======
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1996 1995 1994
--------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Statements of Operations
Income:
Cash dividends from subsidiary bank $1,053 $901 $781
Dividend income 22 28 25
Investment income 116 98 46
------ ------ ------
Total income 1,191 1,027 852
Security gains/(losses) 288 - (3)
General and administrative expenses 150 95 88
------ ------ ------
Total income before tax expense
and equity in undistributed income
of subisidary bank 1,329 932 761
Taxes on income 99 4 (14)
------ ------ ------
Income before equity in undistributed 1,230 928 775
income of subsidiary bank
Equity in undistributed income of
subsidiary bank 6,322 5,164 4,369
------ ------ ------
Net income $7,552 $6,092 $5,144
====== ====== ======
Net income available to common
shareholders $5,965 $5,426 $5,144
====== ====== ======
</TABLE>
F-21
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------
1996 1995 1994
----------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Statement of Cash Flows
Operating activities:
Net income $ 7,552 $ 6,092 $ 5,144
Equity in undistributed income of
subsidiary bank (6,322) (5,164) (4,369)
Other, net 140 (421) (125)
------- ------- -------
Net Cash provided by operating activities 1,370 507 650
------- ------- -------
Investing activities:
Available for sale securities:
Purchases (1,806) (3,146) -
Sales - - 102
Maturities 3,325 1,245 -
------- ------- -------
Net cash provided by (used in)
investing activities 1,519 (1,901) 102
------- ------- -------
Financing activities:
Proceeds from issuance of
Preferred stock - 16,322 -
Common stock 170 - -
Capital contribution to Bank - (13,500) -
Cash dividends paid:
Preferred stock (1,587) (533) -
Common stock (1,015) (864) (697)
------- ------- -------
Net cash provided by (used in)
financing activities (2,432) 1,425 (697)
------- ------- -------
Net increase in cash and cash equivalents 457 31 55
Cash and cash equivalents,
Beginning of year 297 266 211
------- ------- -------
End of year $ 754 $ 297 $ 266
======= ======= =======
</TABLE>
**********
F-22
<PAGE>
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 28,212 $ 22,914
Federal funds sold 15,800 --
------------ ------------
Cash and cash equivalents 44,012 22,914
Investments securities:
Held to maturity, approximate fair value of
$84,598 (1997) and $83,963 (1996) 84,787 83,589
Available for sale, approximate amortized cost of
$65,060 (1997) and $63,419 (1996) 64,897 63,762
Loans receivable, net of allowance for loan losses
of $8,484 (1997) and $7,139 (1996) 668,015 637,507
Accrued interest receivable 8,007 7,400
Premises and equipment, net 12,696 9,649
Other assets 5,395 4,296
------------ ------------
Total assets $ 887,809 $ 829,117
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 85,943 $ 83,729
Interest-bearing demand 37,054 34,309
Money market accounts 93,467 86,910
Savings accounts 4,002 4,086
Time deposits 594,071 544,911
------------ ------------
Total deposits 814,537 753,945
------------ ------------
Income taxes payable 14 187
Accrued interest payable 5,120 5,061
Other Liabilities 3,599 4,892
------------ ------------
Total Liabilities 823,270 764,065
------------ ------------
Commitments and contigencies -- --
Shareholders' equity:
Serial preffered stock -
Series A, 9.20% Redeemable, Cumulative Preferred
Stock; $1 par value; 1,000,000 shares authorized;
liquidation value $17,250,000; 690,000 shares
issued and outstanding 690 690
Series B, $1 par value; 1,000,000 shares authorized;
none issued -- --
Common stock - $1 par value; 10,000,000 shares
authorized; issued and outstanding 3,766,515 (1997)
and 3,764,216 (1996) 3,767 3,764
Capital surplus 24,377 24,332
Retained earnings 35,803 36,041
Unrealized gain/(loss) on investment securities
available for sale, net of tax (98) 205
------------ ------------
Total shareholders' equity 64,539 65,032
------------ ------------
Total liabilities & shareholders' equity $ 887,809 $ 829,117
============ ============
</TABLE>
F-23
<PAGE>
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1997 1996
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 15,516 $ 12,832
Investment securities:
U.S. Government and agency obligations 1,776 1,640
State and political subdivisions 136 140
Mortgage-backed securities 327 390
Other securities 15 13
Federal funds sold 81 74
---------- ----------
Total interest income 17,851 15,089
Interest expense:
Interest-bearing demand 209 203
Money market accounts 919 673
Savings accounts 25 30
Time deposits 8,036 6,622
Other borrowed money 70 58
---------- ----------
Total interest expense 9,259 7,586
---------- ----------
Net interest income 8,592 7,503
Provision for loan losses 3,001 875
---------- ----------
Net interest income after provision for loan losses 5,591 6,628
Other income:
Service charges and fees 752 708
Credit cards 193 207
Other noninterest income 143 117
Gain on sales of loans receivable 326 448
Gain/(loss) on sales of investment securities - 122
---------- ----------
Total other income 1,414 1,602
Other expenses:
Salaries and employee benefits 3,487 2,828
Occupancy 1,043 759
FDIC and other insurance 63 132
Credit cards 76 104
General and administrative 1,690 1,396
---------- ----------
Total other expenses 6,359 5,219
---------- ----------
Income before taxes 646 3,011
Taxes on income 186 1,079
---------- ----------
Net income $ 460 $ 1,932
========== ==========
Net income available to common shareholders $ 63 $ 1,535
========== ==========
Earnings per common share $ 0.02 $ 0.41
========== ==========
Weighted average common shares outstanding 3,766,172 3,756,861
========== ==========
</TABLE>
F-24
<PAGE>
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
<S> <C> <C>
1997 1996
------------ ----------
Operating activities:
Net income $ 460 $ 1,932
Adjustments to reconcile net income to net
cash provided from operating activities:
Provision for loan losses 3,001 875
Depreciation and amortization expense 381 288
Amortization of premiums and accretion of
discount on securities, net 43 42
Amortization of intangibles 45 26
(Gain) Loss on sales of securities - (122)
(Gain) Loss on sales of loans receivable (326) (448)
(Gain) Loss on sales of premises/equipment - (1)
(Gain) Loss on other real estate owned, net - -
Proceeds from sales of residential mortgage loans 14,839 8,477
Residential mortgage loans originated for resale (11,521) (11,364)
Changes in assets and liabilities:
Accrued interest receivable (607) (83)
Other assets (574) (3,713)
Income taxes payable (173) 1,046
Accrued interest payable 59 (325)
Other liabilities (1,331) (9,184)
------------ ----------
Net cash (used in) provided from operating activities 4,296 (12,554)
------------ ----------
Investing activities:
Proceeds from sales of held to maturity securities - -
Proceeds from sales of available for sale securities - -
Proceeds from principal repayments and maturities:
Held to maturity securities 2,006 11,656
Available for sale securities 4,001 10,049
Purchases of held to maturity securities (3,260) (13,620)
Purchases of available for sale securities (5,628) (3,882)
Loans originated and principal repayments, net (48,186) (14,674)
Proceeds from sales of guaranteed student loans 11,317 12,445
Purchases of premises and equipment (3,428) (619)
Proceeds from sales of premises and equipment - 3
Proceeds from sales of other real estate - 49
------------ ----------
Net cash (used in) provided from investing activities (43,178) 1,407
------------ ----------
Financing activities:
Net increase in deposits 60,592 20,280
Net proceeds from issuance of common stock 48 35
Net proceeds from issuance of preferred stock - -
Common stock dividends paid (263) (225)
Preferred stock dividends paid (397) (397)
------------ ----------
Net cash provided from financing activities 59,980 19,693
------------ ----------
Net increase (decrease) in cash and cash equivalents 21,098 8,546
Cash and cash equivalents,
Beginning of period 22,914 20,789
------------ ----------
End of period $ 44,012 $ 29,335
============ ==========
</TABLE>
F-25
<PAGE>
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss) Total
on Available Share-
Preferred Stock Common Stock Capital Retained for Sale holders'
Shares Amount Shares Amount Surplus Earnings Securities Equity
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 690,000 $690 3,755,228 $3,755 $24,171 $31,129 $612 $60,357
Cash dividends paid:
Preferred, $0.575 per share - - - - - (397) - (397)
Cash dividends declared:
Common, $0.07 per share - - - - - (263) - (263)
Common stock issued:
Employee Stock Purchase
Plan - - 760 1 13 - - 14
Dividend Reinvestment Plan - - 1,154 1 20 - - 21
Change in unrealized gain
(loss) on available for sale
securities, net of tax - - - - - - (388) (388)
Net income - - - - - 1,932 - 1,932
-------------------------------------------------------------------------------------------
Balance, March 31, 1996 690,000 $690 3,757,142 $3,757 $24,204 $32,401 $224 $61,276
===========================================================================================
Balance, January 1, 1997 690,000 $690 3,764,216 $3,764 $24,332 $36,041 $205 $65,032
Cash dividends paid:
Preferred, $0.575 per share - - - - - (397) - (397)
Cash dividends declared:
Common, $0.08 per share - - - - - (301) - (301)
Common stock issued:
Employee Stock Purchase
Plan - - 956 1 19 - - 20
Dividend Reinvestment Plan - - 1,343 2 26 - - 28
Change in unrealized gain
(loss) on available for sale
securities, net of tax - - - - - - (303) (303)
Net income - - - - - 460 - 460
-------------------------------------------------------------------------------------------
Balance, March 31, 1997 690,000 $690 3,766,515 $3,767 $24,377 $35,803 $(98) $64,539
===========================================================================================
</TABLE>
F-26
<PAGE>
SOUTHWEST BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: GENERAL
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, changes in shareholders' equity, and cash flows
in conformity with generally accepted accounting principles. However, the
financial statements include all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation. The results of operations and cash flows for the three
months ended March 31, 1997 and 1996 are not necessarily indicative of the
results to be expected for the full year. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Southwest Bancorp, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996.
NOTE 2: PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Southwest Bancorp, Inc. (the Company) and its wholly owned
subsidiary, The Stillwater National Bank and Trust Company (the Bank). All
significant intercompany transactions and balances have been eliminated in
consolidation.
NOTE 3: RECENTLY ADOPTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 129, Disclosure of
Information About Capital Structure. SFAS No. 129 establishes standards for
disclosure of information regarding an entity's capital structure. The adoption
of SFAS No. 129 did not affect the Company's consolidated financial position or
results of operations.
NOTE 4: ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
In June 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 125
requires the Company to recognize the financial and servicing assets it controls
and liabilities it has incurred, derecognize financial assets when control has
been surrendered, and derecognize liabilities when extinguished. The Company
will adopt SFAS No. 125 for transfers and servicing of financial assets and
extinguishment of liabilities occurring after December 31, 1997 as required.
Management believes that adoption of SFAS No. 125 will not have a material
impact on the Company's consolidated financial position or results of
operations.
In February 1997, the FASB issued SFAS No. 128, Earnings Per Share, which
establishes standards for computing and presenting earnings per share. SFAS No.
128 is effective for periods ending after December 15, 1997. Management
believes that SFAS No. 128 will not have a significant effect on the Company's
calculation of earnings per share considering its current capital structure.
F-27
<PAGE>
NOTE 5: ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is shown below for the indicated
periods.
<TABLE>
<CAPTION>
For the three For the
months ended year ended
March 31, 1997 December 31, 1996
-------------- -----------------
(Dollars in thousands)
<S> <C> <C>
Balance at beginning or period $ 7,139 $ 5,813
Loans charged-off:
Real estate mortgage 104 148
Real estate construction - -
Commercial 1,350 1,064
Installment and consumer 318 1,089
-------- --------
Total charge-offs 1,772 2,301
Recoveries:
Real estate mortgage 36 25
Real estate construction - -
Commercial 50 288
Installment and consumer 30 214
-------- --------
Total recoveries 116 527
-------- --------
Net loans charged-off 1,656 1,774
Provision for loan losses 3,001 3,100
-------- --------
Balance at end of period $ 8,484 $ 7,139
======== ========
Loans outstanding:
Average $669,424 $580,590
End of period 676,499 644,646
Net charge-offs to total average loans
(annualized) 1.00% 0.31%
Allowance for loan losses to total loans 1.25% 1.11%
</TABLE>
Nonperforming assets and other risk elements of the loan portfolio are shown
below as of the indicated dates.
<TABLE>
<CAPTION>
As of As of
March 31, 1997 December 31, 1996
-------------- -----------------
(Dollars in thousands)
<S> <C> <C>
Nonaccrual loans (1) $4,745 $4,635
Past due 90 days or more (2) 1,748 1,437
Restructured terms 568 577
------- ------
Total nonperforming loans 7,061 6,649
Other real estate owned 432 64
------- ------
Total nonperforming assets $7,493 $6,713
======= ======
Nonperforming loans to loans receivable 1.04% 1.03%
Allowance for loan losses to nonperforming loans 120.15% 107.37%
Nonperforming assets to loans receivable and
other real estate owned 1.11% 1.04%
</TABLE>
(1) The government-guaranteed portion of loans included in these totals was $0
(1997) and $345 (1996).
(2) The government-guaranteed portion of loans included in these totals was $723
(1997) and $0 (1996).
F-28
<PAGE>
The allowance for loan losses is established through a provision for loan losses
charged to expense. Charge-offs of loan amounts determined by management to be
uncollectible or impaired decrease the allowance and recoveries of previous
charge-offs, if any, are added to the allowance. A loan is considered to be
impaired when, based on current information and events, it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the loan agreement. All of the Company's nonaccrual loans have been
defined as impaired loans. The adequacy of the allowance for loan losses is
determined by management based upon a number of factors including, among others,
analytical reviews of loan loss experience in relationship to outstanding loans
and commitments; unfunded loan commitments; problem and nonperforming loans and
other loans presenting credit concerns; trends in loan growth, portfolio
composition and quality; use of appraisals to estimate the value of collateral;
and management's judgment with respect to current and expected economic
conditions and their impact on the existing loan portfolio. Changes in the
allowance may occur because of changing economic conditions and economic
prospects or financial position of borrowers. While there can be no assurance
that the allowance for loan losses will be adequate to cover all losses from all
loans, management believes that the allowance for loan losses is adequate.
While management uses all available information to estimate the adequacy of the
allowance for loan losses, the ultimate collectability of a substantial portion
of the loan portfolio and the need for future additions to the allowance will be
based upon changes in economic conditions and other relevant factors. Recovery
of the carrying value of such loans is dependent to a great extent on conditions
that may be beyond the Company's control. Actual future losses could differ
significantly from the amounts estimated by management adversely affecting net
income.
NOTE 6: LOANS RECEIVABLE
The Bank extends commercial and consumer credit primarily to customers in the
State of Oklahoma which subjects the loan portfolio to the general economic
conditions within this area. At March 31, 1997 and December 31, 1996,
substantially all of the Bank's loans, except for credit cards, are
collateralized with real estate, inventory, accounts receivable and/or other
assets or guaranteed by agencies of the United States Government.
At March 31, 1997, loans to individuals and businesses in the healthcare
industry totaled approximately $79.0 million, or 12% of total loans. Other
notable concentrations of credit within the loan portfolio include $23.8
million, or 4% of total loans, in hotel/motel loans, $23.4 million, or 3% of
total loans, in residential construction loans and $15.8 million, or 2% of total
loans, in restaurant loans. In the event of total nonperformance by the
borrowers, the Company's accounting loss would be limited to the recorded
investment in the loans receivable reduced by proceeds received from disposition
of the related collateral.
The principal balance of loans for which accrual of interest has been
discontinued totaled approximately $4.7 million at March 31, 1997. During the
first three months of 1997, $103,000 in interest income was received on
nonaccruing loans. If interest on those loans had been accrued, total interest
income of $171,000 would have been recorded.
Those performing loans considered potential problem loans, as defined and
identified by management, amounted to approximately $20.7 million at March 31,
1997, compared to $23.0 million at December 31, 1996. The amount of performing
loans that were considered potential problem loans at December 31, 1996 was
previously incorrectly disclosed as $14.9 million, as a result of a
computational error made in the preparation of the disclosure. The total
amount of such loans recognized on the books of the Company at December 31, 1996
was $20.7 million. Although these are loans where known information about the
borrowers' possible credit problems cause management to have doubts as to their
ability to comply with the present loan repayment terms, most are well
collateralized and are not believed to present significant risk of loss. The
Company's loan portfolio contains a significant number of commercial and
commercial real estate loans with relatively large balances. The deterioration
of one or a few of such loans may cause a significant increase in potential
problem loans or in nonperforming loans.
F-29
<PAGE>
- ------------------------------- -----------------------------------------------
TABLE OF CONTENTS
Page
Prospectus Summary.............
Selected Consolidated
Financial Data................ 870,000 Preferred Securities
Risk Factors...................
Use of Proceeds................ SBI CAPITAL TRUST
Market for the Preferred % Cumulative Trust Preferred Securities
Securities.................... (Liquidation Amount $25 per Preferred Security)
Accounting Treatment........... guaranteed, as described herein, by
Capitalization.................
The Company.................... SOUTHWEST BANCORP, INC.
Management's Discussion and
Analysis of Financial -------------------
Condition and Results of
Operation..................... $21,750,000
Description of the Preferred
Securities.................... % Subordinated Debentures
Description of the of
Subordinated Debentures.......
Description of the Guarantee... SOUTHWEST BANCORP, INC.
Relationship Among the
Preferred Securities, -------------------
Subordinated Debentures and
the Guarantee................. Prospectus
Certain Federal Income Tax May ____, 1997
Consequences..................
ERISA Considerations........... --------------------
Underwriting...................
Validity of Securities.........
Experts........................
Incorporation of Certain
Documents by Reference........
Available Information..........
-----------------
Stifel, Nicolaus & Company
No person has been authorized Incorporated
to give any information or to
make any representation other
than those contained in this
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by SBI Capital,
the Company or the Underwriter.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create any
implication that there has
been no change in the affairs
of the Company since the date
of this Prospectus. This
Prospectus does not constitute
an offer to sell or a solici-
tation of an offer to buy any
securities offered hereby in
any jurisdiction in which such
offer or solicitation is not
authorized or in which the
person making such offer or
solicitation is not qualified
to do so or to anyone to whom
it is unlawful to make such
offer or solicitation.
- ------------------------------- -----------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses payable by the Company in connection with the
Offering described in this Registration Statement (other than underwriting
discounts and commissions) are as follows:
<TABLE>
<S> <C>
SEC Registration Fee.........................................$ 8,625
NASD Filing Fee.............................................. 3,000
Nasdaq Listing Fee........................................... 10,000
*Blue Sky Filing Fees and Expenses (Including counsel fees).. 10,000
*Legal Fees.................................................. 125,000
*Printing and Engraving...................................... 50,000
*Accounting Fees and Expenses................................ 25,000
*Other Expenses.............................................. 18,375
---------
Total.........................................$ 250,000
=========
-------------
* Estimated
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 1031 of the Oklahoma General Corporation Act sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities.
Article XV of the Amended and Restated Certificate of Incorporation of
the Company provides that the Company shall indemnify any individual who is or
was a director, officer, employee or agent of the Company, and any individual
who serves or served at the Company's request as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in any proceeding in which the individual is made a
party as a result of his service in such capacity, if the individual acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company and, with respect to any criminal proceeding, he
had no reasonable cause to believe his conduct was unlawful, unless such
indemnification would be prohibited by law. An individual will not be
indemnified in connection with a proceeding by or in the right of the Company in
which the individual was adjudged liable to the Company, unless the court in
which the suit was brought determines he is fairly and reasonably entitled to
indemnification in view of all of the relevant circumstances.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Southwest
Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to
Quarterly Report on Form 10-Q for the quarter ended July 31,
1996)
3.2 Bylaws of Southwest Bancorp, Inc. (incorporated by reference to
Exhibit 3.2 to Registration Statement on Form S-1 (File No.
33-71168))
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
4.1 Form of Indenture for Subordinated Debentures, to be dated May ___, 1997
4.2 Form of Subordinated Debenture (included as an exhibit to Exhibit 4.1)
4.3 Certificate of Trust of SBI Capital Trust, dated as of May 8, 1997
4.4 Trust Agreement, dated as of May 8, 1997, of SBI Capital Trust
4.5 Form of Amended and Restated Trust Agreement of SBI Capital Trust, to be
dated as of __________, 1997
4.6 Form of Preferred Security Certificate of SBI Capital Trust (included as
an exhibit to Exhibit 4.5)
4.7 Form of Preferred Securities Guarantee Agreement
4.8 Form of Agreement as to Expenses and Liabilities (included as an exhibit
to Exhibit 4.5)
5.1 Form of Opinion of Kennedy & Baris, L.L.P.
5.2 Form of Opinion of Richards, Layton & Finger
8 Form of Tax Opinion of Kennedy & Baris, L.L.P.
10.1 Southwest Bancorp, Inc. 1992 Performance Unit Plan (incorporated by
reference to Exhibit 10.1 to Registration Statement on Form S-1 (File
No. 33-71168))
10.2 Severance Compensation Plan (incorporated by reference to Exhibit 10.2 to
Registration Statement on Form S-1 (File No. 33-71168))
10.3 Southwest Bancorp, Inc. 1994 Stock Option Plan (incorporated by reference
to Exhibit 10.3 to Annual Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.4 Southwest Bancorp, Inc. Employee Stock Purchase Plan (incorporated by
reference to Exhibit 4.1 to Registration Statement on Form S-8 (File
No. 33-97850))
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consents of Kennedy & Baris, L.L.P. (included in Exhibits 5.1 and 8)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24 Power of Attorney
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust Company
to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of State Street Bank and Trust Company
to act as trustee under the Amended and Restated Trust Agreement
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
25.3 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the Preferred Securities Guarantee
Agreement
</TABLE>
- ----------------------------
* To be filed by pre-effective amendment
Item 17. Undertakings.
The Registrant hereby undertakes that it will:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement 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.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers 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 of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Southwest
Bancorp, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Stillwater, State of Oklahoma, on May 9, 1997.
SOUTHWEST BANCORP, INC.
By: /s/ Robert L. McCormick, Jr.
-----------------------------------
Robert L. McCormick, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, SBI Capital
Trust certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stillwater, State of Oklahoma, on May 9, 1997.
SBI CAPITAL TRUST
By: /s/ Robert L. McCormick, Jr.
-----------------------------------
Robert L. McCormick, Jr., Trustee
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Robert L. McCormick, Jr. President and Director May 9, 1997
- ----------------------------- (Principal Executive Officer)
Robert L. McCormick, Jr.
* /s/ Kerby E. Crowell Executive Vice President May 9, 1997
- ----------------------------- (Principal Financial and
Kerby E. Crowell Accounting Officer)
* /s/ George M. Berry Chairman of the Board, Director
- -----------------------------
George M. Berry
* /s/ Thomas D. Berry Director
- -----------------------------
Thomas D. Berry
* /s/ Joyce P. Berry Director
- -----------------------------
Joyce P. Berry
* /s/ Joe Berry Cannon Director
- -----------------------------
Joe Berry Cannon
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
* /s/ W. Haskell Cudd Director
- -----------------------------
W. Haskell Cudd
* /s/ J. Berry Harrison Director
- -----------------------------
J. Berry Harrison
* /s/ Erd M. Johnson Director
- -----------------------------
Erd M. Johnson
* /s/ David P. Lambert Director
- -----------------------------
David P. Lambert
* /s/ Linford R. Pitts Director
- -----------------------------
Linford R. Pitts
* /s/ Robert B. Rodgers Director
- -----------------------------
Robert B. Rodgers
* /s/ Lee A. Wise
- -----------------------------
Lee A. Wise
* /s/ James B. Wise, M.D. Director
- -----------------------------
James B. Wise, M.D.
* /s/ Paul C. Wise Director
- -----------------------------
Paul C. Wise
*By: /s/ Robert L. McCormick, Jr. May 9, 1997
------------------------------
Robert L. McCormick, Jr.
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
Exhibit 1
870,000 Preferred Securities
SBI Capital Trust
% Cumulative Trust Preferred Securities
-----
(Liquidation Amount of $25 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
, 1997
-------------
STIFEL, NICOLAUS & COMPANY, INCORPORATED
500 North Broadway
St. Louis, Missouri 63102
Dear Sirs:
Southwest Bancorp, Inc., an Oklahoma corporation (the "Company") and
its financing subsidiary, SBI Capital Trust, a Delaware business trust (the
"Trust", and hereinafter together with the Company, the "Offerors"), propose
that the Trust issue and sell to Stifel, Nicolaus & Company, Incorporated
(sometimes referred to herein as the "Underwriter"), pursuant to the terms of
this Agreement, 870,000 of the Trust's ____% Cumulative Trust Preferred
Securities, with a liquidation amount of $25.00 per preferred security (the
"Preferred Securities"), to be issued under the Trust Agreement (as hereinafter
defined), the terms of which are more fully described in the Prospectus (as
hereinafter defined). The aforementioned 870,000 Preferred Securities to be sold
to the Underwriter are herein called the "Firm Preferred Securities". Solely for
the purpose of covering over-allotments in the sale of the Firm Preferred
Securities, the Offerors further propose that the Trust issue and sell to the
Underwriter, at its option, up to an additional 130,500 Preferred Securities
(the "Option Preferred Securities") upon exercise of the over-allotment option
granted in Section 1 hereof. The Firm Preferred Securities and any Option
Preferred Securities are herein collectively referred to as the "Designated
Preferred Securities".
The Offerors hereby confirm as follows their agreement with the
Underwriter in connection with the proposed purchase of the Designated Preferred
Securities.
1. Sale, Purchase and Delivery of Designated Preferred Securities;
---------------------------------------------------------------
Description of Designated Preferred Securities.
- -----------------------------------------------
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Offerors hereby agree that the Trust shall issue and sell to the Underwriter,
and the Underwriter agrees to purchase from the Trust, at a purchase price of
$25.00 per preferred security (the "Purchase Price"), the Firm Preferred
Securities. Because the proceeds from the sale of the Firm Preferred Securities
will be used to purchase from the Company its Debentures (as hereinafter defined
and as described in the Prospectus), the Company shall pay to the Underwriter a
commission of $____ per Firm Preferred Security (the "Firm Preferred Securities
Commission").
<PAGE>
In addition, on the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants to the Underwriter an option to purchase all or
any portion of the 130,500 Option Preferred Securities, and upon the exercise of
such option in accordance with this Section 1, the Offerors hereby agree that
the Trust shall issue and sell to the Underwriter, and the Underwriter agrees to
purchase from the Trust, all or any portion of the Option Preferred Securities
at the same Purchase Price per preferred security paid for the Firm Preferred
Securities. Because the proceeds from the sale of the Option Preferred
Securities will be used to purchase from the Company its Debentures, the Company
shall pay to the Underwriter a commission of $_____ per Option Preferred
Security for each Option Preferred Security purchased (the "Option Preferred
Securities Commission"). The option hereby granted (the "Option") shall expire
30 days after the date upon which the Registration Statement (as hereinafter
defined) becomes effective and may be exercised only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Preferred Securities. The Option may be exercised in
whole or in part at any time (but not more than once) by the Underwriter giving
notice (confirmed in writing) to the Trust setting forth the number of Option
Preferred Securities as to which the Underwriter is exercising the Option and
the time, date and place for payment and delivery of certificates for such
Option Preferred Securities. Such time and date of payment and delivery for the
Option Preferred Securities (the "Option Closing Date") shall be determined by
the Underwriter, but shall not be earlier than two nor later than five full
business days after the exercise of such Option, nor in any event prior to the
Closing Date (as hereinafter defined). The Option Closing Date may be the same
as the Closing Date.
Payment of the Purchase Price and the Firm Preferred Securities
Commission and delivery of certificates for the Firm Preferred Securities shall
be made at the offices of the Underwriter, 500 North Broadway, St. Louis,
Missouri 63102, or such other place as shall be agreed to by the Underwriter and
the Offerors, at 10:00 a.m., St. Louis time, on __________, 1997, or at such
other time not more than five full business days thereafter as the Offerors and
the Underwriter shall determine (the "Closing Date"). If the Underwriter
exercises the option to purchase any or all of the Option Preferred Securities,
payment of the Purchase Price and Option Preferred Securities Commission and
delivery of certificates for such Option Preferred Securities shall be made on
the Option Closing Date at the Underwriter's offices, or at such other place as
the Offerors and the Underwriter shall determine. Such payments shall be made to
an account designated by the Trust by wire transfer or certified or bank
cashier's check, in clearing house or similar next day available funds, in the
amount of the Purchase Price therefor, against delivery by or on behalf of the
Trust to the Underwriter of certificates for the Designated Preferred Securities
to be purchased by the Underwriter.
The Agreement contained herein with respect to the timing of the
Closing Date and Option Closing Date is intended to, and does, constitute an
express agreement, as described in Rule 15c6-1(c) and (d) promulgated under the
1934 Act (as defined herein), for a settlement date other than four business
days after the date of the contract.
Certificates for Designated Preferred Securities to be purchased by
the Underwriter shall be delivered by the Offerors in fully registered form in
such authorized denominations and registered in such names as the Underwriter
shall request in writing not later than 12:00 noon, St. Louis time, two business
days prior to the Closing Date and, if applicable, the Option Closing Date.
Certificates for Designated Preferred Securities to be purchased by the
Underwriter shall be made available by the Offerors to the Underwriter for
inspection, checking and packaging at such office as the Underwriter may
designate in writing not later than 1:00 p.m., St. Louis time, on the last
business day prior to the Closing Date and, if applicable, on the last business
day prior to the Option Closing Date.
2
<PAGE>
Time shall be of the essence, and delivery of the certificates for
the Designated Preferred Securities at the time and place specified pursuant to
this Agreement is a further condition of the obligations of the Underwriter
hereunder.
(b) The Offerors propose that the Trust issue the Designated
Preferred Securities pursuant to an Amended and Restated Trust Agreement among
State Street Bank and Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee, the Administrative Trustees named therein,
(collectively, the "Trustees"), and the Company, in substantially the form
heretofore delivered to the Underwriter, said Agreement being hereinafter
referred to as the "Trust Agreement". In connection with the issuance of the
Designated Preferred Securities, the Company proposes (i) to issue its
Subordinated Debentures ( the "Debentures") pursuant to an Indenture, to be
dated as of _____________, 1997, between the Company and State Street Bank and
Trust Company, as Trustee (the "Indenture") and (ii) to guarantee certain
payments on the Designated Preferred Securities pursuant to a Guarantee
Agreement between the Company and State Street Bank and Trust Company, as
guarantee trustee (the "Guarantee"), to the extent described therein.
2. Representations and Warranties.
------------------------------
(a) The Offerors jointly and severally represent and warrant
to, and agree with, the Underwriter that:
(i) The reports filed with the Securities and Exchange
Commission (the "Commission") by the Company under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the rules and
regulations thereunder (the "1934 Act Regulations") at the time they
were filed with the Commission, complied as to form with the
requirements of the 1934 Act and the 1934 Act Regulations and did not
contain an untrue statement of fact or omit to state any fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
(ii) The Offerors have prepared and filed with the
Commission a registration statement on Form S-2 (File Numbers 333-
_____ and 333-_____-01) for the registration of the Designated
Preferred Securities, the Guarantee and $25,012,500 aggregate
principal amount of Debentures under the Securities Act of 1933, as
amended (the "1933 Act"), including the related prospectus subject to
completion, and one or more amendments to such registration statement
may have been so filed, in each case in conformity with the
requirements of the 1933 Act, the rules and regulations promulgated
thereunder (the "1933 Act Regulations") and the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act") and the rules and
regulations thereunder. Copies of such registration statement,
including any amendments thereto, each Preliminary Prospectus (as
defined herein) contained therein and the exhibits, financial
statements and schedules to such registration statement, as finally
amended and revised, have heretofore been delivered by the Offerors
to the Underwriter. After the execution of this Agreement, the
Offerors will file with the Commission (A) if such registration
statement, as it may have been amended, has been declared by the
Commission to be effective under the 1933 Act, a prospectus in the
form most recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in such
registration statement), with such changes or insertions as are
required by Rule 430A of the 1933 Act Regulations ("Rule 430A") or
permitted by Rule 424(b) of the 1933 Act Regulations ("Rule 424(b)")
and as have been provided to and not objected to by the Underwriter
prior to (or as are agreed to by the Underwriter subsequent to) the
execution of this
3
<PAGE>
Agreement, or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective
under the 1933 Act, an amendment to such registration statement,
including a form of final prospectus, necessary to permit such
registration statement to become effective, a copy of which amendment
has been furnished to and not objected to by the Underwriter prior to
(or is agreed to by the Underwriter subsequent to) the execution of
this Agreement. The Offerors will not file any amendment to the
registration statement or any amended Preliminary Prospectus or any
amendment thereto, of which the Underwriter has not been previously
furnished a copy or to which the Underwriter or counsel to the
Underwriter shall reasonably object. As used in this Agreement, the
term "Registration Statement" means such registration statement, as
amended at the time when it was or is declared effective under the
1933 Act, including (1) all financial schedules and exhibits thereto,
(2) all documents (or portions thereof) incorporated by reference
therein filed under the 1934 Act, and (3) any information omitted
therefrom pursuant to Rule 430A and included in the Prospectus (as
hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration
statement or any amendment thereto including all documents (or
portions thereof) incorporated by reference therein under the 1934
Act (including the prospectus subject to completion, if any, included
in the Registration Statement and each prospectus filed pursuant to
Rule 424(a) under the 1933 Act); and the term "Prospectus" means the
prospectus first filed with the Commission pursuant to Rule 424(b)(1)
or (4) or, if no prospectus is required to be filed pursuant to Rule
424(b)(1) or (4), the prospectus included in the Registration
Statement, in each case including the financial schedules and all
documents (or portions thereof) incorporated by reference therein
under the 1934 Act. The date on which the Registration Statement
becomes effective is hereinafter referred to as the "Effective Date."
(iii) The documents incorporated by reference in the
Preliminary Prospectus or Prospectus or from which information is so
incorporated by reference, when they became effective or were filed
with the Commission, as the case may be, complied with the
requirements of the 1934 Act and the 1934 Act Regulations, and when
read together and with the other information in the Preliminary
Prospectus or Prospectus, as the case may be, at the time the
Registration Statement became or becomes effective and at the Closing
Date and any Option Closing Date, did not or will not, as the case
may be, contain an untrue statement of fact or omit to state any fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(iv) No order preventing or suspending the use of any
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) has been issued by the Commission, nor
has the Commission, to the knowledge of the Offerors, threatened to
issue such an order or instituted proceedings for that purpose. Each
Preliminary Prospectus, at the time of filing thereof, (A) complied
with the requirements of the 1933 Act and the 1933 Act Regulations
and (B) did not contain an untrue statement of fact or omit to state
any fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that this
-----------------
representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Offerors by the Underwriter expressly for inclusion in
the Prospectus beneath the heading "Underwriting" (such information
referred to herein as the "Underwriters Information").
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(v) At the Effective Date and at all times subsequent
thereto, up to and including the Closing Date and, if applicable, the
Option Closing Date, the Registration Statement and any post-
effective amendment thereto (A) complied and will comply with the
requirements of the 1933 Act, the 1933 Act Regulations and the Trust
Indenture Act (and the rules and regulations thereunder) and (B) did
not and will not contain an untrue statement of fact or omit to state
any fact required to be stated therein or necessary to make the
statements therein, not misleading. At the Effective Date and at all
times when the Prospectus is required to be delivered in connection
with offers and sales of Designated Preferred Securities, including,
without limitation, the Closing Date and, if applicable, the Option
Closing Date, the Prospectus, as amended or supplemented, (A)
complied and will comply with the requirements of the 1933 Act and
the 1933 Act Regulations and the Trust Indenture Act (and the rules
and regulations thereunder) and (B) did not contain and will not
contain an untrue statement of fact or omit to state any fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
-----------------
warranty does not apply to Underwriters Information.
(vi) (A) The Company is duly organized, validly existing and
in good standing under the laws of the State of Oklahoma, with full
corporate and other power and authority to own, lease and operate its
properties and conduct its business as described in and contemplated
by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) and as currently being conducted and is duly registered
as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHC Act").
(B) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the
Delaware Business Trust Act with the power and authority (trust and
other) to own its property and conduct its business as described in
the Registration Statement and Prospectus, to issue and sell its
common securities (the "Common Securities") to the Company pursuant
to the Trust Agreement, to issue and sell the Designated Preferred
Securities, to enter into and perform its obligations under this
Agreement and to consummate the transactions herein contemplated; the
Trust has no subsidiaries and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of
its business or the ownership of its property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have an adverse effect on
the Trust; the Trust has conducted and will conduct no business other
than the transactions contemplated by this Agreement and described in
the Prospectus; the Trust is not a party to or bound by any agreement
or instrument other than this Agreement, the Trust Agreement and the
agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; the Trust has no liabilities or
obligations other than those arising out of the transactions
contemplated by this Agreement and the Trust Agreement and described
in the Prospectus; the Trust is not a party to or subject to any
action, suit or proceeding of any nature; the Trust is not, and at
the Closing Date or any Option Closing Date will not be, to the
knowledge of the Offerors, classified as an association taxable as a
corporation for United States federal income tax purposes; and the
Trust is, and as of the Closing Date or any Option Closing Date will
be, treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(vii) The Company has 2 subsidiaries, Stillwater National
Bank & Trust Company (the "Bank") and the Trust. The Bank and the
Trust are hereinafter collectively referred to as the "Subsidiaries".
The Company does not own or control, directly or
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indirectly, more than 5% of any class of equity security of any
corporation, association or other entity other than the Subsidiaries.
Each Subsidiary is a national banking association or business trust
duly incorporated, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation. Each such
Subsidiary has full corporate and other power and authority to own,
lease and operate its properties and to conduct its business as
described in and contemplated by the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and as currently being conducted. The
Bank is a member of the Federal Reserve System, and no proceedings
for the termination or revocation of such membership are pending, or,
to the knowledge of the Company, threatened. The deposit accounts of
the Bank are insured by the Bank Insurance Fund administered by the
Federal Deposit Insurance Corporation (the "FDIC") up to the maximum
amount provided by law, except to the extent the Prospectus discloses
such deposit accounts are insured by the Savings Association
Insurance Fund administered by the FDIC and to such extent the
deposit accounts are so insured up to the maximum amount provided by
law; and no proceedings for the modification, termination or
revocation of any such insurance are pending or, to the knowledge of
the Offerors, threatened.
(viii) The Company and each of the Subsidiaries is duly
qualified to transact business as a foreign corporation and is in
good standing in each other jurisdiction in which it owns or leases
property or conducts its business so as to require such qualification
and in which the failure to so qualify would, individually or in the
aggregate, have an adverse effect on the condition (financial or
otherwise), earnings, business, prospects or results of operations of
the Company and the Subsidiaries on a consolidated basis. All of the
issued and outstanding shares of capital stock of the Subsidiaries
(A) have been duly authorized and are validly issued, (B) are fully
paid and nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 55 or 12 U.S.C. Section 1831o, and
(C) except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), are
directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, restriction upon
voting or transfer, preemptive rights, claim or equity. Except as
disclosed in the Prospectus, there are no outstanding rights,
warrants or options to acquire or instruments convertible into or
exchangeable for any capital stock or equity securities of the
Offerors or the Subsidiaries, except for preemptive rights under the
National Bank Act.
(ix) The capital stock of the Company and the equity
securities of the Trust conform to the description thereof contained
in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The outstanding shares of
capital stock and equity securities of each Offeror have been duly
authorized and validly issued and are fully paid and nonassessable,
and no such shares were issued in violation of the preemptive or
similar rights of any security holder of an Offeror; no person has
any preemptive or similar right to purchase any shares of capital
stock or equity securities of the Offerors. Except as disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), there are no outstanding rights,
options or warrants to acquire any securities of the Offerors other
than options issued under the Company's 1994 Stock Option Plan, and
there are no outstanding securities convertible into or exchangeable
for any such securities and no restrictions upon the voting or
transfer of any capital stock of the Company or equity securities of
the Trust pursuant to the Company's corporate charter or bylaws, the
Trust Agreement or any agreement or other instrument to which an
Offeror is a party or by which an Offeror is bound.
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<PAGE>
(X) (A) The Trust has all requisite power and authority to
issue, sell and deliver the Designated Preferred Securities in accordance with
and upon the terms and conditions set forth in this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus). All corporate and
trust action required to be taken by the Offerors for the authorization,
issuance, sale and delivery of the Designated Preferred Securities in accordance
with such terms and conditions has been validly and sufficiently taken. The
Designated Preferred Securities, when delivered in accordance with this
Agreement, will be duly and validly issued and outstanding, will be fully paid
and nonassessable undivided beneficial interests in the assets of the Trust,
will be entitled to the benefits of the Trust Agreement, will not be issued in
violation of or subject to any preemptive or similar rights, and will conform to
the description thereof in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus) and
the Trust Agreement. None of the Designated Preferred Securities, immediately
prior to delivery, will be subject to any security interest, lien, mortgage,
pledge, encumbrance, restriction upon voting or transfer, preemptive rights,
claim, equity or other defect.
(B) The Debentures have been duly and validly authorized,
and, when duly and validly executed, authenticated and issued as provided in the
Identure and delivered to the Trust pursuant to the Trust Agreement, will
constitute valid and legally binding obligations of the Company entitled to the
benefits of the Indenture and will conform to the description thereof contained
in the Prospectus.
(C) The Guarantee has been duly and validly authorized, and,
when duly and validly executed and delivered to the guarantee trustee for the
benefit of the Trust, will constitute a valid and legally binding obligation of
the Company and will conform to the description thereof contained in the
Prospectus.
(D) The Agreement as to Expenses and Liabilities (the
"Expense Agreement") has been duly and validly authorized, and, when duly and
validly executed and delivered by the Company, will constitute a valid and
legally binding obligation of the Company and will conform to the description
thereof contained in the Prospectus.
(xi) The Offerors and the Subsidiaries have complied with all
federal, state and local statutes, regulations, ordinances and rules applicable
to the ownership and operation of their properties or the conduct of their
businesses as described in and contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted.
(xii) The Offerors and the Subsidiaries have all permits,
easements, consents, licenses, franchises and other governmental and regulatory
authorizations from all appropriate federal, state, local or other public
authorities ("Permits") as are necessary to own and lease their properties and
conduct their businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently being
conducted. All such Permits are in full force and effect and each of the
Offerors and the Subsidiaries are complying therewith, and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination thereof or will result in any other impairment of the rights of the
holder of any such Permit, subject in each case to
7
<PAGE>
such qualification as may be adequately disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). Such
Permits contain no restrictions that would impair the ability of the Company or
the Subsidiaries to conduct their businesses in the manner consistent with their
past practices. Neither the Offerors nor any of the Subsidiaries have received
notice or otherwise has knowledge of any proceeding or action relating to the
revocation or modification of any such Permit.
(xiii) Neither of the Offerors nor any of the Subsidiaries is in
breach or violation of their corporate charter, by-laws or other governing
documents (including without limitation, the Trust Agreement). Neither of the
Offerors nor any of the Subsidiaries are, and to the knowledge of the Offerors
no other party is, in violation, breach or default (with or without notice or
lapse of time or both) in the performance or observance of any term, covenant,
agreement, obligation, representation, warranty or condition contained in (A)
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license, Permit or any other agreement or instrument to
which it is a party or by which it or any of its properties may be bound, which
such breach, violation or default could have adverse consequences to the
Offerors and the Subsidiaries on a consolidated basis, and to the knowledge of
the Offerors, no other party has asserted that the Offerors or any of the
Subsidiaries is in such violation, breach or default (provided that the
foregoing shall not apply to defaults by borrowers from the Bank), or (B) except
as disclosed in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the Offerors or
the Subsidiaries or any of their respective properties the breach, violation or
default of which could have an adverse effect on the condition, financial or
otherwise, earnings, affairs, business, prospects, or results of operations of
the Offerors and the Subsidiaries on a consolidated basis.
(xiv) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) do not and will not
conflict with, result in the creation or imposition of any lien, claim, charge,
encumbrance or restriction upon any property or assets of the Offerors or the
Subsidiaries or the Designated Preferred Securities pursuant to, constitute a
breach or violation of, or constitute a default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of the charter
or by-laws of the Company or the Subsidiaries, the Trust Agreement, the
Guarantee, the Indenture, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease, franchise, license, Permit or any other
agreement or instrument to which the Offerors or the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound or any
order, decree, judgment, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Offerors or the Subsidiaries or any of their
respective properties which conflict, creation, imposition, breach, violation or
default would have either singly or in the aggregate an adverse effect on the
condition, financial or otherwise, earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a consolidated
basis. No authorization, approval, consent or order of, or filing, registration
or qualification with, any person (including, without limitation, any court,
governmental body or authority) is required in connection with the transactions
contemplated by this Agreement, the Trust Agreement, the Indenture, the
Guarantee, the Registration Statement and the Prospectus, except such
8
<PAGE>
as may be required by, and have been obtained under, the 1933 Act, the Trust
Indenture Act, state securities laws, Interpretations or Rules of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the purchase
and distribution of the Designated Preferred Securities by the Underwriter, and
from the Nasdaq Stock Market's National Market relating to the listing of the
Designated Preferred Securities.
(xv) The Offerors have all requisite corporate power and
authority to enter into this Agreement and this Agreement has been duly and
validly authorized, executed and delivered by the Offerors and constitutes the
legal, valid and binding agreement of the Offerors, enforceable against the
Offerors in accordance with its terms, except as the enforcement thereof may be
limited by general principles of equity and by bankruptcy or other laws relating
to or affecting creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable securities laws.
Each of the Indenture, the Trust Agreement, the Guarantee and the Expense
Agreement has been duly authorized by the Company, and, when executed and
delivered by the Company on the Closing Date, each of said agreements will
constitute a valid and legally binding obligation of the Company and will be
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity and by
bankruptcy or other laws relating to or affecting creditors' rights generally
and except as any indemnification or contribution provisions thereof may be
limited under applicable securities laws. Each of the Indenture, the Trust
Agreement and the Guarantee has been duly qualified under the Trust Indenture
Act and will conform to the description thereof contained in the Prospectus.
(xvi) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good title to all personal property
owned by them, in each case free and clear of all security interests, liens,
mortgages, pledges, encumbrances, restrictions, claims, equities and other
defects except such as are referred to in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or such as do not
affect the value of such property in the aggregate and do not interfere with the
use made or proposed to be made of such property; and all of the leases under
which the Company or the Subsidiaries hold real or personal property are valid,
existing and enforceable leases and in full force and effect and do not
interfere with the use made or proposed to be made of such real or personal
property, and neither the Company nor any of the Subsidiaries is in default of
any of the terms or provisions of any leases.
(xvii) Deloitte & Touche LLP, who have certified certain of the
consolidated financial statements of the Company and the Subsidiaries including
the notes thereto, included in the Registration Statement and Prospectus, are
independent public accountants with respect to the Company and the Subsidiaries,
as required by the 1933 Act and the 1933 Act Regulations.
(xviii) The consolidated financial statements including the notes
thereto, included by incorporation by reference or otherwise in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) with respect to the Company and the
Subsidiaries comply with the 1933 Act and the 1933 Act Regulations and present
fairly the consolidated financial position of the Company and the Subsidiaries
as of the dates indicated and the consolidated results of operations, cash flows
and shareholders' equity of the Company and the Subsidiaries for the periods
specified and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The selected and summary
9
<PAGE>
consolidated financial data concerning the Offerors and the Subsidiaries
included in the Registration Statement and the Prospectus (or such Preliminary
Prospectus) comply with the 1933 Act and the 1933 Act Regulations, present
fairly the information set forth therein, and have been compiled on a basis
consistent with that of the consolidated financial statements of the Offerors
and the Subsidiaries in the Registration Statement and the Prospectus (or such
Preliminary Prospectus). The other financial, statistical and numerical
information included in the Registration Statement and the Prospectus (or such
Preliminary Prospectus) comply with the 1933 Act and the 1933 Act Regulations,
present fairly the information shown therein, and to the extent applicable have
been compiled on a basis consistent with the consolidated financial statements
of the Company and the Subsidiaries included in the Registration Statement and
the Prospectus (or such Preliminary Prospectus).
(xix) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), except as otherwise
stated therein:
(A) neither of the Offerors nor any of the Subsidiaries
have sustained any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which is material to
the condition (financial or otherwise), earnings, business, prospects or results
of operations of the Offerors and the Subsidiaries on a consolidated basis;
(B) there has not been any adverse change in, or any
development which is likely to have an adverse effect on, the condition
(financial or otherwise), earnings, business, prospects or results of operations
of the Offerors and the Subsidiaries on a consolidated basis, whether or not
arising in the ordinary course of business;
(C) neither of the Offerors nor any of the Subsidiaries have
incurred any liabilities or obligations, direct or contingent, or entered into
any transactions, other than in the ordinary course of business which are
material to the condition (financial or otherwise), earnings, business,
prospects or results of operations of the Offerors and the Subsidiaries on a
consolidated basis;
(D) neither of the Offerors have declared or paid any
dividend other than dividends with respect to the Company's Series A, 9.20%
Redeemable, Cumulative Preferred Stock, $1 par value, and neither of the
Offerors nor any of the Subsidiaries have become delinquent in the payment of
principal or interest on any outstanding borrowings; and
(E) there has not been any change in the capital stock
(except for the exercise of employee stock options issued under the Company's
1994 Stock Option Plan, and disclosed as outstanding), equity securities, long-
term debt, obligations under capital leases or, other than in the ordinary
course of business, short-term borrowings of the Offerors or the Subsidiaries.
(xx) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Offerors, threatened, against or affecting
the Offerors or the
10
<PAGE>
Subsidiaries or any of their respective properties before or by any court or any
regulatory, administrative or governmental official, commission, board, agency
or other authority or body, or any arbitrator, wherein an unfavorable decision,
ruling or finding could have an adverse effect on the consummation of this
Agreement or the transactions contemplated herein or the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Offerors and the Subsidiaries on a consolidated basis or which is required
to be disclosed in the Registration Statement or the Prospectus (or such
Preliminary Prospectus) and is not so disclosed.
(xxi) There are no contracts or other documents required to be
filed as exhibits to the Registration Statement by the 1933 Act or the 1933 Act
Regulations or the Trust Indenture Act (or any rules or regulations thereunder)
which have not been filed as exhibits or incorporated by reference to the
Registration Statement, or that are required to be summarized in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) that are not so summarized.
(xxii) Neither of the Offerors has taken, directly or indirectly,
any action designed to result in or which has constituted or which might cause
or result in stabilization or manipulation of the price of any security of the
Offerors to facilitate the sale or resale of the Designated Preferred
Securities, and neither of the Offerors is aware of any such action taken or to
be taken by any affiliate of the Offerors.
(xxiii) The Offerors and the Subsidiaries own, or possess adequate
rights to use, all patents, copyrights, trademarks, service marks, trade names
and other rights necessary to conduct the businesses now conducted by them or as
described in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and neither the Offerors nor the Subsidiaries
have received any notice of infringement or conflict with asserted rights of
others with respect to any patents, copyrights, trademarks, service marks, trade
names or other rights which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have an adverse effect on the
condition (financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a consolidated
basis, and the Offerors do not know of any basis for any such infringement or
conflict.
(xxiv) Except as adequately disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), no
labor dispute involving the Company or the Subsidiaries exists or, to the
knowledge of the Offerors, is imminent which might be expected to have an
adverse effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis or which is required to be disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Company nor any of the Subsidiaries have
received notice of any existing or threatened labor dispute by the employees of
any of its principal suppliers, customers or contractors which might be expected
to have an adverse effect on the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and the
Subsidiaries on a consolidated basis.
(xxv) The Offerors and the Subsidiaries have timely and properly
prepared and filed all necessary federal, state, local and foreign tax returns
which are required to be filed and have paid all taxes shown as due thereon and
have paid all other taxes and assessments to the extent that the same shall have
become due, except such as are being contested in good faith or where the
failure to so timely and properly prepare
11
<PAGE>
and file would not have an adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Offerors and the Subsidiaries on a consolidated basis. The Offerors have no
knowledge of any tax deficiency which has been or might be assessed against the
Offerors or the Subsidiaries which, if the subject of an unfavorable decision,
ruling or finding, would have an adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Offerors and the Subsidiaries on a consolidated basis.
(xxvi) Each of the contracts, agreements and instruments described
or referred to in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and each
contract, agreement and instrument filed as an exhibit to the Registration
Statement is in full force and effect and is the legal, valid and binding
agreement of the Offerors or the Subsidiaries, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy or other laws relating to or affecting
creditors' rights generally. Except as disclosed in the Prospectus (or such
Preliminary Prospectus), to the knowledge of the Offerors, no other party to any
such agreement is (with or without notice or lapse of time or both) in breach or
default thereunder; provided however, that the foregoing shall not apply to
----------------
defaults by borrowers from the Bank.
(xxvii) No relationship, direct or indirect, exists between or
among the Offerors or the Subsidiaries, on the one hand, and the directors,
officers, trustees, shareholders, customers or suppliers of the Offerors or the
Subsidiaries, on the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not adequately
described therein.
(xxviii) No person has the right to request or require the
Offerors or the Subsidiaries to register any securities for offering and sale
under the 1933 Act by reason of the filing of the Registration Statement with
the Commission or the issuance and sale of the Designated Preferred Securities
except as adequately disclosed in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xxix) The Designated Preferred Securities have been approved for
quotation on the Nasdaq National Market subject to official notice of issuance.
(xxx) Except as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
contractual encumbrances or restrictions or legal restrictions on the ability of
the Subsidiaries (A) to pay dividends or make any other distributions on its
capital stock or to pay any indebtedness owed to the Offerors, (B) to make any
loans or advances to, or investments in, the Offerors or (C) to transfer any of
its property or assets to the Offerors.
[(xxxi) Without limiting the generality of any of the foregoing
representations and warranties, the Trust Department Service Agreement (the
"Service Agreement") dated August 24, 1992 between the Bank and The Trust
Company of Oklahoma is in full force and effect and neither the Bank nor, to the
best knowledge of the Company, The Trust Company of Oklahoma, is in violation,
breach or default (with or without notice or lapse of time or both) in the
performance or observance of any term, covenant, agreement, obligation,
representation, warranty or condition contained in the Service Agreement, and
the
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Service Agreement complies in all material respects with all applicable
federal, state and local statutes, regulations, ordinances and rules.]
(xxxii) Neither of the Offerors is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xxxiii) The Offerors have not distributed and will not distribute
prior to the Closing Date any prospectus in connection with the Offering, other
than a Preliminary Prospectus, the Prospectus, the Registration Statement and
the other materials permitted by the 1933 Act and the 1933 Act Regulations and
reviewed by the Underwriter.
3. Offering by the Underwriter. After the Registration Statement
---------------------------
becomes effective or, if the Registration Statement is already effective, after
this Agreement becomes effective, the Underwriter proposes to offer the Firm
Preferred Securities for sale to the public upon the terms and conditions set
forth in the Prospectus. The Underwriter may from time to time thereafter reduce
the public offering price and change the other selling terms, provided the
proceeds to the Trust shall not be reduced as a result of such reduction or
change.
The Underwriter may reserve and sell such of the Designated Preferred
Securities purchased by the Underwriter as the Underwriter may elect to dealers
chosen by it (the "Selected Dealers") at the public offering price set forth in
the Prospectus less the applicable Selected Dealers' concessions set forth
therein, for re-offering by Selected Dealers to the public at the public
offering price. The Underwriter may allow, and Selected Dealers may re-allow, a
concession set forth in the Prospectus to certain other brokers and dealers.
4. Certain Covenants of the Offerors. The Offerors jointly and
------------------------------------
severally covenant with the Underwriter as follows:
(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible. If
the Registration Statement has become or becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then, the
Offerors will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted and will provide evidence satisfactory to the
Underwriter of such timely filing.
(b) The Offerors shall notify the Underwriter immediately, and
confirm such notice in writing:
(i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, has become effective, or when the
Prospectus or any supplement to the Prospectus or any amended Prospectus has
been filed;
(ii) of the receipt of any comments or requests from the
Commission;
(iii) of any request of the Commission to amend or
supplement the Registration Statement, any Preliminary Prospectus or the
Prospectus or for additional information; and
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(iv) of the issuance by the Commission or any state or
other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, or suspending the
qualification of any of the Designated Preferred Securities for offering or
sale in any jurisdiction or the institution or threat of institution of any
proceedings for any of such purposes. The Offerors shall use their best
efforts to prevent the issuance of any such stop order or of any other such
order and if any such order is issued, to cause such order to be withdrawn
or lifted as soon as possible.
(c) The Offerors shall furnish to the Underwriter, from time to
time without charge, as soon as available, as many copies as the Underwriter may
reasonably request of (i) the registration statement as originally filed and of
all amendments thereto, in executed form, including exhibits, whether filed
before or after the Registration Statement becomes effective, (ii) all exhibits
and documents incorporated therein or filed therewith, (iii) all consents and
certificates of experts in executed form, (iv) each Preliminary Prospectus and
all amendments and supplements thereto, and (v) the Prospectus, and all
amendments and supplements thereto.
(d) During the time when a prospectus is required to be delivered
under the 1933 Act, the Offerors shall comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Designated Preferred Securities as
contemplated herein and in the Trust Agreement and the Prospectus. The Offerors
shall not file any amendment to the registration statement as originally filed
or to the Registration Statement and shall not file any amendment thereto or
make any amendment or supplement to any Preliminary Prospectus or to the
Prospectus of which the Underwriter shall not previously have been advised in
writing and provided a copy a reasonable time prior to the proposed filings
thereof or to which the Underwriter or counsel to the Underwriter shall
reasonably object. If it is necessary, in the Underwriter's reasonable opinion
or in the reasonable opinion of counsel to the Underwriter to amend or
supplement the Registration Statement or the Prospectus in connection with the
distribution of the Designated Preferred Securities, the Offerors shall
forthwith amend or supplement the Registration Statement or the Prospectus, as
the case may be, by preparing and filing with the Commission and furnishing to
the Underwriter, such number of copies as the Underwriter may reasonably request
of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement or the Prospectus, as the case may be (in form and
substance reasonably satisfactory to the Underwriter and counsel to the
Underwriter). If any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus to correct an untrue statement of fact or to
include any fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if for any reason
it is necessary at any time to amend or supplement the Prospectus to comply with
the 1933 Act and the 1933 Act Regulations, the Offerors shall, subject to the
second sentence of this subsection (d), forthwith amend or supplement the
Prospectus by preparing and filing with the Commission, and furnishing to the
Underwriter, such number of copies as the Underwriter may reasonably request of
an amendment or amendments of, or a supplement or supplements to, the Prospectus
(in form and substance satisfactory to the Underwriter and counsel to the
Underwriter) so that, as so amended or supplemented, the Prospectus shall not
contain an untrue statement of fact or omit to state any fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) The Offerors shall cooperate with the Underwriter and counsel
to the Underwriter in order to qualify the Designated Preferred Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Underwriter may reasonably request and shall continue such qualifications in
effect so long as may be advisable for distribution of the
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Designated Preferred Securities; provided, however, that the Offerors shall not
be required to qualify to do business as a foreign corporation or file a general
consent to service of process in any jurisdiction in connection with the
foregoing. The Offerors shall file such statements and reports as may be
required by the laws of each jurisdiction in which the Designated Preferred
Securities have been qualified as above. The Offerors will notify the
Underwriter immediately of, and confirm in writing, the suspension of
qualification of the Designated Preferred Securities or threat thereof in any
jurisdiction.
(f) The Offerors shall make generally available to their security
holders in the manner contemplated by Rule 158 of the 1933 Act Regulations and
furnish to the Underwriter as soon as practicable, but in any event not later
than 16 months after the Effective Date, a consolidated earnings statement of
the Offerors conforming with the requirements of Section 11(a) of the 1933 Act
and Rule 158.
(g) The Offerors shall use the proceeds from the sale of the
Designated Preferred Securities to be sold by the Trust hereunder in the manner
specified in the Prospectus under the caption "Use of Proceeds."
(h) For five years from the Effective Date, the Offerors shall
furnish to the Underwriter copies of all reports and communications (financial
or otherwise) furnished by the Offerors to the holders of the Designated
Preferred Securities as a class, copies of all reports and financial statements
filed with or furnished to the Commission (other than portions for which
confidential treatment has been obtained from the Commission) or with any
national securities exchange or the Nasdaq National Market and such other
documents, reports and information concerning the business and financial
conditions of the Offerors as the Underwriter may reasonably request, other than
such documents, reports and information for which the Offerors has the legal
obligation not to reveal to the Underwriter.
(i) For a period of 180 days from the Effective Date, the
Offerors shall not, directly or indirectly, offer for sale, sell or agree to
sell or otherwise dispose of any Designated Preferred Securities other than
pursuant to this Agreement, any other beneficial interests in the assets of the
Trust or any securities of the Trust or the Company that are substantially
similar to the Designated Preferred Securities, including any guarantee of such
beneficial interests or substantially similar securities, or securities
convertible into or exchangeable for or that represent the right to receive any
such beneficial interest or substantially similar securities, without the
Underwriter's prior written consent.
(j) The Offerors shall use their best efforts to cause the
Designated Preferred Securities to become quoted on the Nasdaq National Market,
or in lieu thereof a national securities exchange, and to remain so quoted for
at least five years from the Effective Date or for such shorter period as may be
specified in a written consent of the Underwriter, provided this shall not
prevent the Company from redeeming the Designated Preferred Securities pursuant
to the terms of the Trust Agreement. If the Designated Preferred Securities are
exchanged for Debentures, the Company will use its best efforts to have the
Debentures promptly listed on the Nasdaq National Market or other organization
on which the Designated Preferred Securities are then listed, and to have the
Debentures promptly registered under the Exchange Act.
(k) Subsequent to the date of this Agreement and through the date
which is the later of (i) the day following the date on which the Underwriter's
option to purchase the Option Preferred Securities shall expire or (ii) the day
following the Option Closing Date with respect to any Option Preferred
Securities that the Underwriter shall elect to purchase, except as described in
or contemplated by the Prospectus, neither the Offerors nor any of the
Subsidiaries shall take
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any action (or refrain from taking any action) which will result in the Offerors
or the Subsidiaries incurring any liability or obligation, direct or contingent,
or enter into any transaction, except in the ordinary course of business, and
there will not be any change in the financial position, capital stock, or any
increase in long-term debt, obligations under capital leases or short-term
borrowings of the Offerors and the Subsidiaries on a consolidated basis.
(l) The Offerors shall not, for a period of 180 days after the
date hereof, without the Underwriter's prior written consent, purchase, redeem
or call for redemption, or prepay or give notice of prepayment (or announce any
redemption or call for redemption, or any repayment or notice of prepayment) of
the Offerors' securities; provided however, that the foregoing shall not prevent
----------------
an employee from delivering the Company's securities in payment of the exercise
price of options issued under the Company's 1994 Stock Option Plan.
(m) The Offerors shall not take, directly or indirectly, any action
designed to result in or which has constituted or which might cause or result in
stabilization or manipulation of the price of any security of the Offerors to
facilitate the sale or resale of the Designated Preferred Securities and the
Offerors are not aware of any such action taken or to be taken by any affiliate
of the Offerors.
(n) Prior to the Closing Date (and, if applicable, the Option
Closing Date), the Offerors will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Offerors, the Subsidiaries or the offering of the Designated Preferred
Securities (the "Offering") without the Underwriter's prior written consent,
which will not be unreasonably withheld.
5. Payment of Expenses. Whether or not this Agreement is terminated or
-------------------
the sale of the Designated Preferred Securities to the Underwriter is
consummated, the Company covenants and agrees that it will pay or cause to be
paid (directly or by reimbursement) all costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including:
(a) the preparation, printing, filing, delivery and shipping of
the initial registration statement, the Preliminary Prospectus or Prospectuses,
the Registration Statement and the Prospectus and any amendments or supplements
thereto, and the printing, delivery and shipping of this Agreement and any other
underwriting documents (including, without limitation, selected dealers
agreements), the certificates for the Designated Preferred Securities and the
Preliminary and Final Blue Sky Memoranda and any legal investment surveys and
any supplements thereto;
(b) all fees, expenses and disbursements of the Offerors' counsel
and accountants;
(c) all fees and expenses incurred in connection with the
qualification of the Designated Preferred Securities, Debentures and the
Guarantee under the securities or blue sky laws of such jurisdictions as the
Underwriter may request, including all filing fees and fees and disbursements of
counsel to the Underwriter in connection therewith, including, without
limitation, in connection with the preparation of the Preliminary and Final Blue
Sky Memoranda and any legal investment surveys and any supplements thereto;
(d) all fees and expenses incurred in connection with filings made
with the NASD;
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(e) any applicable fees and other expenses incurred in connection
with the listing of the Designated Preferred Securities and, if applicable, the
Guarantee and the Debentures on the Nasdaq National Market;
(f) the cost of furnishing to the Underwriter copies of the initial
registration statements, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar and
the fees and disbursements of counsel to any transfer agent or registrar;
(h) all costs and expenses (including stock transfer taxes)
incurred in connection with the printing, issuance and delivery of the
Designated Preferred Securities to the Underwriter;
(i) all expenses incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture and the Guarantee; and
(j) all other costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement that are not
otherwise specifically provided for in this Section 5.
If the sale of Designated Preferred Securities contemplated by this
Agreement is not completed for any reason whatsoever, including without
limitation if this Agreement is terminated by the Company or by the Underwriter
for any reason whatsoever, whether or not such termination is allowable
hereunder, the Company will pay the Underwriter its accountable out-of-pocket
expenses in connection herewith or in contemplation of the performance of the
Underwriter's obligations hereunder, including without limitation travel
expenses, reasonable fees, expenses and disbursements of counsel or other out-
of-pocket expenses incurred by the Underwriter in connection with any discussion
of the Offering or the contents of the Registration Statement, any investigation
of the Offerors and the Subsidiaries, or any preparation for the marketing,
purchase, sale or delivery of the Designated Preferred Securities, in each case
following presentation of reasonably detailed invoices therefor.
If the sale of Designated Preferred Securities contemplated by this
Agreement is completed, the Company shall not be responsible for payment of fees
or disbursements of counsel to the Underwriter other than in accordance with
paragraph (c) above, or for the reimbursement of any expenses of the
Underwriter, including without limitation any advertising expenses related to
any offers made by the Underwriter.
6. Conditions of the Underwriter's Obligations. The obligations of the
-------------------------------------------
Underwriter to purchase and pay for the Firm Preferred Securities and, following
exercise of the option granted by the Offerors in Section 1 of this Agreement,
the Option Preferred Securities, are subject, in the Underwriter's sole
discretion, to the accuracy of and compliance with the representations and
warranties and agreements of the Offerors herein as of the date hereof and as of
the Closing Date (or in the case of the Option Preferred Securities, if any, as
of the Option Closing Date), to the accuracy of the written statements of the
Offerors made pursuant to the provisions hereof, to the performance by the
Offerors of their covenants and obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement or any amendment thereto filed
prior to the Closing Date has not been declared effective prior to the time of
execution hereof, the
17
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Registration Statement shall become effective not later than 10:00 a.m., St.
Louis time, on the first business day following the time of execution of this
Agreement, or at such later time and date as the Underwriter may agree to in
writing. If required, the Prospectus and any amendment or supplement thereto
shall have been timely filed in accordance with Rule 424(b) and Rule 430A under
the 1933 Act and Section 4(a) hereof. No stop order suspending the effectiveness
of the Registration Statement or any amendment or supplement thereto shall have
been issued under the 1933 Act or any applicable state securities laws and no
proceedings for that purpose shall have been instituted or shall be pending, or,
to the knowledge of the Offerors or the Underwriter, shall be contemplated by
the Commission or any state authority. Any request on the part of the Commission
or any state authority for additional information (to be included in the
Registration Statement or Prospectus or otherwise) shall have been disclosed to
the Underwriter and complied with to the Underwriter's satisfaction and to the
satisfaction of counsel to the Underwriter.
(b) The Underwriter shall not have advised the Company at or
before the Closing Date (and, if applicable, the Option Closing Date) that the
Registration Statement or any post-effective amendment thereto, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of fact which, in the Underwriter's opinion, is material or omits to state any
fact which, in the Underwriter's opinion, is material and is required to be
stated therein or is necessary to make statements therein (in the case of the
Prospectus or any amendment or supplement thereto, in light of the circumstances
under which they were made) not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Trust Agreement, and
the Designated Preferred Securities, and the authorization and form of the
Registration Statement and Prospectus, other than financial statements and other
financial data, and all other legal matters relating to this Agreement and the
transactions contemplated hereby or by the Trust Agreement shall be satisfactory
in all respects to counsel to the Underwriter, and the Offerors and the
Subsidiaries shall have furnished to such counsel all documents and information
relating thereto that they may reasonably request to enable them to pass upon
such matters.
(d) Kennedy & Baris, L.L.P., counsel to the Offerors, shall have
furnished to the Underwriter their signed opinion, dated the Closing Date or the
Option Closing Date, as the case may be, in form and substance satisfactory to
counsel to the Underwriter, to the effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Oklahoma, and
is duly registered as a bank holding company under the BHC Act. Each of the
Subsidiaries is duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Each of the Company
and the Subsidiaries has full corporate power and authority to own or lease
its properties and to conduct its business as such business is described in
the Prospectus and is currently conducted. All outstanding shares of
capital stock of the Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable except to the extent such
shares may be deemed assessable under 12 U.S.C. Section 55 or 12 U.S.C.
Section 1831o and, except as disclosed in the Prospectus, there are no
outstanding rights, options or warrants to purchase any such shares or
securities convertible into or exchangeable for any such shares. The Bank
is a member of the Federal Reserve System, and no proceedings for
termination or revocation of such membership are pending or, to the best
knowledge of such counsel, threatened. The deposit accounts of the Bank are
insured by the FDIC up to the maximum amount provided by law, and no
proceedings for the termination or revocation of such insurance are pending
or, to the best knowledge of such counsel, threatened.
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(ii) The capital stock, Debentures and Guarantee of the
Company and the equity securities of the Trust conform to the description
thereof contained in the Prospectus. The capital stock of the Company
authorized and issued as of ______________, 1997 is as set forth under the
caption "Capitalization" in the Prospectus, has been duly authorized and
validly issued, and is fully paid and nonassessable. The form of
certificates to evidence the Designated Preferred Securities has been
approved by or on behalf of the Trust and is in due and proper form and
complies with all applicable requirements. There are no outstanding rights,
options or warrants to purchase, no other outstanding securities
convertible into or exchangeable for, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or equity
securities of the Trust, except as described in the Prospectus.
(iii) The Offerors have all requisite corporate power and
authority to issue, sell and deliver the Designated Preferred Securities
and Debentures in accordance with and upon the terms and conditions set
forth in this Agreement, the Indenture, the Trust Agreement, the
Registration Statement and the Prospectus. All corporate action required to
be taken by the Offerors for the authorization, issuance, sale and delivery
of the Designated Preferred Securities and Debentures in accordance with
such terms and conditions has been validly and sufficiently taken. All of
the Designated Preferred Securities have been duly and validly authorized
and, when delivered in accordance with this Agreement will be duly and
validly issued, fully paid and nonassessable, and will conform to the
description thereof in the Registration Statement, the Prospectus and the
Trust Agreement. The Designated Preferred Securities have been approved for
quotation on the Nasdaq National Market subject to official notice of
issuance. There are no preemptive or other rights to subscribe for or to
purchase, and other than as disclosed in the Prospectus no restrictions
upon the voting or transfer of, any shares of capital stock or equity
securities of the Offerors or the Subsidiaries pursuant to the corporate
charter, by-laws or other governing documents (including without
limitation, the Trust Agreement) of the Offerors or the Subsidiaries, or,
to the best of such counsel's knowledge, any agreement or other instrument
to which either Offeror or any of the Subsidiaries is a party or by which
either Offeror or any of the Subsidiaries may be bound.
(iv) The Offerors have all requisite corporate and trust
power to enter into and perform their obligations under this Agreement, and
this Agreement has been duly and validly authorized, executed and delivered
by the Offerors and constitutes the legal, valid and binding obligations of
the Offerors enforceable in accordance with its terms, except as the
enforcement hereof or thereof may be limited by general principles of
equity and by bankruptcy or other laws relating to or affecting creditors'
rights generally, and except as the indemnification and contribution
provisions hereof may be limited under applicable laws and certain remedies
may not be available in the case of a non-material breach.
(v) Each of the Indenture, the Trust Agreement and the
Guarantee has been duly qualified under the Trust Indenture Act, has been
duly authorized, executed and delivered by the Company, and is a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies
of creditors generally and of general principles of equity;
(vi) The Debentures have been duly authorized, executed,
authenticated and delivered by the Company, are entitled to the benefits of
the Indenture and are legal, valid and binding obligations of the Company
enforceable against the Company in
19
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accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity;
(vii) The Expense Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and legally binding
obligation of the Company enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of creditors
generally and of general principles of equity;
(viii) To the best of such counsel's knowledge, neither of
the Offerors nor any of the Subsidiaries is in breach or violation of, or
default under, with or without notice or lapse of time or both, its
corporate charter, by-laws or governing document (including without
limitation, the Trust Agreement). The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated by
this Agreement, and the Trust Agreement do not and will not conflict with,
result in the creation or imposition of any lien, claim, charge,
encumbrance or restriction upon any property or assets of the Offerors or
the Subsidiaries or the Designated Preferred Securities pursuant to, or
constitute a breach or violation of, or constitute a default under, with or
without notice or lapse of time or both, any of the terms, provisions or
conditions of the charter, by-laws or governing document (including without
limitation, the Trust Agreement) of the Offerors or the Subsidiaries, or to
the best of such counsel's knowledge, any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease, franchise, license or
any other agreement or instrument to which either Offeror or the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or any order, decree, judgment, franchise, license,
Permit, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, known to such
counsel having jurisdiction over the Offerors or the Subsidiaries or any of
their respective properties. No authorization, approval, consent or order
of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required
under Oklahoma law in connection with the transactions contemplated by this
Agreement in connection with the purchase and distribution of the
Designated Preferred Securities by the Underwriter.
(ix) To the best of such counsel's knowledge, holders of
securities of the Offerors either do not have any right that, if exercised,
would require the Offerors to cause such securities to be included in the
Registration Statement or have waived such right. To the best of such
counsel's knowledge, neither the Offerors nor any of the Subsidiaries is a
party to any agreement or other instrument which grants rights for or
relating to the registration of any securities of the Offerors.
(x) Except as set forth in the Registration Statement and
the Prospectus, (i) no action, suit or proceeding at law or in equity is
pending or threatened in writing to which the Offerors or the Subsidiaries
is or may be a party, and (ii) no action, suit or proceeding is pending or
threatened in writing against or affecting the Offerors or the Subsidiaries
or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or
body, or any arbitrator, wherein an unfavorable decision, ruling or finding
could have an adverse effect on the consummation of this Agreement or the
issuance and sale of the Designated Preferred Securities as contemplated
herein or the condition (financial or otherwise), earnings, affairs,
business, or results of operations of the Offerors and the Subsidiaries on
20
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a consolidated basis or which is required to be disclosed in the
Registration Statement or the Prospectus and is not so disclosed.
(xi) No authorization, approval, consent or order of or
filing, registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required in
connection with the transactions contemplated by this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus, except such as
may be required by, and have been obtained under, the 1933 Act, the Trust
Indenture Act, state securities laws, or Interpretations or Rules of the
NASD in connection with the purchase and distribution of the Designated
Preferred Securities by the Underwriter, and from the Nasdaq Stock Market's
National Market relating to the listing of the Designated Preferred
Securities.
(xii) The Registration Statement and the Prospectus and any
amendments or supplements thereto and any documents incorporated therein by
reference (other than the financial statements or other financial data
included therein or omitted therefrom and Underwriter's Information, as to
which such counsel need express no opinion) comply as to form with the
requirements of the 1933 Act and the 1933 Act Regulations as of their
respective dates of effectiveness.
(xiii) There are no contracts, agreements, leases or other
documents of a character required to be disclosed in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement that are not so disclosed or filed.
(xiv) The statements under the captions "Capitalization",
"Description of the Preferred Securities", "Description of the Subordinated
Debentures", "Description of the Guarantee", "Relationship Among the
Preferred Securities, the Subordinated Debentures and the Guarantee",
"Certain Federal Income Tax Consequences", "ERISA Considerations",
"Regulation of Branch and Interstate Banking", and "Supervision and
Regulation" in the Prospectus or incorporated therein by reference, insofar
as such statements constitute a summary of legal and regulatory matters,
documents, instruments or proceedings referred to therein are accurate
descriptions of the matters summarized therein and fairly present the
information called for with respect to such legal and regulatory matters,
documents, instruments and proceedings, other than financial and
statistical data as to which said counsel expresses no opinion or belief.
(xv) Such counsel has been advised by the staff of the
Commission that the Registration Statement has become effective under the
1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made within the time period required by Rule 424(b); to the best of
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for a stop order
are pending or threatened by the Commission.
(xvi) Except as set forth in the Prospectus, to the best of
counsel's knowledge, there are no contractual encumbrances or restrictions,
or legal restrictions (excluding any encumbrances or restrictions of
general application to national banks contained in laws, rules and
regulations of applicable regulatory authorities) on the ability of the
Subsidiaries (A) to pay dividends or make any other distributions on its
capital stock or to pay indebtedness owed to the Offerors, (B) to make any
loans or advances to, or investments in, the Offerors or (C) to transfer
any of its property or assets to the Offerors.
21
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(xvii) To the best of such counsel's knowledge, (A) the
business and operations of the Offerors and the Subsidiaries comply with
all statutes, ordinances, laws, rules and regulations applicable thereto,
except in those instances where non-compliance would not materially impair
the ability of the Offerors and the Subsidiaries to conduct their business;
and (B) the Offerors and the Subsidiaries possess and are operating in
compliance with the terms, provisions and conditions of all Permits and
required to conduct their businesses as described in the Prospectus, except
in those instances where the loss thereof or non-compliance therewith would
not have an adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the
Offerors and the Subsidiaries on a consolidated basis; to the best of such
counsel's knowledge, all such Permits are valid and in full force and
effect, and, to the best of such counsel's knowledge, no action, suit or
proceeding is pending or threatened which may lead to the revocation,
termination, suspension or non-renewal of any such Permit, except in those
instances where the loss thereof or non-compliance therewith would not
materially impair the ability of the Offerors or the Subsidiaries to
conduct their businesses.
In giving the above opinion, such counsel may state that, insofar as such
opinion involves factual matters, they have relied upon certificates of officers
of the Offerors including, without limitation, certificates as to the identity
of any and all contracts, indentures, mortgages, deeds of trust, loans or credit
agreements, notes, leases, franchises, licenses or other agreements or
instruments, and all permits, easements, consents, licenses, franchises and
government regulatory authorizations, for purposes of paragraphs (viii), (xiii)
and (xvii) hereof and certificates of public officials. In giving such opinion,
such counsel may rely as to matters of Delaware law upon the opinion of
Richards, Layton and Finger described herein.
Such counsel shall also confirm that, in connection with the preparation of
the Registration Statement and Prospectus, such counsel has participated in
conferences with officers and representatives of the Offerors and with their
independent public accountants and with the Underwriter and counsel to the
Underwriter, at which conferences such counsel made inquiries of such officers,
representatives and accountants and discussed in detail the contents of the
Registration Statement and Prospectus and the documents incorporated therein by
reference and such counsel has no reason to believe (A) that the Registration
Statement or any amendment thereto (except for the financial statements and
related schedules and statistical data included therein or omitted therefrom or
Underwriter's Information, as to which such counsel need express no opinion), at
the time the Registration Statement or any such amendment became effective,
contained any untrue statement of fact or omitted to state any fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (B) that the
Prospectus or any amendment or supplement thereto or the documents contained
therein by reference (except for the financial statements and related schedules
and statistical data included therein or omitted therefrom or Underwriter's
Information, as to which such counsel need express no opinion), at the time the
Registration Statement became effective (or, if the term "Prospectus" refers to
the prospectus first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
at the time the Prospectus was issued), at the time any such amended or
supplemented Prospectus was issued, at the Closing Date and, if applicable, the
Option Closing Date, contained or contains any untrue statement of fact or
omitted or omits to state any fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, or (C) that there is any amendment to the Registration
Statement required to be filed that has not already been filed.
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(e) Richards, Layton and Finger, special Delaware counsel to the
Offerors, shall have furnished to the Underwriter their signed opinion, dated as
of Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to such counsel, to the effect that:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act and,
under the Trust Agreement and the Delaware Business Trust Act, has the
trust power and authority to conduct its business as described in the
Prospectus.
(ii) The Trust Agreement is a legal, valid and binding agreement
of the Trust and the Trustees, and is enforceable against the Company, as
sponsor, and the Trustees, in accordance with its terms.
(iii) Under the Trust Agreement and the Delaware Business Trust Act,
the execution and delivery of the Underwriting Agreement by the Trust, and
the performance by the Trust of its obligations thereunder, have been
authorized by all requisite trust action on the part of the Trust.
(iv) The Designated Preferred Securities have been duly authorized
by the Trust Agreement, and when issued and sold in accordance with the
Trust Agreement, the Designated Preferred Securities will be, subject to
the qualifications set forth in paragraph (v) below, fully paid and
nonassessable beneficial interest in the assets of the Trust and entitled
to the benefits of the Trust Agreement. The form of certificates to
evidence the Designated Preferred Securities has been approved by the Trust
and is in due and proper form and complies with all applicable requirements
of the Delaware Business Trust Act.
(v) Holders of Designated Preferred Securities, as beneficial
owners of the Trust, will be entitled to the same limitation of personal
liability extended to shareholders of private, for-profit corporations
organized under the General Corporation Law of the State of Delaware. Such
opinion may note that the holders of Designated Preferred Securities may be
obligated to make payments as set forth in the Trust Agreement.
(vi) Under the Delaware Business Trust Act and the Trust Agreement,
the issuance of the Designated Preferred Securities is not subject to
preemptive rights.
(vii) The issuance and sale by the Trust of the Designated Preferred
Securities and the Common Securities, the execution, delivery and
performance by the Trust of this Agreement, and the consummation of the
transactions contemplated by this Agreement, do not violate (a) the Trust
Agreement, or (b) any applicable Delaware law, rule or regulation.
Such opinion may state that it is limited to the laws of the State of
Delaware and that the opinion expressed in paragraph (ii) above is subject to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and other
similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
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(f) Bryan Cave LLP, counsel to the Underwriter, shall have
furnished to the Underwriter their signed opinion, dated the Closing Date or the
Option Closing Date, as the case may be, with respect to the sufficiency of all
corporate procedures and other legal matters relating to this Agreement, the
validity of the Designated Preferred Securities, the Registration Statement, the
Prospectus and such other related matters as the Underwriter may reasonably
request and there shall have been furnished to such counsel such documents and
other information as they may request to enable them to pass on such matters. In
giving such opinion, Bryan Cave LLP may rely as to matters of fact upon
statements and certifications of officers of the Offerors and of other
appropriate persons and may rely as to matters of law, other than law of the
United States and the State of Missouri, and upon the opinions of Kennedy &
Baris, L.L.P and Richards, Layton and Finger described herein.
(g) On the date of this Agreement and on the Closing Date (and, if
applicable, any Option Closing Date), the Underwriter shall have received from
Deloitte & Touche LLP a letter, dated the date of this Agreement and the Closing
Date (and, if applicable, the Option Closing Date), respectively, in form and
substance satisfactory to the Underwriter, confirming that they are independent
public accountants with respect to the Company and the Bank, within the meaning
of the 1933 Act and the 1933 Act Regulations, and stating in effect that:
(i) In their opinion, the consolidated financial statements
of the Company and the Bank audited by them and included in the
Registration Statement comply as to form with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations.
(ii) On the basis of the procedures specified by the
American Institute of Certified Public Accountants as described in SAS No.
71, "Interim Financial Information", inquiries of officials of the Company
and the Bank responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter, which
procedures do not constitute an audit in accordance with U.S. generally
accepted auditing standards, nothing came to their attention that caused
them to believe that, if applicable, the unaudited interim consolidated
financial statements of the Company and its subsidiary included in the
Registration Statement do not comply as to form with the applicable
accounting requirements of the 1933 Act and 1933 Act Regulations or are not
in conformity with U.S. generally accepted accounting principles applied on
a basis substantially consistent, except as noted in the Registration
Statement, with the basis for the audited consolidated financial statements
of the Company and its subsidiary included in the Registration Statement.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements and
other information referred to below, a reading of the latest available
unaudited condensed consolidated financial statements of the Company and
its subsidiary, inspection of the minute books of the Company and the Bank
since the date of the latest audited financial statements of the Company
and its subsidiary included in the Registration Statement, inquiries of
officials of the Company and the Bank responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) as of a specified date not more than five days
prior to the date of such letter, there have been any changes in the
consolidated capital stock, allowance for loan losses, or net loans
receivable of the Company and its
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subsidiary, any increase in the consolidated long-term debt, short-
term borrowings, obligations under capital leases or real estate
owned of the Company and its subsidiary, any decreases in
consolidated total assets or shareholders equity of the Company and
its subsidiary, or any changes, decreases or increases in other items
specified by the Underwriter, in each case as compared with amounts
shown in the latest unaudited interim consolidated statement of
financial condition of the Company and its subsidiary included in the
Registration Statement except in each case for changes, increases or
decreases which the Registration Statement specifically discloses,
have occurred or may occur or which are described in such letter; and
(B) for the period from the date of the latest
unaudited interim consolidated financial statements included in the
Registration Statement to the specified date referred to in Clause
(iii)(A), there were any decreases in the consolidated interest
income, net interest income, other operating income or net income of
the Company and its subsidiary or in the per share amount of net
income of the Company and its subsidiary, any increase in
consolidated other operating expense of the Company and its
subsidiary, or any changes, decreases or increases in any other items
specified by the Underwriter, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Underwriter, except in each
case for increases or decreases which the Registration Statement
discloses have occurred or may occur, or which are described in such
letter.
(iv) In addition to the audit referred to in their report
included in the Registration Statement and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (ii) and (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with U.S. generally
accepted auditing standards, with respect to certain amounts, percentages
and financial information specified by the Underwriter which are derived
from the general accounting records and consolidated financial statements
of the Company and its subsidiary which appear in the Registration
Statement specified by the Underwriter in the Registration Statement, and
have compared such amounts, percentages and financial information with the
accounting records and the material derived from such records and
consolidated financial statements of the Company and its subsidiary have
found them to be in agreement.
In the event that the letters to be delivered referred to above set forth
any such changes, decreases or increases as specified in Clauses (iii)(A) or
(iii)(B) above, or any exceptions from such agreement specified in Clause (iv)
above, it shall be a further condition to the obligations of the Underwriter
that the Underwriter shall have determined, after discussions with officers of
the Company and the Bank responsible for financial and accounting matters, that
such changes, decreases, increases or exceptions as are set forth in such
letters do not (x) reflect an adverse change in the items specified in Clause
(iii)(A) above as compared with the amounts shown in the latest unaudited
consolidated statement of financial condition of the Company and its subsidiary
included in the Registration Statement, (y) reflect an adverse change in the
items specified in Clause (iii)(B) above as compared with the corresponding
periods of the prior year or other period specified by the Underwriter, or (z)
reflect a material change in items specified in Clause (iv) above from the
amounts shown in the Preliminary Prospectus distributed by the Underwriter in
connection with the offering contemplated hereby or from the amounts shown in
the Prospectus.
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(h) At the Closing Date and, if applicable, the Option Closing
Date, the Underwriter shall have received certificates of the chief executive
officer and the chief financial and accounting officer of the Company, which
certificates shall be deemed to be made on behalf of the Company dated as of the
Closing Date and, if applicable, the Option Closing Date, evidencing
satisfaction of the conditions of Section 6(a) and stating that (i) the
representations and warranties of the Company set forth in Section 2(a) hereof
are accurate as of the Closing Date and, if applicable, the Option Closing Date,
and that the Offerors have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to such
Closing Date; (ii) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any adverse
change in the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries on a
consolidated basis; (iii) since such dates there has not been any transaction
entered into by the Offerors or the Subsidiaries other than transactions in the
ordinary course of business; and (iv) they have carefully examined the
Registration Statement and the Prospectus as amended or supplemented and nothing
has come to their attention that would lead them to believe that either the
Registration Statement or the Prospectus, or any amendment or supplement thereto
as of their respective effective or issue dates, contained, and the Prospectus
as amended or supplemented at such Closing Date (and, if applicable, the Option
Closing Date), contains any untrue statement of fact, or omits to state any fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) covering such other matters as the Underwriter may
reasonably request. The officers' certificate of the Company shall further state
that no stop order affecting the Registration Statement is in effect or, to
their knowledge, threatened.
(i) At the Closing Date and, if applicable, the Option Closing
Date, the Underwriter shall have received a certificate of an authorized
representative of the Trust to the effect that to the best of his or her
knowledge based upon an investigation, the representations and warranties of the
Trust in this Agreement are true and correct as though made on and as of the
Closing Date (and, if applicable, the Option Closing Date); the Trust has
complied with all the agreements and satisfied all the conditions required by
this Agreement to be performed or satisfied by the Trust on or prior to the
Closing Date and since the most recent date as of which information is given in
the Prospectus, except as contemplated by the Prospectus, the Trust has not
incurred any liabilities or obligations, direct or contingent, or entered into
any transactions not in the ordinary course of business and there has not been
any adverse change in the condition (financial or otherwise) of the Trust.
(j) On the Closing Date, the Underwriter shall have received duly
executed counterparts of the Trust Agreement, the Guarantee, the Indenture and
the Expense Agreement.
(k) The NASD, upon review of the terms of the public offering of
the Designated Preferred Securities, shall not have objected to the
Underwriter's participation in such offering.
(l) Prior to the Closing Date and, if applicable, the Option
Closing Date, the Offerors shall have furnished to the Underwriter and counsel
to the Underwriter all such other documents, certificates and opinions as they
have reasonably requested.
All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriter. Any certificate signed by an officer
of an Offeror and delivered to the Underwriter pursuant hereto shall also be
deemed to be a representation and warranty of such Offeror to the
26
<PAGE>
Underwriter as to the statements made therein. The Offerors shall furnish to the
Underwriter conformed copies of such opinions, certificates, letters and other
documents as the Underwriter may reasonably request.
If any of the conditions referred to in this Section 6 shall not
have been fulfilled when and as required by this Agreement, this Agreement and
all of the Underwriter's obligations hereunder may be terminated by the
Underwriter on notice to the Company at, or at any time before, the Closing Date
or the Option Closing Date, as applicable. Any such termination shall be without
liability of the Underwriter to the Offerors.
7. Indemnification and Contribution.
--------------------------------
(a) The Offerors agree to jointly and severally indemnify and hold
harmless the Underwriter, each of its directors, officers and agents, and each
person, if any, who controls the Underwriter within the meaning of the 1933 Act,
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and reasonable attorney fees and expenses),
joint or several, arising out of or based (i) upon any untrue statement or
alleged untrue statement of fact made by the Company or the Trust contained in
Section 2(a) of this Agreement (or any certificate delivered by the Company or
the Trust pursuant to Sections 6(h), 6(i) or 6(l) hereof) or the registration
statement as originally filed or the Registration Statement, any Preliminary
Prospectus or the Prospectus, or in any amendment or supplement thereto, (ii)
upon any blue sky application or other document executed by the Company or the
Trust specifically for that purpose or based upon written information furnished
by the Company or the Trust filed in any state or other jurisdiction in order to
qualify any of the Designated Preferred Securities under the securities laws
thereof (any such application, document or information being hereinafter
referred to as a "Blue Sky Application"), (iii) any omission or alleged omission
to state a fact in the registration statement as originally filed or the
Registration Statement, any Preliminary Prospectus or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application required to be
stated therein or necessary to make the statements therein not misleading, and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and attorney fees), joint or several, arising
out of or based upon any untrue statement or alleged untrue statement of fact
contained in any Preliminary Prospectus or the Prospectus, or in any amendment
or supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or (iv) the enforcement of this indemnification
provision or the contribution provisions of Section 7(d); and shall reimburse
each such indemnified party for any reasonable legal or other expenses as
incurred, but in no event less frequently than 30 days after each invoice is
submitted, incurred by them in connection with investigating or defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action, notwithstanding the possibility that
payments for such expenses might later be held to be improper, in which case
such payments shall be promptly refunded; provided, however, that the Offerors
-----------------
shall not be liable in any such case to the extent, but only to the extent, that
any such losses, claims, damages, liabilities and expenses arise out of or are
based upon any untrue statement or omission or allegation thereof that has been
made therein or omitted therefrom in reliance upon and in conformity the
Underwriter's Information; provided further, that the indemnification contained
----------------
in this paragraph with respect to any Preliminary Prospectus shall not inure to
the benefit of the Underwriter (or of any person controlling the Underwriter) to
the extent any such losses, claims, damages, liabilities or expenses directly
results from the fact that the Underwriter sold Designated Preferred Securities
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (as amended or supplemented
if any amendments or supplements thereto shall have been furnished to the
27
<PAGE>
Underwriter in sufficient time to distribute same with or prior to the written
confirmation of the sale involved), if required by law, and if such loss, claim,
damage, liability or expense would not have arisen but for the failure to give
or send such person such document. The foregoing indemnity agreement is in
addition to any liability the Company or the Trust may otherwise have to any
such indemnified party.
(b) The Underwriter agrees to indemnify and hold harmless each
Offeror, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls an Offeror within the meaning of
the 1933 Act, to the same extent as required by the foregoing indemnity from the
Company to the Underwriter, but only with respect to the Underwriter's
Information or in a Blue Sky Application. The foregoing indemnity agreement is
in addition to any liability which the Underwriter may otherwise have to any
such indemnified party.
(c) If any action or claim shall be brought or asserted against any
indemnified party or any person controlling an indemnified party in respect of
which indemnity may be sought from the indemnifying party, such indemnified
party or controlling person shall promptly notify the indemnifying party in
writing, and the indemnifying party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all expenses; provided, however, that the failure so to notify
-----------------
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under such paragraph, and further, shall
only relieve it from liability under such paragraph to the extent prejudiced
thereby. Any indemnified party or any such controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party or such controlling person unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) the indemnifying party has failed to assume the defense or to
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
such indemnified party or such controlling person and the indemnifying party and
such indemnified party or such controlling person shall have been advised by
such counsel that there may be one or more legal defenses available to it that
are different from or in addition to those available to the indemnifying party
(in which case, if such indemnified party or controlling person notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
or such controlling person) it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time and for all
such indemnified party and controlling persons, which firm shall be designated
in writing by the indemnified party. Each indemnified party and each
controlling person, as a condition of such indemnity, shall use reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent, but if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
An indemnifying party shall not, without the prior written consent of each
indemnified party, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnity may be sought
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hereunder (whether or not such indemnified party or any person who controls such
indemnified party within the meaning of the 1933 Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes a release of each such indemnified party reasonably satisfactory to
each such indemnified party and each such controlling person from all liability
arising out of such claim, action, suit or proceeding or unless the indemnifying
party shall confirm in a written agreement with each indemnified party, that
notwithstanding any federal, state or common law, such settlement, compromise or
consent shall not alter the right of any indemnified party or controlling person
to indemnification or contribution as provided in this Agreement.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and the
Underwriter on the other from the offering of the Designated Preferred
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Offerors on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Offerors on the
one hand and the Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Designated
Preferred Securities (before deducting expenses) received by the Offerors bear
to the total underwriting discounts, commissions and compensation received by
the Underwriter, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Offerors on the one hand and of the
Underwriter on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of fact or the omission
or alleged omission to state a fact relates to information supplied by the
Offerors or by the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Offerors and the Underwriter agree that it would not
be just and equitable if contribution pursuant to this paragraph (d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the first sentence of
this paragraph (d) shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Designated Preferred Securities underwritten by the
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages that the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this paragraph (d), each person who controls the
Underwriter within the meaning of the 1933 Act shall have the same rights to
contribution as the Underwriter, and each person who controls an Offeror within
the meaning of the 1933 Act, each officer and trustee of an Offeror who shall
have signed the Registration Statement and each director of an
29
<PAGE>
Offeror shall have the same rights to contribution as the Offerors subject in
each case to the preceding sentence. The obligations of the Offerors under this
paragraph (d) shall be in addition to any liability which the Offerors may
otherwise have and the obligations of the Underwriter under this paragraph (d)
shall be in addition to any liability that the Underwriter may otherwise have.
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Offerors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter or by or on behalf of the Offerors, or such
directors, trustees or officers (or any person controlling an Offeror), (ii)
acceptance of any Designated Preferred Securities and payment therefor hereunder
and (iii) any termination of this Agreement. A successor of the Underwriter or
of an Offeror, such directors, trustees or officers (or of any person
controlling the Underwriter or an Offeror) shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 7.
(f) The Company agrees to indemnify the Trust against any and all
losses, claims, damages or liabilities that may become due from the Trust under
this Section 7.
8. Termination. The Underwriter shall have the right to terminate this
-----------
Agreement at any time at or prior to the Closing Date or, with respect to the
Underwriter's obligation to purchase the Option Preferred Securities, at any
time at or prior to the Option Closing Date, without liability on the part of
the Underwriter to the Offerors, if:
(a) Either Offeror shall have failed, refused, or been unable to
perform any agreement on its part to be performed under this Agreement, or any
of the conditions referred to in Section 6 shall not have been fulfilled, when
and as required by this Agreement;
(b) The Offerors or any of the Subsidiaries shall have sustained
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree which in the judgment of the
Underwriter impairs the investment quality of the Designated Preferred
Securities;
(c) There has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
adverse change in, or any development which is likely to have an adverse effect
on, the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries on a
consolidated basis, whether or not arising in the ordinary course of business;
(d) There has occurred any outbreak of hostilities or other
calamity or crisis or change in general economic, political or financial
conditions, or internal conditions, the effect of which on the financial markets
of the United States is such as to make it, in the Underwriter's reasonable
judgment, impracticable to market the Designated Preferred Securities or enforce
contracts for the sale of the Designated Preferred Securities;
(e) Trading generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, by any of said exchanges or
market system or by the Commission or any other governmental authority;
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(f) A banking moratorium shall have been declared by either
federal or Oklahoma authorities; or
(g) Any action shall have been taken by any government in respect
of its monetary affairs which, in the Underwriter's reasonable judgment, has an
adverse effect on the United States securities markets.
If this Agreement shall be terminated pursuant to this Section 8, the
Offerors shall not then be under any liability to the Underwriter except as
provided in Sections 5 and 7 hereof.
9. Effective Date of Agreement. If the Registration Statement is not
---------------------------
effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Company shall immediately notify the
Underwriter when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of execution
of this Agreement, this Agreement shall become effective at the earlier of 11:00
a.m. St. Louis time, on the first full business day following the day on which
this Agreement is executed, or at such earlier time as the Underwriter shall
release the Designated Preferred Securities for initial public offering. The
Underwriter shall notify the Offerors immediately after it has taken any action
which causes this Agreement to become effective.
Until such time as this Agreement shall have become effective, it
may be terminated by the Offerors, by notifying the Underwriter, or by the
Underwriter, by notifying either Offeror, except that the provisions of Sections
5 and 7 shall at all times be effective.
10. Representations, Warranties and Agreements to Survive Delivery. The
--------------------------------------------------------------
representations, warranties, indemnities, agreements and other statements of the
Offerors and their officers and trustees set forth in or made pursuant to this
Agreement and the agreements of the Underwriter contained in Section 7 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Offerors or controlling persons of
either Offeror, or by or on behalf of the Underwriter or controlling persons of
the Underwriter or any termination or cancellation of this Agreement and shall
survive delivery of and payment for the Designated Preferred Securities.
11. Notices. Except as otherwise provided in this Agreement, all notices
-------
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered by hand, mailed by registered or certified
mail, return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to either Offeror shall be sent to 608
South Main Street, Stillwater, Oklahoma 74076, Attention: Robert L. McCormick,
Jr. (with a copy to Kennedy & Baris, L.L.P., 4719 Hampden Lane, Suite 300,
Bethesda, Maryland 20814, Attention: James I. Lundy, III, Esq.); and notices to
the Underwriter shall be sent to Stifel, Nicolaus & Company, Incorporated, 500
North Broadway, Suite 1500, St. Louis, Missouri 63102, Attention: Rick E.
Maples (with a copy to Bryan Cave LLP, One Metropolitan Square, 211 North
Broadway, Suite 3600, St. Louis, Missouri 63102-2750, Attention: Frederick W.
Scherrer, Esq.).
12. Parties. The Agreement herein set forth is made solely for the
-------
benefit of the Underwriter and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriter, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
31
<PAGE>
Agreement. The term "successors and assigns" shall not include any purchaser,
in his status as such purchaser, from the Underwriter of the Designated
Preferred Securities.
13. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Missouri, without giving effect to the choice of law or conflicts of
law principles thereof.
14. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
32
<PAGE>
If the foregoing is in accordance with the Underwriter's understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
shall become a binding agreement between the Company, the Trust and the
Underwriter in accordance with its terms.
Very truly yours,
SOUTHWEST BANCORP, INC.
By:
-------------------------------
Name:
Title:
SBI CAPITAL TRUST
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of ____________,1997.
STIFEL, NICOLAUS & COMPANY, INCORPORATED
By:
----------------------------
Name:
Title:
33
<PAGE>
Exhibit 4.1
SOUTHWEST BANCORP, INC.
AND
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE
INDENTURE
____% SUBORDINATED DEBENTURES DUE 2027
DATED AS OF _______________, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS....................................................... 1
SECTION 1.1 DEFINITIONS OF TERMS........................................ 1
ARTICLE II. ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND
EXCHANGE OF THE DEBENTURES.............................................. 7
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT............................ 7
SECTION 2.2 MATURITY.................................................... 7
SECTION 2.3 FORM AND PAYMENT............................................ 8
SECTION 2.4 [Intentionally Omitted...................................... 8
SECTION 2.5 INTEREST.................................................... 8
SECTION 2.6 EXECUTION AND AUTHENTICATIONS............................... 9
SECTION 2.7 REGISTRATION OF TRANSFER AND EXCHANGE.......................10
SECTION 2.8 TEMPORARY DEBENTURES........................................10
SECTION 2.9 MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.............11
SECTION 2.10 CANCELLATION...............................................11
SECTION 2.11 BENEFIT OF INDENTURE.......................................11
SECTION 2.12 AUTHENTICATION AGENT.......................................12
ARTICLE III. REDEMPTION OF DEBENTURES.........................................12
SECTION 3.1 REDEMPTION..................................................12
SECTION 3.2 SPECIAL EVENT REDEMPTION....................................12
SECTION 3.3 OPTIONAL REDEMPTION BY COMPANY..............................13
SECTION 3.4 NOTICE OF REDEMPTION........................................13
SECTION 3.5 PAYMENT UPON REDEMPTION.....................................14
SECTION 3.6 NO SINKING FUND.............................................14
ARTICLE IV. EXTENSION OF INTEREST PAYMENT PERIOD..............................14
SECTION 4.1 EXTENSION OF INTEREST PAYMENT PERIOD........................14
SECTION 4.2 NOTICE OF EXTENSION.........................................15
SECTION 4.3 LIMITATION ON TRANSACTIONS..................................15
ARTICLE V. PARTICULAR COVENANTS OF THE COMPANY................................15
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST...........................15
SECTION 5.2 MAINTENANCE OF AGENCY.......................................15
SECTION 5.3 PAYING AGENTS...............................................16
SECTION 5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE............16
SECTION 5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS....................17
SECTION 5.6 LIMITATION ON TRANSACTIONS..................................17
SECTION 5.7 COVENANTS AS TO THE TRUST...................................17
SECTION 5.8 COVENANTS AS TO PURCHASES...................................17
ARTICLE VI.. DEBENTUREHOLDERS' LISTS AND REPORTS.. BY THE COMPANY AND THE
TRUSTEE.................................................................17
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTUREHOLDERS................................................17
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 6.2 PRESERVATION OF INFORMATION COMMUNICATIONS WITH
DEBENTUREHOLDERS................................................18
SECTION 6.3 REPORTS BY THE COMPANY......................................18
SECTION 6.4 REPORTS BY THE TRUSTEE......................................18
ARTICLE VII. REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF
DEFAULT.................................................................19
SECTION 7.1 EVENTS OF DEFAULT...........................................19
SECTION 7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE......................................................20
SECTION 7.3 APPLICATION OF MONEYS COLLECTED.............................21
SECTION 7.4 LIMITATION ON SUITS.........................................21
SECTION 7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER..........................................................22
SECTION 7.6 CONTROL BY DEBENTUREHOLDERS.................................22
SECTION 7.7 UNDERTAKING TO PAY COSTS....................................23
ARTICLE VIII. FORM OF DEBENTURE AND ORIGINAL ISSUE............................23
SECTION 8.1 FORM OF DEBENTURE...........................................23
SECTION 8.2 ORIGINAL ISSUE OF DEBENTURES................................23
ARTICLE IX. CONCERNING THE TRUSTEE............................................23
SECTION 9.1 CERTAIN DUTIES AND RESPONSIBILITIES TRUSTEE.................23
SECTION 9.2 NOTICE OF DEFAULTS..........................................24
SECTION 9.3 CERTAIN RIGHTS OF TRUSTEE...................................24
SECTION 9.4 TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC...................25
SECTION 9.5 MAY HOLD DEBENTURES.........................................26
SECTION 9.6 MONEYS HELD IN TRUST........................................26
SECTION 9.7 COMPENSATION AND REIMBURSEMENT..............................26
SECTION 9.8 RELIANCE ON OFFICERS' CERTIFICATE...........................26
SECTION 9.9 DISQUALIFICATION; CONFLICTING INTERESTS.....................26
SECTION 9.10 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY....................26
SECTION 9.11 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR..........27
SECTION 9.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.....................28
SECTION 9.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS........................................................28
SECTION 9.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY......28
ARTICLE X. CONCERNING THE DEBENTUREHOLDERS....................................29
SECTION 10.1 EVIDENCE OF ACTION BY HOLDERS..............................29
SECTION 10.2 PROOF OF EXECUTION BY DEBENTUREHOLDERS.....................29
SECTION 10.3 WHO MAY BE DEEMED OWNERS...................................29
SECTION 10.4 CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED............30
SECTION 10.5 ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS.................31
ARTICLE XI. SUPPLEMENTAL INDENTURES...........................................30
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
DEBENTUREHOLDERS................................................30
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS...31
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURES..........................31
SECTION 11.4 DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.............31
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES.......................32
ARTICLE XII.. . SUCCESSOR CORPORATION.........................................32
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC...............................32
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED..........................32
SECTION 12.3 EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.................33
ARTICLE XIII. SATISFACTION AND DISCHARGE......................................33
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE....................33
SECTION 13.2 DISCHARGE OF OBLIGATIONS...................................33
SECTION 13.3 DEPOSITED MONEYS TO BE HELD IN TRUST.......................34
SECTION 13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS....................34
SECTION 13.5 REPAYMENT TO COMPANY.......................................34
ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS..34
SECTION 14.1 NO RECOURSE................................................34
ARTICLE XV. MISCELLANEOUS PROVISIONS..........................................35
SECTION 15.1 EFFECT ON SUCCESSORS AND ASSIGNS...........................35
SECTION 15.2 ACTIONS BY SUCCESSOR.......................................35
SECTION 15.3 SURRENDER OF COMPANY POWERS................................35
SECTION 15.4 NOTICES....................................................35
SECTION 15.5 GOVERNING LAW..............................................35
SECTION 15.6 TREATMENT OF DEBENTURES AS DEBT............................35
SECTION 15.7 COMPLIANCE CERTIFICATES AND OPINIONS.......................36
SECTION 15.8 PAYMENTS ON BUSINESS DAYS..................................36
SECTION 15.9 CONFLICT WITH TRUST INDENTURE ACT..........................36
SECTION 15.10 COUNTERPARTS..............................................36
SECTION 15.11 SEPARABILITY..............................................36
SECTION 15.12 ASSIGNMENT................................................36
SECTION 15.13 ACKNOWLEDGMENT OF RIGHTS; RIGHT OF SET-OFF................36
ARTICLE XVI. SUBORDINATION OF DEBENTURES......................................37
SECTION 16.1 AGREEMENT TO SUBORDINATE...................................37
SECTION 16.2 DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT ADDITIONAL
SENIOR OBLIGATIONS..............................................37
SECTION 16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.......................37
SECTION 16.4 SUBROGATION................................................38
SECTION 16.5 TRUSTEE TO EFFECTUATE SUBORDINATION........................39
SECTION 16.6 NOTICE BY THE COMPANY......................................39
SECTION 16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS......40
SECTION 16.8 SUBORDINATION MAY NOT BE IMPAIRED..........................40
</TABLE>
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<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- ------------------- ---------
<S> <C>
310(a).....................................................................9.10
310(b)................................................................9.9, 9.11
310(c)...........................................................Not Applicable
311(a).....................................................................9.14
311(b).....................................................................9.14
311(c)...........................................................Not Applicable
312(a)..............................................................6.1,.6.2(a)
312(b)...................................................................6.2(c)
312(c)...................................................................6.2(c)
313(a)...................................................................6.4(a)
313(b)...................................................................6.4(b)
313(c)...........................................................6.4(a),.6.4(b)
313(d)...................................................................6.4(c)
314(a)...................................................................6.3(a)
314(b)...........................................................Not Applicable
314(c)................................................................... 15.7
314(d)...........................................................Not Applicable
314(e)................................................................... 15.7
314(f)...........................................................Not Applicable
315(a)..............................................................9.1(a),.9.3
315(b)......................................................................9.2
315(c)...................................................................9.1(a)
315(d)...................................................................9.1(b)
315(e)......................................................................7.7
316(a).................................................................1.1,.7.6
316(b)...................................................................7.4(b)
316(c)..................................................................10.1(b)
317(a)......................................................................7.2
317(b)......................................................................5.3
318(a).....................................................................15.9
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Indenture and
shall not affect the interpretation of any of its terms or provisions.
-iv-
<PAGE>
INDENTURE
INDENTURE, dated as of __________, 1997, between SOUTHWEST BANCORP, INC., an
Oklahoma corporation (the "Company") and STATE STREET BANK AND TRUST COMPANY, a
trust company duly organized and existing under the laws of the Commonwealth of
Massachusetts, as trustee (the "Trustee");
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the execution and delivery of this Indenture to provide for the issuance of
securities to be known as its ____% Subordinated Debentures due 2027
(hereinafter referred to as the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture;
WHEREAS, SBI Capital Trust, a Delaware statutory business trust (the "Trust"),
has offered to the public $____ million aggregate liquidation amount of its
Preferred Securities (as defined herein) 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 $_____ million aggregate liquidation amount of its
Common Securities (as defined herein), in $_____ million aggregate principal
amount of the Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver this
Indenture; and
WHEREAS, all requirements necessary to make this Indenture a valid instrument
in accordance with its terms, and to make the Debentures, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been performed, and the execution and delivery of this
Indenture have been duly authorized in all respects:
WHEREAS, to provide the terms and conditions upon which the Debentures are to
be authenticated, issued and delivered, the Company has duly authorized the
execution 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
Debentures by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of the Debentures:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS OF TERMS
The terms defined in this Section 1.1 (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 1.1 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, or that are by reference in the Trust Indenture Act
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force at the
date of the execution of this instrument. All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with Generally Accepted Accounting Principles.
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<PAGE>
"Accelerated Maturity Date" means if the Company elects to accelerate the
Maturity Date in accordance with Section 2.2(c), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after July 31,
2002.
"Additional Interest" shall have the meaning set forth in Section 2.5.
"Additional Senior Obligations" means all indebtedness of the Company whether
incurred on or prior to the date of this Indenture or thereafter incurred, for
claims in respect of derivative products such as interest and foreign exchange
rate contracts, commodity contracts and similar arrangements; provided, however,
that Additional Senior Obligations does not include claims in respect of Senior
Debt or Subordinated Debt or obligations which, by their terms, are expressly
stated to be not superior in right of payment to the Debentures or to rank pari
passu in right of payment with the Debentures. For purposes of this definition,
"claim" shall have the meaning assigned thereto in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended.
"Administrative Trustees" shall have 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
Debentures appointed by the Trustee pursuant to Section 2.12.
"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, with respect to the Debentures, any day other than a
Saturday or a Sunday or a day on which federal or state banking institutions in
the City of New York, are authorized or required by law, executive order or
regulation to close, or a day on which the Corporate Trust Office of the Trustee
or the Property Trustee is closed for business.
"Capital Treatment Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm experienced in such matters to the effect that,
as a result of any amendment to or any change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities under the Trust Agreement, there is
more than an insubstantial risk of impairment of the Company's ability to treat
the aggregate Liquidation Amount of the Preferred Securities (or any substantial
portion thereof) as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then
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 of a Capital
Treatment Event if such
-2-
<PAGE>
inability results from the Company having cumulative preferred capital in excess
of the amount which may qualify for treatment as Tier 1 Capital under applicable
capital adequacy guidelines of the Federal Reserve.
"Certificate" means a certificate signed by the principal executive officer,
the principal financial officer, the principal accounting officer, the treasurer
or any vice president of the Company. The Certificate need not comply with the
provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the definition of
"Investment Company Event."
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" means undivided beneficial interests in the assets of the
Trust which rank pari passu with the Preferred Securities; provided, however,
that upon the occurrence of an Event of Default, the rights of holders of Common
Securities to payment in respect of (i) distributions, and (ii) payments upon
liquidation, redemption and otherwise, are subordinated to the rights of holders
of Preferred Securities.
"Company" means Southwest Bancorp, Inc., a corporation duly organized and
existing under the laws of the State of Oklahoma, 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 4.1.
"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at Two International Place, 4th
Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Custodian" means any receiver, trustee, assignee, liquidator, or similar
official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
"Debentureholder," "holder of Debentures," "registered holder," or other
similar term, means the Person or Persons in whose name or names a particular
Debenture shall be registered on the books of the Company or the Trustee kept
for that purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in Section 2.7(b).
"Debenture Registrar" shall have the meaning set forth in Section 2.7(b).
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
-3-
<PAGE>
"Default" means any event, act or condition that with notice or lapse of time,
or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"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 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.
"Distribution" shall have the meaning set forth in the Trust Agreement.
"Event of Default" means, with respect to the Debentures, any event specified
in Section 7.1, which has continued for the period of time, if any, and after
the giving of the notice, if any, therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as amended, as in
effect at the date of execution of this instrument.
"Extended Interest Payment Period" shall have the meaning set forth in Section
4.1.
"Extended Maturity Date" means if the Company elects to extend the Maturity
Date in accordance with Section 2.2(b), the date selected by the Company which
is after the Scheduled Maturity Date but before July 31, 2046.
"Federal Reserve" means the Board of Governors of the Federal Reserve System.
"Generally Accepted Accounting Principles" means such accounting principles as
are generally accepted at the time of any computation required hereunder.
"Governmental Obligations" means securities that are (i) direct obligations of
the United States of America for the payment of which its full faith and credit
is pledged; or (ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Herein," "hereof," and "hereunder," and other words of similar import, refer
to this Indenture as a whole and not to any particular Article, Section or other
subdivision.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into in accordance with the terms hereof.
"Interest Payment Date" shall have the meaning set forth in Section 2.5.
"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm experienced in such matters, to the effect that,
as a result of the occurrence of a change in law or regulation or a
-4-
<PAGE>
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), the Trust is or shall be considered an "investment company" that is
required to be registered under the Investment Company Act, which Change in 1940
Act Law becomes effective on or after the date of original issuance of the
Preferred Securities under the Trust Agreement.
"Maturity Date" means the date on which the Debentures mature and on which the
principal shall be due and payable together with all accrued and unpaid interest
thereon including Compounded Interest and Additional Interest, if any.
"Ministerial Action" shall have the meaning set forth in Section 3.2.
"Officers' Certificate" means a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary of the Company
that is delivered to the Trustee in accordance with the terms hereof. Each such
certificate shall include the statements provided for in Section 15.7, if and to
the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal counsel, who may be
an employee of or counsel for the Company, that is delivered to the Trustee in
accordance with the terms hereof. Each such opinion shall include the statements
provided for in Section 15.7, if and to the extent required by the provisions
thereof.
"Outstanding," when used with reference to the Debentures, means, subject to
the provisions of Section 10.4, as of any particular time, all Debentures
theretofore authenticated and delivered by the Trustee under this Indenture,
except (a) 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) 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 Debentures or portions of such Debentures are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been given as in Article III provided, or provision satisfactory to the Trustee
shall have been made for giving such notice; and (c) Debentures in lieu of or in
substitution for which other Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.7.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant to
Section 5.3.
"Person" means any individual, corporation, partnership, joint-venture, joint-
stock company, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Debenture" means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such particular Debenture; and,
for the purposes of this definition, any Debenture authenticated and delivered
under Section 2.9 in lieu of a lost, destroyed or stolen Debenture shall be
deemed to evidence the same debt as the lost, destroyed or stolen 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 (i) distributions, and
(ii) payments upon liquidation, redemption and otherwise, are subordinated to
the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company may
enter into with the Trustee or other Persons that operate directly or indirectly
for the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust Agreement.
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"Responsible Officer" when used with respect to the Trustee means the Chairman
of the Board of Directors, the President, any Vice President, the Secretary, the
Treasurer, any trust officer, any corporate trust officer or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means July 31, 2027.
"Securities Act," means the Securities Act of 1933, as amended, as in effect
at the date of execution of this instrument.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of 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 Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt of the Company which, when
incurred and without respect to any election under section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company;
(ii) any Debt of the Company to any of its subsidiaries; (iii) Debt to any
employee of the Company; (iv) 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 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;
and (v) Debt which constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in Section 16.1.
"Special Event" means a Tax Event, a Capital Treatment Event or an Investment
Company Event.
"Subordinated Debt" means the principal of (and premium, if any) and interest,
if any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of this Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Debentures).
"Subsidiary" means, with respect to any Person, (i) any corporation at least a
majority of whose outstanding Voting Stock shall at the time be owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries; (ii) any general partnership, joint
venture, trust or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or
by one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel, rendered
by a law firm experienced in such matters, to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or shall 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 Debentures; (ii) interest
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payable by the Company on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, shall not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes; or (iii) the
Trust is, or shall be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges. The Trust or the Company shall request and receive
such Opinion of Counsel with regard to such matters within a reasonable period
of time after the Trust or the Company shall have become aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.
"Trust" means SBI Capital Trust, a Delaware statutory business trust.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
____________, 1997, of the Trust.
"Trustee" means State Street Bank and 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 amended,
subject to the provisions of Sections 11.1, 11.2, and 12.1, as in effect at the
date of execution of this instrument.
"Trust Securities" means the Common Securities and Preferred Securities,
collectively.
"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
ISSUE, DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE DEBENTURES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT
There is hereby authorized Debentures designated the "___% Subordinated
Debentures due 2027," limited in aggregate principal amount up to $______
million, which amount shall be as set forth in any written order of the Company
for the authentication and delivery of Debentures pursuant to Section 2.6.
SECTION 2.2. MATURITY
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date; or
(iii) if the Company elects to accelerate the Maturity Date to be a date
prior to the Scheduled Maturity Date in accordance with Section
2.2(c), 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 extend the Maturity Date to the Extended
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, and further provided that
the following conditions in this Section 2.2(b) are satisfied both
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at the date the Company gives notice in accordance with Section 2.2(d) of
its election to extend the Maturity Date and at the Scheduled Maturity
Date:
(i) the Company is not in bankruptcy, otherwise insolvent or in
liquidation;
(ii) the Company is not in default in the payment of interest or
principal on the Debentures;
(iii) the Trust is not in arrears on payments of Distributions on the
Trust Securities issued by it and no deferred Distributions are
accumulated; and
(iv) the Company has a rating on its Senior Debt of investment grade.
(c) The Company may, on one occasion, at any time before the day which is 90
days before the Scheduled Maturity Date and after July 31, 2002, elect to
shorten the Maturity Date 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.
(d) If the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to the registered holders of
the Debentures, the Property Trustee and the Trust of the extension of the
Maturity Date and the Extended Maturity Date at least 90 days and no more
than 180 days before the Scheduled Maturity Date.
(e) If the Company elects to accelerate the Maturity Date in accordance with
Section 2.2(c), the Company shall give notice to the registered holders of
the Debentures, the Property Trustee and the Trust of the acceleration of
the Maturity Date and the Accelerated Maturity Date at least 90 days and
no more than 180 days before the Accelerated. Maturity Date.
SECTION 2.3. FORM AND PAYMENT
The Debentures shall be issued in fully registered certificated form without
interest coupons. Principal and interest on the Debentures issued in
certificated form shall be payable, the transfer of such Debentures shall be
registrable and such Debentures shall be exchangeable for 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 Debenture
Register or by wire transfer to an account maintained by the holder as specified
in the Debenture Register, provided that the holder provides proper transfer
instructions by the regular record date. Notwithstanding the foregoing, so long
as the holder of any Debentures is the Property Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Property Trustee shall be made
at such place and to such account as may be designated by the Property Trustee.
SECTION 2.4. [Intentionally Omitted]
SECTION 2.5. INTEREST
(a) Each Debenture shall 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 January 31,
April 30, July 31, and October 31 of each year (each, an "Interest Payment
Date," commencing on July 31, 1997), to the Person in whose name such Debenture
or any Predecessor Debenture is registered, at the close of business on the
regular record date for such interest installment, which shall be the fifteenth
day of the last month of the calendar quarter.
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(b) The amount of interest payable for any period shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed shall be computed on the basis of the number of days elapsed in a 360-
day year of twelve 30-day months. In the event that any date on which interest
is payable on the Debentures is not a Business Day, then payment of interest
payable on such date shall 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) with the same force and effect as if made on the date such payment was
originally payable.
(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company shall pay as additional interest ("Additional
Interest") on the 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 shall 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.
SECTION 2.6. EXECUTION AND AUTHENTICATIONS
(a) The Debentures shall be signed on behalf of the Company by its Chief
Executive Officer, President or one of its Vice Presidents, under its corporate
seal attested by its Secretary or one of its Assistant Secretaries. Signatures
may be in the form of a manual or facsimile signature. The Company may use the
facsimile signature of any Person who shall have been a Chief Executive Officer,
President or Vice President thereof, or of any Person who shall have been a
Secretary or Assistant Secretary thereof, notwithstanding the fact that at the
time the Debentures shall be authenticated and delivered or disposed of such
Person shall have ceased to be the Chief Executive Officer, President or a Vice
President, or the Secretary or an Assistant Secretary, of the Company. The seal
of the Company may be in the form of a facsimile of such seal and may be
impressed, affixed, imprinted or otherwise reproduced on the Debentures. The
Debentures may contain such notations, legends or endorsements required by law,
stock exchange rule or usage. Each Debenture shall be dated the date of its
authentication by the Trustee.
(b) A Debenture shall not be valid until manually authenticated by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.
(c) At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Debentures executed by the Company to the
Trustee for authentication, together with a written order of the Company for the
authentication and delivery of such Debentures signed by its Chief Executive
Officer, President or any Vice President and its Treasurer or any Assistant
Treasurer, and the Trustee in accordance with such written order shall
authenticate and deliver such Debentures.
(d) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
(e) The Trustee shall not be required to authenticate such Debentures if the
issue of such Debentures pursuant to this Indenture shall affect the Trustee's
own rights, duties or immunities under the Debentures and this Indenture or
otherwise in a manner that is not reasonably acceptable to the Trustee.
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SECTION 2.7. REGISTRATION OF TRANSFER AND EXCHANGE
(a) Debentures may be exchanged upon presentation thereof at the office or
agency of the Company designated for such purpose in the Borough of Manhattan,
the City of New York, or at the office of the Debenture Registrar, for other
Debentures and for a like aggregate principal amount, upon payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
all as provided in this Section 2.7. In respect of any Debentures so surrendered
for exchange, the Company shall execute, the Trustee shall authenticate and such
office or agency shall deliver in exchange therefor the Debenture or Debentures
that the Debentureholder making the exchange shall be entitled to receive,
bearing numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or agency
designated for such purpose in the Borough of Manhattan, the City of New York,
or at the office of the Debenture Registrar, or such other location designated
by the Company a register or registers (herein referred to as the "Debenture
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall register the Debentures and the transfers of Debentures as in
this Article II provided and which at all reasonable times shall be open for
inspection by the Trustee. The registrar for the purpose of registering
Debentures and transfer of Debentures as herein provided shall initially be the
Trustee and thereafter as may be appointed by the Company as authorized by Board
Resolution (the "Debenture Registrar"). Upon surrender for transfer of any
Debenture at the office or agency of the Company designated for such purpose,
the Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new
Debenture or Debentures for a like aggregate principal amount. All Debentures
presented or surrendered for exchange or registration of transfer, as provided
in this Section 2.7, shall be accompanied (if so required by the Company or the
Debenture Registrar) by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Debenture Registrar, duly executed by the
registered holder or by such holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial
redemption, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.8, Section 3.5(b) and Section 11.4 not involving any
transfer.
(d) The Company shall not be required (i) to issue, exchange or register the
transfer of any Debentures during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of less than all
the Outstanding Debentures and ending at the close of business on the day of
such mailing; nor (ii) to register the transfer of or exchange any Debentures or
portions thereof called for redemption.
SECTION 2.8. TEMPORARY DEBENTURES
Pending the preparation of definitive Debentures, the Company may execute, and
the Trustee shall authenticate and deliver, temporary Debentures (printed,
lithographed, or typewritten). Such temporary Debentures shall be substantially
in the form of the definitive Debentures in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Debentures, all as may be determined by the Company. Every temporary
Debenture shall be executed by the Company and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Debentures. Without unnecessary delay the Company
shall execute and shall furnish definitive Debentures and thereupon any or all
temporary Debentures may be surrendered in exchange therefor (without charge to
the holders), at the office or agency of the Company designated for the purpose
in the Borough of Manhattan, the City of New York, and the Trustee shall
authenticate and such office or agency shall deliver in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures, unless the Company advises the Trustee to the effect that definitive
Debentures need not be executed and furnished until further notice from the
Company. Until so exchanged, the temporary Debentures shall be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder.
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SECTION 2.9. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES
(a) In case any temporary or definitive Debenture shall become mutilated or be
destroyed, lost or stolen, the Company (subject to the next succeeding sentence)
shall execute, and upon the Company's request the Trustee (subject as aforesaid)
shall authenticate and deliver, a new Debenture bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debenture, or in lieu of and in substitution for the Debenture so destroyed,
lost or stolen. In every case the applicant for a substituted Debenture shall
furnish to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
the applicant's Debenture and of the ownership thereof. The Trustee may
authenticate any such substituted Debenture and deliver the same upon the
written request or authorization of the Chairman, President or any Vice
President and the Treasurer or any Assistant Treasurer of the Company. Upon the
issuance of any substituted Debenture, 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. In case any Debenture that has matured or is
about to mature shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Debenture, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Debenture) if the applicant for such payment shall furnish to the Company and
the Trustee such security or indemnity as they may require to save them
harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Debenture and of the ownership thereof.
(b) Every replacement Debenture issued pursuant to the provisions of this
Section 2.9 shall constitute an additional contractual obligation of the Company
whether or not the mutilated, destroyed, lost or stolen Debenture shall be found
at any time, or be enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Debentures duly issued hereunder. All Debentures shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.10. CANCELLATION
All Debentures surrendered for the purpose of payment, redemption, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent, be delivered to the Trustee for cancellation, or, if surrendered to the
Trustee, shall be canceled by it, and no Debentures shall be issued in lieu
thereof except as expressly required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the
Trustee shall deliver to the Company canceled Debentures held by the Trustee. In
the absence of such request the Trustee may dispose of canceled Debentures in
accordance with its standard procedures and deliver a certificate of disposition
to the Company. If the Company shall otherwise acquire any of the Debentures,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.
SECTION 2.11. BENEFIT OF INDENTURE
Nothing in this Indenture or in the Debentures, express or implied, shall give
or be construed to give to any Person, other than the parties hereto and the
holders of the Debentures (and, with respect to the provisions of Article XVI,
the holders of Senior Indebtedness) any legal or equitable right, remedy or
claim under or in respect of this Indenture, or under any covenant, condition or
provision herein contained; all such covenants, conditions and provisions being
for the sole benefit of the parties hereto and of the holders of the Debentures
(and, with respect to the provisions of Article XVI, the holders of Senior
Indebtedness).
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SECTION 2.12. AUTHENTICATION AGENT
(a) So long as any of the Debentures remain Outstanding there may be an
Authenticating Agent for any or all such Debentures, which the Trustee shall
have the right to appoint. Said Authenticating Agent shall be authorized to act
on behalf of the Trustee to authenticate Debentures issued upon exchange,
transfer or partial redemption thereof, and 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. All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall be a corporation that has a
combined capital and surplus, as most recently reported or determined by it,
sufficient under the laws of any jurisdiction under which it is organized or in
which it is doing business to conduct a trust business, and that is otherwise
authorized under such laws to conduct such business and is subject to
supervision or examination by federal or state authorities. If at any time any
Authenticating Agent shall cease to be eligible in accordance with these
provisions, it shall resign immediately.
(b) Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
(and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
ARTICLE III.
REDEMPTION OF DEBENTURES
SECTION 3.1. REDEMPTION
Subject to the Company having received prior approval of the Federal Reserve,
if then required under the applicable capital guidelines or policies of the
Federal Reserve, the Company may redeem the Debentures issued hereunder on and
after the dates set forth in and in accordance with the terms of this Article
III.
SECTION 3.2. SPECIAL EVENT REDEMPTION
Subject to the Company having received the prior approval of the Federal
Reserve, if then required under the applicable capital guidelines or policies of
the Federal Reserve, if a Special Event has occurred and is continuing, then,
notwithstanding Section 3.3(a) but subject to Section 3.3(b), the Company shall
have the right upon not less than 30 days nor more than 60 days notice to the
holders of the Debentures to redeem the Debentures, in whole but not in part,
for cash within 180 days following the occurrence of such Special Event (the
"180-Day Period") at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest thereon to the date of such
redemption (the "Redemption Price"), provided that if at the time there is
available to the Company the opportunity to eliminate, within the 180-Day
Period, a Tax Event by taking some ministerial action (a "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 Debentures while the Trust is pursuing
any Ministerial Action pursuant to its obligations under the Trust Agreement.
The Redemption Price shall be paid prior to 12:00 noon, New York 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 10:00 a.m., New York time, on the date such Redemption Price
is to be paid.
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SECTION 3.3. OPTIONAL REDEMPTION BY COMPANY
(a) Subject to the provisions of Section 3.3(b), except as otherwise may be
specified in this Indenture, the Company shall have the right to redeem the
Debentures, in whole or in part, from time to time, on or after June 30, 2002,
at a Redemption Price equal to 100% of the principal amount to be redeemed plus
any accrued and unpaid interest thereon to the date of such redemption. Any
redemption pursuant to this Section 3.3(a) shall be made upon not less than 30
days nor more than 60 days notice to the holder of the Debentures, at the
Redemption Price. If the Debentures are only partially redeemed pursuant to this
Section 3.3, the Debentures shall be redeemed pro rata or by lot or in such
other manner as the Trustee shall deem appropriate and fair in its discretion.
The Redemption Price shall be paid prior to 12:00 noon, New York 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 10:00 a.m., New York time, on the date such
Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the delisting of
the Preferred Securities issued by the Trust from The Nasdaq Stock Market's
National Market or any national securities exchange or other organization on
which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
SECTION 3.4. NOTICE OF REDEMPTION
(a) In case the Company shall desire to exercise such right to redeem all or,
as the case may be, a portion of the Debentures in accordance with the right
reserved so to do, the Company shall, or shall cause the Trustee to, upon
receipt of 45 days' written notice from the Company (which notice shall, in the
event of a partial redemption, include a representation to the effect that such
partial redemption shall not result in the delisting of the Preferred Securities
as described in Section 3.3(b) above), give notice of such redemption to holders
of the 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 Debenture Register unless a shorter period is
specified in the Debentures to be redeemed. 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 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 Debentures. In
the case of any redemption of Debentures prior to the expiration of any
restriction on such redemption provided in the terms of such Debentures or
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 shall be
made at the office or agency of the Company in the Borough of Manhattan, the
City of New York or at the Corporate Trust Office, upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption shall be paid as specified in said notice and that from and after
said date interest shall cease to accrue. If less than all the Debentures are to
be redeemed, the notice to the holders of the Debentures shall specify the
particular Debentures to be redeemed. If the Debentures are to be redeemed in
part only, the notice 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 Debenture, a new Debenture or Debentures in principal amount
equal to the unredeemed portion thereof shall be issued.
(b) If less than all the 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 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, the portion or portions (equal to $25 or
any integral multiple thereof) of the Debentures to be redeemed and shall
thereafter promptly notify the Company in writing of the numbers of the
Debentures to be redeemed, in whole or in part. The Company may, if and whenever
it shall so elect pursuant to the terms hereof, by delivery of instructions
signed on its behalf by its President or any Vice President, instruct the
Trustee or any paying agent to call all or any part of the Debentures for
redemption and to give notice of redemption in the manner set forth in this
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Section 3.4, such notice to be in the name of the Company or its own name 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 Debenture 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 3.4.
SECTION 3.5. PAYMENT UPON REDEMPTION
(a) If the giving of notice of redemption shall have been completed as above
provided, the Debentures or portions of 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 applicable Redemption Price, and interest on such Debentures
or portions of 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 Debenture or portion thereof. On presentation and
surrender of such Debentures on or after the date fixed for redemption at the
place of payment specified in the notice, said Debentures shall be paid and
redeemed at the Redemption Price (but if the date fixed for redemption is an
interest payment date, the interest installment payable on such date shall be
payable to the registered holder at the close of business on the applicable
record date pursuant to Section 3.3).
(b) Upon presentation of any 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 Debenture is presented shall deliver to the holder thereof, at
the expense of the Company, a new Debenture of authorized denomination in
principal amount equal to the unredeemed portion of the Debenture so presented.
SECTION 3.6. NO SINKING FUND
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE IV.
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time and from time to time during the term of the
Debentures, to defer payments of interest by extending the interest payment
period of such 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. Interest, the payment of
which has been deferred because of the extension of the interest payment period
pursuant to this Section 4.1, shall 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 calculate (and deliver such calculation to the Trustee) and pay
all interest accrued and unpaid on the Debentures, including any Additional
Interest and Compounded Interest (together, "Deferred Interest") that shall be
payable to the holders of the Debentures in whose names the Debentures are
registered in the Debenture Register on the first record date after 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 of the
Debentures. 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.
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SECTION 4.2. NOTICE OF EXTENSION
(a) If the Property Trustee is the only registered holder of the Debentures at
the time the Company elects an Extended Interest Payment Period, the Company
shall give written notice to the Administrative Trustees, the Property Trustee
and the Trustee of its election of such Extended Interest Payment Period two
Business Days before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust 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 Nasdaq Stock Market's National Market or
other applicable self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least one Business Day
before such record date.
(b) If the Property Trustee is not the only holder of the Debentures at the
time the Company elects an Extended Interest Payment Period, the Company shall
give the holders of the Debentures and the Trustee written notice of its
election of such Extended Interest Payment Period at least two 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 Nasdaq Stock Market's National Market or other
applicable self-regulatory organization or to holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a) or (b)
of this Section 4.2 shall be counted as one of the 20 quarters permitted in the
maximum Extended Interest Payment Period permitted under Section 4.1.
SECTION 4.3. LIMITATION ON TRANSACTIONS
If (i) the Company shall exercise its right to defer payment of interest as
provided in Section 4.1; or (ii) there shall have occurred any Event of Default,
then (a) the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock; (b) the Company
shall not make any payment of interest, principal or premium, if any, or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Debentures; provided, however, that notwithstanding
the foregoing the Company may make payments pursuant to its obligations under
the Preferred Securities Guarantee; and (c) the Company shall not redeem,
purchase or acquire less than all of the Outstanding Debentures or any of the
Preferred Securities.
ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST
The Company shall duly and punctually pay or cause to be paid the principal of
and interest on the Debentures at the time and place and in the manner provided
herein.
SECTION 5.2. MAINTENANCE OF AGENCY
So long as any of the Debentures remain Outstanding, the Company shall
maintain an office or agency in the Borough of Manhattan, the City of New York,
and at such other location or locations as may be designated as provided in this
Section 5.2, where (i) Debentures may be presented for payment; (ii) Debentures
may be presented as hereinabove authorized for registration of transfer and
exchange; and (iii) notices and demands to or upon the Company in respect of the
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 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. In addition to any such
office or agency, the Company may from time to time designate one or more
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offices or agencies outside of the Borough of Manhattan, the City of New York,
where the Debentures may be presented for registration or transfer and for
exchange in the manner provided herein, and the Company may from time to time
rescind such designation as the Company may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any such office or agency in
the Borough of Manhattan, the City of New York, for the purposes above
mentioned. The Company shall give the Trustee prompt written notice of any such
designation or rescission thereof.
SECTION 5.3. PAYING AGENTS
(a) The Trustee shall act as the Paying Agent. If the Company shall appoint
one or more paying agents for the Debentures, other than the Trustee, the
Company shall 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 5.3:
(i) that it shall hold all sums held by it as such agent for the payment of
the principal of or interest on the Debentures (whether such sums have been paid
to it by the Company or by any other obligor of such Debentures) in trust for
the benefit of the Persons entitled thereto;
(ii) that it shall give the Trustee notice of any failure by the Company (or
by any other obligor of such Debentures) to make any payment of the principal of
or interest on the Debentures when the same shall be due and payable;
(iii) that it shall, 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 shall 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
Debentures, it shall on or before each due date of the principal of or interest
on such 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 on Debentures until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and shall promptly notify the Trustee
of such action, or any failure (by it or any other obligor on such Debentures)
to take such action. Whenever the Company shall have one or more Paying Agents
for the Debentures, it shall, prior to each due date of the principal of or
interest on any 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 shall promptly notify the Trustee
of this action or failure so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary, (i) the
agreement to hold sums in trust as provided in this Section 5.3 is subject to
the provisions of Section 13.3 and 13.4; 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.
SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, shall appoint, in the manner provided in Section 9.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS
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The Company shall not, while any of the 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.
SECTION 5.6. LIMITATION ON TRANSACTIONS
If Debentures are issued to the Trust or a trustee of the Trust in connection
with the issuance of Trust Securities by the Trust and (i) there shall have
occurred any event that would constitute an Event of Default; (ii) the Company
shall be in default with respect to its payment of any obligations under the
Preferred Securities Guarantee relating to the Trust; or (iii) the Company shall
have given notice of its election to defer payments of interest on such
Debentures by extending the interest payment period as provided in this
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock; (b) the Company shall not make any payment
of interest, principal or premium, if any, or repay, repurchase or redeem any
debt securities issued by the Company which rank pari passu with or junior to
the Debentures; provided, however, that the Company may make payments pursuant
to its obligations under the Preferred Securities Guarantee; and (c) the Company
shall not redeem, purchase or acquire less than all of the Outstanding
Debentures or any of the Preferred Securities.
SECTION 5.7. COVENANTS AS TO THE TRUST
For so long as the Trust Securities of the Trust remain outstanding, the
Company shall (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of the
Company under this Indenture may succeed to the Company's ownership of the
Common Securities; (ii) not voluntarily terminate, wind up or liquidate the
Trust, except upon prior approval of the Federal Reserve, if then so required
under applicable capital guidelines or policies of the Federal Reserve, and use
its reasonable efforts to cause the Trust (a) to remain a business trust, except
in connection with a distribution of Debentures, the redemption of all of the
Trust Securities of the Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Trust Agreement; and (b) to otherwise
continue not to be treated as an association taxable as a corporation for United
States federal income tax purposes; and (iii) use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an individual
beneficial interest in the Debentures. In connection with the distribution of
the Debentures to the holders of the Preferred Securities issued by the Trust
upon a Dissolution Event, the Company shall use its best efforts to list such
Debentures on The Nasdaq Stock Market's National Market or on such other
exchange as the Preferred Securities are then listed.
SECTION 5.8. COVENANTS AS TO PURCHASES
Except upon the exercise by the Company of its right to redeem the Debentures
pursuant to Section 3.2 upon the occurrence and continuation of a Special Event,
the Company shall not purchase any Debentures, in whole or in part, from the
Trust prior to July 31, 2002.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 6.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF DEBENTUREHOLDERS.
The Company shall furnish or cause to be furnished to the Trustee (a) on a
quarterly basis on each regular record date (as described in Section 2.5) a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of the Debentures 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 (in the event the
Company fails to provide such list on a monthly
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basis, the Trustee shall be entitled to rely on the most recent list provided 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 Debenture Registrar.
SECTION 6.2. PRESERVATION OF INFORMATION; COMMUNICATIONS WITH DEBENTUREHOLDERS
(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 of
Debentures contained in the most recent list furnished to it as provided in
Section 6.1 and as to the names and addresses of holders of Debentures received
by the Trustee in its capacity as Debenture Registrar for the Debentures (if
acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in Section
6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b) of the
Trust Indenture Act with other Debentureholders with respect to their rights
under this Indenture or under the Debentures.
SECTION 6.3. REPORTS BY THE COMPANY
(a) The Company covenants and agrees to file with the Trustee, within 15 days
after the Company is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) that the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports pursuant to either of such sections, then to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports that may be required pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to time
by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class postage
prepaid, or reputable overnight delivery service that provides for evidence of
receipt, to the Debentureholders, as their names and addresses appear upon the
Debenture 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 6.3 as may be
required by rules and regulations prescribed from time to time by the
Commission.
SECTION 6.4. REPORTS BY THE TRUSTEE
(a) On or before July 15 in each year in which any of the Debentures are
Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register, a brief report dated as of the preceding May 15, 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.
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(c) A copy of each such report shall, at the time of such transmission to
Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT
(a) Whenever used herein with respect to the Debentures, "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 Debentures, as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the Company
in accordance with the terms of this Indenture shall not constitute a default
in the payment of interest for this purpose;
(ii) the Company defaults in the payment of the principal on the
Debentures as and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise; provided, however,
that a valid extension of the maturity of such Debentures in accordance with
the terms of this Indenture shall not constitute a default in the payment of
principal;
(iii) the Company fails to observe or perform any other of its
covenants or agreements with respect to the 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 Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case; (ii) consents to the entry of an order for
relief against it in an involuntary case; (iii) consents to the appointment of
a Custodian of it or for all or substantially all of its property; or (iv)
makes a general assignment for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in an involuntary
case; (ii) appoints a Custodian of the Company for all or substantially all of
its property; or (iii) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 90 days; or
(vi) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of Debentures to holders of Trust
Securities in liquidation of their interests in the Trust; (ii) the redemption
of all of the outstanding Trust Securities of the Trust; or (iii) 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 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 Debentures then
Outstanding hereunder, by notice in writing to the Company (and to the Trustee
if given by such Debentureholders) may declare the principal of all the
Debentures to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, notwithstanding
anything contained in this Indenture or in the Debentures.
(c) At any time after the principal of the 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,
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the holders of a majority in aggregate principal amount of the Debentures then
Outstanding hereunder, 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 Debentures and the principal of any and
all Debentures that shall have become due otherwise than by acceleration (with
interest upon such principal, and upon overdue installments of interest, at the
rate per annum expressed in the Debentures to the date of such payment or
deposit) and the amount payable to the Trustee under Section 9.7; and (ii) any
and all Events of Default under this Indenture, other than the nonpayment of
principal on Debentures that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 7.6. 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 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 to their
respective 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.
SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
(a) The Company covenants that (1) in case it shall default in the payment of
any installment of interest on any of the Debentures, and such default shall
have continued for a period of 90 Business Days; or (2) in case it shall default
in the payment of the principal of any of the Debentures when the same shall
have become due and payable, whether upon maturity of the Debentures or upon
redemption or upon declaration or otherwise, then, upon demand of the Trustee,
the Company shall pay to the Trustee, for the benefit of the holders of the
Debentures, the whole amount that then shall have been become due and payable on
all such Debentures for principal or interest, or both, as the case may be, with
interest upon the overdue principal and upon overdue installments of interest at
the rate per annum expressed in the Debentures; and (if the 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) 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 9.7.
(b) If the Company shall fail to pay such amounts set forth in Section 7.2(a)
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 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 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 thereof, 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 the 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 9.7; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of the Debentures 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 Debentureholders, to pay to the Trustee any amount due it under Section
9.7.
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(d) All rights of action and of asserting claims under this Indenture, or
under any of the terms established with respect to Debentures, may be enforced
by the Trustee without the possession of any of such 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 9.7, be
for the ratable benefit of the holders of the Debentures. In case of an Event of
Default hereunder, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law. Nothing contained herein shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Debentureholder in
any such proceeding.
SECTION 7.3. APPLICATION OF MONEYS COLLECTED
Any moneys collected by the Trustee pursuant to this Article VII with respect
to the 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 Debentures, and notation
thereon of 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 9.7;
SECOND: To the payment of all Senior Indebtedness 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 the
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
Debentures for principal and interest, respectively.
SECTION 7.4. LIMITATION ON SUITS
(a) Except as provided in Section 15.13 hereof, no holder of any Debenture
shall have any right by virtue or by availing of any provision of this Indenture
to institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Debentures specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than 25% in
aggregate principal amount of the Debentures then Outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as trustee hereunder; (iii) such holder or holders shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby; and (iv) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding;
and (v) during such 60 day period, the holders of a majority in principal amount
of the Debentures do not give the Trustee a direction inconsistent with the
request.
(b) Notwithstanding anything contained herein to the contrary or any other
provisions of this Indenture, the right of any holder of the Debentures to
receive payment of the principal of and interest on the Debentures, as therein
provided, on or after the respective due dates expressed in such Debenture (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
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redemption date, shall not be impaired or affected without the consent of such
holder and by accepting a Debenture hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Debenture with every
other such taker and holder and the Trustee, that no one or more holders of
Debentures shall have any right in any manner whatsoever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of the holders of any other of such Debentures, or to obtain or seek to
obtain priority over or preference to any other such holder, 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 Debentures. For the
protection and enforcement of the provisions of this Section 7.4, each and every
Debentureholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER
(a) All powers and remedies given by this Article VII to the Trustee or to the
Debentureholders 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 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 Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
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 an acquiescence
therein; and, subject to the provisions of Section 7.4, every power and remedy
given by this Article VII or by law to the Trustee or the Debentureholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Debentureholders.
SECTION 7.6. CONTROL BY DEBENTUREHOLDERS
The holders of a majority in aggregate principal amount of the Debentures at
the time Outstanding, determined in accordance with Section 10.4, shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee; provided, however, that such direction shall not be in conflict
with any rule of law or with this Indenture. Subject to the provisions of
Section 9.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability. The holders of a majority in aggregate
principal amount of the Debentures at the time Outstanding affected thereby,
determined in accordance with Section 10.4, may on behalf of the holders of all
of the Debentures waive any past default in the performance of any of the
covenants contained herein and its consequences, except (i) a default in the
payment of the principal of or interest on, any of the Debentures as and when
the same shall become due by the terms of such Debentures otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal has been deposited with the
Trustee (in accordance with Section 7.1(c)); (ii) a default in the covenants
contained in Section 5.6; or (iii) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Outstanding Debenture affected; provided, however, that if the 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
preference 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 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 Debentures shall be restored to their
respective former positions and rights hereunder; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
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SECTION 7.7. UNDERTAKING TO PAY COSTS
All parties to this Indenture agree, and each holder of any 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 7.8 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders holding more than 10% in aggregate principal amount of the
Outstanding Debentures, or to any suit instituted by any Debentureholder for the
enforcement of the payment of the principal of or interest on the Debentures, on
or after the respective due dates expressed in such Debenture or established
pursuant to this Indenture.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
SECTION 8.1. FORM OF DEBENTURE
The Debenture and the Trustee's Certificate of Authentication to be endorsed
thereon are to be substantially in the forms contained as Exhibit A attached
hereto and incorporated herein by reference.
SECTION 8.2. ORIGINAL ISSUE OF DEBENTURES.
Debentures in the aggregate principal amount of $______ may, upon execution of
this Indenture, be executed by the Company and delivered to the Trustee for
authentication. If the Underwriters exercise their Option and there is an
Option Closing Date (as such terms are defined in Underwriting Agreement, dated
______________, 1997, by and among the Company, the Trust and Stifel Nicolaus &
Company, Incorporated, for itself and as representative of the Underwriters
named therein) then, on such Option Closing Date, Debentures in the additional
aggregate principal amount of $_______ may be executed by the Company and
delivered to the Trustee for authentication. In either such event, the Trustee
shall thereupon authenticate and deliver said Debentures to or upon the written
order of the Company, signed by its Chairman, its Vice Chairman, its President,
or any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES 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 Debentures such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants shall be read
into this Indenture against the Trustee. In case an Event of Default has
occurred that has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(1) 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:
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(i) the duties and obligations of the Trustee shall with respect to
the Debentures be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable with respect to the
Debentures 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
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to the Debentures 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
requirements of this Indenture;
(2) 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;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
the holders of not less than a majority in principal amount of the Debentures
at the time Outstanding relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Indenture with respect to
the Debentures; and
(4) 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.
SECTION 9.2. NOTICE OF DEFAULTS
Within 90 days after actual knowledge by a Responsible Officer of the Trustee
of the occurrence of any default hereunder with respect to the Debentures, the
Trustee shall transmit by mail to all holders of the Debentures, as their names
and addresses appear in the Debenture 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 or interest (including any
Additional Interest) on any Debenture, 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 the directors and/or Responsible Officers of
the Trustee determines in good faith that the withholding of such notice is in
the interests of the holders of such Debentures; and provided, further, that in
the case of any default of the character specified in section 7.1(a)(iii), no
such notice to holders of Debentures need be sent until at least 30 days after
the occurrence thereof. For the purposes of this Section 9.2, the term "default"
means any event which is, or after notice or lapse of time or both, would
become, an Event of Default with respect to the Debentures.
SECTION 9.3. CERTAIN RIGHTS OF TRUSTEE
Except as otherwise provided in Section 9.1:
(a) The Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, security or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by a Board Resolution or an instrument signed in
the name of the Company by the President or any Vice President and
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by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a default or an Event
of Default, other than an Event of Default specified in Section 7.1(a)(i); or
(ii), unless and until it receives written notification of such Event of Default
from the Company or by holders of at least 25% of the aggregate principal amount
of the Debentures at the time Outstanding;
(d) 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;
(e) The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request, order or direction of any
of the Debentureholders, pursuant to the provisions of this Indenture, unless
such Debentureholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default (that has not been
cured or waived) to exercise with respect to the Debentures such of the rights
and powers vested in it by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(f) 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;
(g) 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 Debentures
(determined as provided in Section 10.4); provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a condition
to so proceeding. The reasonable expense of every such examination shall be paid
by the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(h) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys, and
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.
SECTION 9.4. TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC
(a) The Recitals contained herein and in the 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 Debentures.
(c) The Trustee shall not be accountable for the use or application by the
Company of any of the Debentures or of the proceeds of such 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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SECTION 9.5. MAY HOLD DEBENTURES
The Trustee or any Paying Agent or Debenture Registrar for the Debentures, in
its individual or any other capacity, may become the owner or pledgee of
Debentures with the same rights it would have if it were not Trustee, Paying
Agent or Debenture Registrar.
SECTION 9.6. MONEYS HELD IN TRUST
Subject to the provisions of Section 13.5, all moneys received by the Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
SECTION 9.7. 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
shall 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 9.7 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
SECTION 9.8. RELIANCE ON OFFICERS' CERTIFICATE
Except as otherwise provided in Section 9.1, whenever in the administration of
the provisions of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting to take any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers' Certificate delivered to the Trustee and
such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.
SECTION 9.9. 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.
SECTION 9.10. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY
There shall at all times be a Trustee with respect to the 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
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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 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.11.
SECTION 9.11. 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 Debentureholders, as
their names and addresses appear upon the Debenture Register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee with respect to Debentures 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 with respect to Debentures, or any Debentureholder who has
been a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 9.9, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section 9.9
after written request therefor by the Company or by any Debentureholder who
has been a bona fide holder of a Debenture or Debentures for at least six
months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 9.10 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder; 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 with
respect to all Debentures 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 9.9,
unless the Trustee's duty to resign is stayed as provided herein, any
Debentureholder who has been a bona fide holder of a Debenture or Debentures
for at least six months may, on behalf of that holder and all others similarly
situated, 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 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.
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(d) Any resignation or removal of the Trustee and appointment of a successor
trustee with respect to the Debentures pursuant to any of the provisions of this
Section 9.11 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section 9.11 may be
appointed with respect to the Debentures, and at any time there shall be only
one Trustee with respect to the Debentures.
SECTION 9.12. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
(a) In case of the appointment hereunder of a successor trustee with respect
to the Debentures, every successor trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
trustee all the rights, powers, and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder.
(b) Upon request of any 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 9.12.
(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 IX.
(d) Upon acceptance of appointment by a successor trustee as provided in this
Section 9.12, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Debentureholders,
as their names and addresses appear upon the Debenture 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.
SECTION 9.13. 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 under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, 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 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 Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
SECTION 9.14. 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.
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ARTICLE X
CONCERNING THE DEBENTUREHOLDERS
SECTION 10.1. EVIDENCE OF ACTION BY HOLDERS
(a) Whenever in this Indenture it is provided that the holders of a majority
or specified percentage in aggregate principal amount of the 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 of Debentures in Person
or by agent or proxy appointed in writing.
(b) If the Company shall solicit from the Debentureholders 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 Debentureholders 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 Debentureholders of record at the close of business on the record date shall
be deemed to be Debentureholders for the purposes of determining whether
Debentureholders of the requisite proportion of Outstanding 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 Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Debentureholders 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.
SECTION 10.2. PROOF OF EXECUTION BY DEBENTUREHOLDERS
Subject to the provisions of Section 9.1, proof of the execution of any
instrument by a Debentureholder (such proof shall not require notarization) or
his agent or proxy and proof of the holding by any Person of any of the
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 Debentures shall be proved by the Debenture Register of
such Debentures or by a certificate of the Debenture Registrar thereof.
(c) The Trustee may require such additional proof of any matter referred to in
this Section 10.2 as it shall deem necessary.
SECTION 10.3. WHO MAY BE DEEMED OWNERS
Prior to the due presentment for registration of transfer of any Debenture,
the Company, the Trustee, any Paying Agent, any Authenticating Agent and any
Debenture Registrar may deem and treat the Person in whose name such Debenture
shall be registered upon the books of the Company as the absolute owner of such
Debenture (whether or not such Debenture shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Debenture Registrar) for the purpose of receiving payment of or on account of
the principal of and interest on such Debenture (subject to Section 2.3) and for
all other purposes; and neither the Company nor the Trustee nor any Paying Agent
nor any Authenticating Agent nor any Debenture Registrar shall be affected by
any notice to the contrary.
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SECTION 10.4. CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED
In determining whether the holders of the requisite aggregate principal amount
of Debentures have concurred in any direction, consent or waiver under this
Indenture, the Debentures that are owned by the Company or any other obligor on
the 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
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 Debentures that the Trustee actually knows are so owned shall be so
disregarded. The Debentures so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section 10.4, if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and that the pledgee is not a Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
SECTION 10.5. ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 10.1, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Debentures specified
in this Indenture in connection with such action, any holder of a Debenture that
is shown by the evidence to be included in the Debentures the holders of which
have consented to such action may, by filing written notice with the Trustee,
and upon proof of holding as provided in Section 10.2, revoke such action so far
as concerns such Debenture. Except as aforesaid any such action taken by the
holder of any Debenture shall be conclusive and binding upon such holder and
upon all future holders and owners of such Debenture, and of any Debenture
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 Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the 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 Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF DEBENTUREHOLDERS
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 Debentureholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, or in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or in place of
certificated Debentures;
(d) to add to the covenants of the Company for the benefit of the holders of
all or any of the Debentures 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 Debentures, as herein set forth;
(f) to make any change that does not adversely affect the rights of any
Debentureholder in any material respect;
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(g) to provide for the issuance of and establish the form and terms and
conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or of the
Debentures, or to add to the rights of the holders of the Debentures;
(h) to qualify or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(i) to evidence a consolidation or merger involving the Company as permitted
under Section 12.1.
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 11.1 may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 11.2.
SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS
With the consent (evidenced as provided in Section 10.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect), for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner not covered by
Section 11.1, the rights of the holders of the Debentures under this Indenture;
provided, however, that no such supplemental indenture shall without the consent
of the holders of each Debenture then Outstanding and affected thereby, (i)
extend the fixed maturity of any Debentures, 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 Debenture so affected; or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture; provided further, that if the
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 liquidation
preference of Trust Securities of the Trust shall have consented to such
supplemental indenture; provided further, that if the consent of the holder of
each Outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture. It shall not be necessary for the
consent of the Debentureholders affected thereby under this Section 11.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such consent shall approve the substance thereof.
SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article XI, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debentures shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 11.4. DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES
Debentures affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of
this Article XI, may bear a notation in form approved by the Company, provided
such form meets the requirements of any exchange upon which the Debentures may
be listed, as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors of the Company, to any modification of this
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Indenture contained in any such supplemental indenture may be prepared by the
Company, authenticated by the Trustee and delivered in exchange for the
Debentures then Outstanding.
SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES
(a) Upon the request of the Company, accompanied by its Board Resolutions
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Debentureholders 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 Sections 9.1, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article XI is
authorized or permitted by, and conforms to, the terms of this Article XI and
that it is proper for the Trustee under the provisions of this Article XI to
join in the execution thereof.
(b) Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 11.5, the
Trustee shall transmit by mail, first class postage prepaid, a notice, setting
forth in general terms the substance of such supplemental indenture, to the
Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE XII
SUCCESSOR CORPORATION
SECTION 12.1. COMPANY MAY CONSOLIDATE, ETC.
Nothing contained in this Indenture or in any of the Debentures shall prevent
any consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company, as the case may be),
or successive consolidations or mergers in which the Company, as the case may
be, or its successor or successors shall be a party or parties, or shall prevent
any sale, conveyance, transfer or other disposition of the property of the
Company, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company, as the case may be, or its successor or successors)
authorized to acquire and operate the same; provided, however, that the Company
hereby covenants and agrees that, (i) upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, the due and punctual payment, in the
case of the Company, of the principal of and interest on all of the Debentures,
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Company as the case may be, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act, as
then in effect) satisfactory in form to the Trustee executed and delivered to
the Trustee by the entity formed by such consolidation, or into which the
Company, as the case may be, shall have been merged, or by the entity which
shall have acquired such property; (ii) in case the Company consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially then 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 (iii) immediately after giving effect thereto, an 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.
SECTION 12.2. SUCCESSOR CORPORATION SUBSTITUTED
(a) In case of any such consolidation, merger, sale, conveyance, transfer or
other disposition and upon the assumption by the successor corporation, 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 Debentures Outstanding and the due and punctual
performance of all of the covenants and conditions of this
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Indenture to be performed by the Company such successor corporation 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
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 Debentures thereafter to be issued as may be appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures shall
prevent the Company from merging into itself or acquiring by purchase or
otherwise all or any part of the property of any other Person (whether or not
affiliated with the Company).
SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE
The Trustee, subject to the provisions of Section 9.1, may receive an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or other disposition, and any such assumption, comply with
the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE
SECTION 13.1. SATISFACTION AND DISCHARGE OF INDENTURE
If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Debentures theretofore authenticated (other than any Debentures
that shall have been destroyed, lost or stolen and that shall have been replaced
or paid as provided in Section 2.9) and Debentures for whose payment money or
Governmental Obligations have theretofore been deposited in trust or segregated
and held in trust by the Company (and thereupon repaid to the Company or
discharged from such trust, as provided in Section 13.5); or (b) all such
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 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
2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.7 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
SECTION 13.2. DISCHARGE OF OBLIGATIONS
If at any time all Debentures not heretofore delivered to the Trustee for
cancellation or that have not become due and payable as described in Section
13.1 shall have been paid by the Company by depositing irrevocably with the
Trustee as trust funds, an amount of moneys or Governmental Obligations, or a
combination thereof, sufficient in the opinion of a nationally recognized
certified public accounting firm to pay at maturity or upon redemption all
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
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this Indenture shall cease to be of further effect except for the provisions of
Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6, 9.10 and 13.5 hereof that shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 9.6
and 13.5 shall survive.
SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST
All monies or Governmental Obligations deposited with the Trustee pursuant to
Sections 13.1 or 13.2 shall be held in trust and shall be available for payment
as due, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the holders of the Debentures for the
payment or redemption of which such moneys or Governmental Obligations have been
deposited with the Trustee.
SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS
In connection with the satisfaction and discharge of this Indenture, all
moneys or Governmental Obligations then held by any Paying Agent under the
provisions of this Indenture shall, upon demand of the Company, be paid to the
Trustee and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys or Governmental Obligations.
SECTION 13.5. REPAYMENT TO COMPANY
Any monies or Governmental Obligations deposited with any Paying Agent or the
Trustee, or then held by the Company in trust, for payment of principal of or
interest on the Debentures that are not applied but remain unclaimed by the
holders of such Debentures for at least two years after the date upon which the
principal of or interest on such Debentures shall have respectively become due
and payable, shall be repaid to the Company, as the case may be, on May 31 of
each year or (if then held by the Company) shall be discharged from such trust;
and thereupon the Paying Agent and the Trustee shall be released from all
further liability with respect to such moneys or Governmental Obligations, and
the holder of any of the Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 14.1. NO RECOURSE
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of the Debentures, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, 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 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 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 Debentures.
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ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind their respective successors
and assigns, whether so expressed or not.
SECTION 15.2. ACTIONS BY SUCCESSOR
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.
SECTION 15.3. SURRENDER OF COMPANY POWERS
The Company by instrument in writing executed by appropriate authority 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, as the case may be, and as to any successor corporation.
SECTION 15.4. NOTICES
Except as otherwise expressly provided herein any notice or demand that by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Debentures to or on the Company may be given or
served by being deposited first class postage prepaid in a post-office letterbox
addressed (until another address is filed in writing by the Company with the
Trustee), as follows: Southwest Bancorp, Inc., 608 South Main Street,
Stillwater, Oklahoma 74074, Attention:____________________. Any notice,
election, request or demand by the Company or any Debentureholder 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.
SECTION 15.5. GOVERNING LAW
This Indenture and each Debenture shall be deemed to be a contract made under
the internal laws of the State of Oklahoma, and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 15.6. TREATMENT OF DEBENTURES AS DEBT
It is intended that the Debentures shall 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.
SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS
(a) Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
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(b) Each certificate or opinion of the Company provided for in this Indenture
and 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, he has made such
examination or investigation as, in the opinion of such Person, is necessary to
enable him 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.
SECTION 15.8. PAYMENTS ON BUSINESS DAYS
In any case where the date of maturity of interest or principal of any
Debenture or the date of redemption of any Debenture shall not be a Business
Day, then payment of interest or principal may (subject to Section 2.5) be made
on the next succeeding Business Day with the same force and effect as if made on
the nominal date of maturity or redemption, and no interest shall accrue for the
period after such nominal date.
SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT
If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 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.
SECTION 15.11. SEPARABILITY
In case any one or more of the provisions contained in this Indenture or in
the 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 Debentures,
but this Indenture and the Debentures shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 15.12. ASSIGNMENT
The Company shall 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 shall 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 thereto.
SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS; RIGHT OF SET-OFF
(a) The Company acknowledges that, with respect to any Debentures held by the
Trust or a trustee of the Trust, if the Property Trustee fails to enforce its
rights under this Indenture as the holder of the 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,
and notwithstanding the provisions of Section 7.4(a) hereof,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 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
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of the principal of or interest on the 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 Debentures.
(b) Notwithstanding anything to the contrary contained in this Indenture, the
Company shall have the right to set-off any payment it is otherwise required to
make hereunder in respect of any Trust Securities to the extent that the Company
has previously made, or is concurrently making, a payment to the holder of such
Trust Securities under the Guarantee or in connection with a proceeding for
enforcement of payment of the principal of or interest on the Debentures
directly brought by holders of any Trust Securities.
ARTICLE XVI
SUBORDINATION OF DEBENTURES
SECTION 16.1. AGREEMENT TO SUBORDINATE
The Company covenants and agrees, and each holder of Debentures issued
hereunder by such holder's acceptance thereof likewise covenants and agrees,
that all Debentures shall be issued subject to the provisions of this Article
XVI; and each holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The payment by the Company of the principal of and interest on all
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 Debt, Subordinated Debt and Additional Senior Obligations
(collectively, "Senior Indebtedness") to the extent provided herein, 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.
SECTION 16.2. DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR ADDITIONAL SENIOR
OBLIGATIONS
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
Indebtedness of the Company, or in the event that the maturity of any Senior
Indebtedness 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 (including redemption payments) of or interest on the Debentures. In
the event that, notwithstanding the foregoing, any payment shall be received by
the Trustee when such payment is prohibited by the preceding sentence of this
Section 16.2, such payment shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that the holders of the
Senior Indebtedness (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 Indebtedness, and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY
(a) 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 Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment or distribution is made
by the Company on account of the principal or interest on the 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 of the
Debentures 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
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<PAGE>
by the holders of the Debentures or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness 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 Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the holders of Debentures or to the Trustee.
(b) 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 Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money or money's worth 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 Indebtedness.
(c) 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 Debentures, to the payment of all Senior Indebtedness of the Company, as
the case may be, that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment; and (ii) the rights of the holders of
such Senior Indebtedness 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 shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 16.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 9.7.
SECTION 16.4. SUBROGATION
(a) Subject to the payment in full of all Senior Indebtedness of the Company,
the rights of the holders of the Debentures shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of and interest on the Debentures
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article XVI, and no payment pursuant
to the provisions of this Article XVI to or for the benefit of the holders of
such Senior Indebtedness by holders of the Debentures or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Indebtedness of
the Company, and the holders of the Debentures, be deemed to be a payment by the
Company to or on account of such Senior Indebtedness. 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 Debentures, on the one hand,
and the holders of such Senior Indebtedness on the other hand.
(b) Nothing contained in this Article XVI or elsewhere in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors (other than the holders of Senior Indebtedness of the Company),
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<PAGE>
and the holders of the Debentures, the obligation of the Company, which is
absolute and unconditional, to pay to the holders of the Debentures the
principal of and interest on the 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 Debentures and creditors of the
Company, as the case may be, other than the holders of Senior Indebtedness of
the Company, as the case may be, nor shall anything herein or therein prevent
the Trustee or the holder of any 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
Indebtedness in respect of cash, property or securities of the Company, as the
case may be, received upon the exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company referred to in
this Article XVI, the Trustee, subject to the provisions of Article IX, and the
holders of the 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 Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
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.
SECTION 16.5. TRUSTEE TO EFFECTUATE SUBORDINATION
Each holder of 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.
SECTION 16.6. NOTICE BY THE COMPANY
(a) The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the 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 monies to or by the Trustee in respect of the
Debentures pursuant to the 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 Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
(b) The Trustee, subject to the provisions of Section 9.1, shall be entitled
to conclusively rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness 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 Indebtedness 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 Indebtedness 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 Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XVI, and, if such
evidence is not furnished, the Trustee
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<PAGE>
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS
(a) The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XVI in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder. The Trustee's right to compensation and reimbursement of expenses as set
forth in Section 9.7 shall not be subject to the subordination provisions of the
Article XVI.
(b) With respect to the holders of Senior Indebtedness 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 Indebtedness
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 Indebtedness and,
subject to the provisions of Section 9.1, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to holders of
Debentures, the Company or any other Person money or assets to which any holder
of such Senior Indebtedness shall be entitled by virtue of this Article XVI or
otherwise.
SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED
(a) No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
-40-
<PAGE>
(b) Without in any way limiting the generality of Section 16.8(a), the holders
of Senior Indebtedness 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
Debentures, without incurring responsibility to the holders of the Debentures
and without impairing or releasing the subordination provided in this Article
XVI or the obligations hereunder of the holders of the Debentures to the holders
of such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SOUTHWEST BANCORP, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
Attest:
_______________________
STATE STREET BANK AND TRUST COMPANY, as trustee
By:______________________________________
Name:____________________________________
Title:___________________________________
Attest:
_______________________
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<PAGE>
STATE OF _________ )
) ss
COUNTY OF __________ )
On this ______ day of ______________________, 1997, before me appeared
___________________, to me personally known, who, being by me duly sworn, did
say that he is the _____________________ of _______________________, and that
the seal affixed to said instrument is the corporate seal of said corporation,
and that said instrument was signed and sealed in behalf of said corporation by
authority of its board of directors and said _____________________________,
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
at my office in said county and state the day and year last above written.
________________________________________
Notary Public
My term expires:________________________
[seal]
COMMONWEALTH OF MASSACHUSETTS )
) ss
COUNTY OF SUFFOLK )
On this ______ day of ______________________, 1997, before me appeared
___________________, to me personally known, who, being by me duly sworn, did
say that he is the _____________________ of STATE STREET BANK AND TRUST, and
that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its board of directors and said
_____________________________, 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
at my office in said county and commonwealth the day and year last above
written.
_______________________________________
Notary Public
My term expires:_______________________
[seal]
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<PAGE>
EXHIBIT A
(FORM OF FACE OF DEBENTURE)
No. _____________________________ $_______________________
CUSIP No. _______________________
SOUTHWEST BANCORP, INC.
___% SUBORDINATED DEBENTURE
DUE JUNE 30, 2027
Southwest Bancorp, Inc., an Oklahoma corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to, ______________ or registered
assigns, the principal sum of ______________ Dollars ($___________) on
_________, 2027 (the "Stated Maturity"), and to pay interest on said principal
sum from [Date of Issue] 1997, 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 January 31, April 30, July 31 and October 31 of each year commencing
July 31, 1997, at the rate of ___% per annum until the principal hereof shall
have become due and payable, and on any overdue principal and (without
duplication) on any overdue installment of interest at the same rate per annum
compounded quarterly. 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.
The amount of interest 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. In the
event that any date on which interest is payable on this Debenture is not a
business day, then payment of interest payable on such date 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) 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 shall, as provided in the Indenture,
be paid to the person in whose name this Debenture (or one or more Predecessor
Debentures, as defined in said 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 fifteenth day of the month in which the Interest
Payment Date occurs, unless otherwise provided in the Indenture. Any such
interest installment not punctually paid or duly provided for shall forthwith
cease to be payable to the registered holders on such regular record date and
may be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of the
Debentures not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this Debenture
shall be payable at the office or agency of the Trustee maintained for that
purpose in any coin or currency of the United States of America that at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the registered holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the holder of this
Debenture is the Property Trustee, the payment of the principal of and interest
on this Debenture shall be made at such place and to such account as may be
designated by the Trustee.
The Stated Maturity may be shortened at any time by the Company to any
date not earlier than June 30, 2002, subject to the Company having received
prior approval of the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve. Such date may also be extended at
any time at the election of the Company for one or more periods, but in no event
to a date later than June 30, 2046, subject to certain limitations described in
the Indenture.
A - 1
<PAGE>
The indebtedness evidenced by this 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 Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each holder of this
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
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, 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 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
----------------------
SOUTHWEST BANCORP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
A - 2
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned
Indenture.
Dated:
STATE STREET BANK AND TRUST COMPANY,
--------------------------------
as Trustee or Authentication Agent
By By
----------------------------------- -----------------------------
Authorized Signatory
A - 3
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
______________% SUBORDINATED DEBENTURE
(CONTINUED)
This Debenture is one of the subordinated debentures of the Company
(herein sometimes referred to as the "Debentures"), specified in the Indenture,
all issued or to be issued under and pursuant to an Indenture dated as of
_________, 1997 (the "Indenture") duly executed and delivered between the
Company and State Street Bank and 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 Debentures. The Debentures are
limited in aggregate principal amount as specified in the Indenture.
In certain circumstances, because of the occurrence and continuation of
a Special Event, this Debenture may become due and payable prior to its Stated
Maturity, at the principal amount together with any interest accrued thereon
(the "Redemption Price"). The Redemption Price shall be paid prior to 12:00
noon, Eastern 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
Debenture at the option of the Company, without premium or penalty, in whole or
in part at any time on or after June 30, 2002 (an "Optional Redemption"), or at
any time in certain circumstances upon the occurrence of a Special Event, at a
Redemption Price equal to 100% of the principal amount plus any accrued but
unpaid interest, to the date of such redemption. Any redemption pursuant to this
paragraph shall be made upon not less than 30 days nor more than 60 days notice,
at the Redemption Price. If the Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Debentures shall be redeemed pro
rata or by lot or by any other method utilized by the Trustee.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof shall 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 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 Debentures at the time outstanding, as defined
in the Indenture, to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debentures; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of the 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 Debenture so affected; or (ii) reduce the
aforesaid percentage of Debentures, the holders of which are required to consent
to any such supplemental indenture, without the consent of the holders of each
Debenture then outstanding and affected thereby. The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount of
the Debentures at the time outstanding, on behalf of all of the holders of the
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 Debentures. Any such consent or waiver by the registered holder of
this 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
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or in place hereof, irrespective of whether
or not any notation of such consent or waiver is made upon this Debenture).
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall
A - 4
<PAGE>
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal and interest on this 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
Debentures and from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters (each, 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 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. 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.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered holder hereof on the
Debenture Register of the Company, upon surrender of this 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 his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount shall be
issued to the designated transferee or transferees. No service charge shall 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 Debenture,
the Company, the Trustee, any paying agent and the Debenture Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Debenture 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 Debenture 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 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 Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.
All terms used in this Debenture that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
A - 5
<PAGE>
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
SBI CAPITAL TRUST
THIS CERTIFICATE OF TRUST OF SBI CAPITAL TRUST (the "Trust"), dated as of
May 8, 1997, is being duly executed and filed by WILMINGTON TRUST COMPANY, a
Delaware banking corporation, Robert L. McCormick, Jr, Kerby E. Crowell and
Deborah T. Bradley each an individual, as trustees, to form a business trust
under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is SBI CAPITAL
TRUST.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North,1100 North Market Street, Wilmington, Delaware 19890-
0001, Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on May 9,
1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
has executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY, as trustee
By: /s/ Norma p. Closs
--------------------------------------
Name: NORMA P. CLOSS
--------------------------------------
Title: VICE PRESIDENT
--------------------------------------
/s/ Robert L. McCormick
--------------------------------------
Robert L. McCormick, Jr., as Trustee
/s/ Kerby E. Crowell
--------------------------------------
Kerby E. Crowell, as Trustee
/s/ Deborah T. Bradley
--------------------------------------
Deborah T. Bradley, as Trustee
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
SBI CAPITAL TRUST
THIS CERTIFICATE OF TRUST OF SBI CAPITAL TRUST (the "Trust"), dated as
of ________________, 1997, is being duly executed and filed by WILMINGTON TRUST
COMPANY, a Delaware banking corporation, ______________________,
_________________ and _____________________, each an individual, as trustees, to
form a business trust under the Delaware Business Trust Act (12 Del. C. Section
3801 et seq.).
1. NAME. The name of the business trust formed hereby is SBI CAPITAL
TRUST.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company,
Rodney Square North,1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on
______________, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY, as trustee
By: ______________________________________________
Name:_____________________________________________
Title:____________________________________________
_____________________________________________
____________________, as Trustee
____________________________________________
____________________, as Trustee
____________________________________________
____________________, as Trustee
A - 1
<PAGE>
EXHIBIT B
[Intentionally Omitted]
B - 1
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER ________. NUMBER OF COMMON SECURITIES
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
SBI CAPITAL TRUST
COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
SBI CAPITAL TRUST, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that _________________ (the
"Holder") is the registered owner of ________________ (_____) common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust and designated the ___% Common Securities (liquidation amount $25 per
Common Security) (the "Common Securities"). In accordance with Section 510 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences, and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _______________, 1997, as the same may be amended from time to
time (the "Trust Agreement"), including the designation of the terms of the
Common Securities as set forth therein. The Trust shall 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 receive 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 __________, 1997.
SBI CAPITAL TRUST
By:_________________________________
Name:_______________________________
Tittle:_____________________________
C - 1
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as
of _____________, 1997, between SOUTHWEST BANCORP, INC. an Oklahoma corporation
(the "Company"), and SBI CAPITAL TRUST, 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
___________________________ _____% 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 ____________, 1997, 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 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 State Street Bank and 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
D - 1
<PAGE>
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.
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):
SBI Capital Trust, 608 South Main Street, Stillwater, Oklahoma, 74074.
Facsimile No.: ___________________. Attention: _______________________
Southwest Bancorp, Inc., 608 South Main Street, Stillwater, Oklahoma
74074. Facsimile No.: ______________ Attention:
__________________________
D - 2
<PAGE>
D - 3
<PAGE>
SECTION 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Oklahoma (without regard
to conflict of laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
SOUTHWEST BANCORP, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
SBI CAPITAL TRUST
By:__________________________________
Name:________________________________
Title: Administrative Trustee
D - 4
<PAGE>
EXHIBIT E
Certificate Number Number of Preferred Securities
P-
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
SBI CAPITAL TRUST
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
SBI CAPITAL TRUST, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that ______________ (the
"Holder") is the registered owner of _____ preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust and
designated the __________% Cumulative Trust Preferred Securities (liquidation
amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 504 of the Trust
Agreement. 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 _____________, 1997, 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 Southwest Bancorp, In. an Oklahoma corporation, and
State Street Bank and Trust Company, as guarantee trustee, dated as of
_______________, 1997 (the "Guarantee"), to the extent provided therein. The
Trust shall 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 receive 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 _______________, 1997.
SBI CAPITAL TRUST
By:_____________________________________
Name:___________________________________
Title: Administrative Trustee
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the % Cumulative Trust Preferred Securities
described in the within-mentioned Amended and Restated Trust Agreement.
Dated:
STATE STREET BANK AND TRUST COMPANY, SBI CAPITAL TRUST
as Authentication Agent and Registrar
By ___________________________________ By ______________________
Authorized Signatory Administrative Trustee
<PAGE>
Exhibit 4.4
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of May 8, 1997 (this "Trust
Agreement"), among (i) Southwest Bancorp, Inc., an Oklahoma corporation (the
"Depositor"), (ii) Wilmington Trust Company, a Delaware banking corporation, as
trustee, and (iii) Robert L. McCormick, Jr., Kerby E. Crowell and Deborah T.
Bradley, each an individual, as trustees (each of such trustees in (ii) and
(iii) a "Trustee" and collectively, the "Trustees"). The Depositor and the
Trustees hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "SBI
Capital Trust" in which name the Trustees, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $10.00. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. Section 3801, et seq. (the "Business Trust Act"),
and that this document constitutes the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions of
the Business Trust Act.
3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery of any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-2 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the registration
under the Securities Act of 1933, as amended, of the Preferred Securities of the
Trust and possibly certain other securities and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all pre-effective
and post-effective amendments thereto) relating to the registration of the
Preferred Securities of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) to file with The Nasdaq Stock Market=s National Market or a
national stock exchange (each, an "Exchange") and execute on behalf of the Trust
one or more listing applications and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred Securities to be listed on any of the
Exchanges; (iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or blue sky
laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem
necessary or desirable; and (iv) to execute on behalf of the Trust that certain
Underwriting Agreement relating to the Preferred Securities, among the Trust,
the Depositor and the several Underwriters named therein, substantially in the
form included as an exhibit to the 1933 Act Registration Statement. In the event
that any filing referred to in clauses (i), (ii) and (iii) above is required by
the rules and regulations of the Commission, an Exchange or state securities or
blue sky laws, to be executed on behalf of the Trust by one or more of the
Trustees, each of the Trustees, in its or his capacity as a Trustee of the
Trust, is hereby authorized and, to the extent so required, directed to join in
any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Wilmington Trust Company in its capacity as
a Trustee of the Trust shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the Exchange or state securities or blue sky
laws. In connection with the filings referred to above, the Depositor and Robert
L. McCormick, Jr., Kerby E. Crowell and Deborah T. Bradley, each as Trustees and
not in their individual capacities,
<PAGE>
hereby constitutes and appoints Robert L. McCormick, Jr., Kerby E. Crowell and
Deborah T. Bradley, and each of them, as its true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for the
Depositor or such Trustee or in the Depositor=s or such Trustees= name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to the 1933 Act Registration Statement and the 1934
Act Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, the Exchange and
administrators of the state securities or blue sky laws, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as the Depositor or such Trustee might or
could to in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their respective substitute or substitutes,
shall do or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in two or more counterparts.
6. The number of Trustees initially shall be four and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustees may resign upon 30 days= prior notice to the Depositor.
[Remainder of page intentionally blank]
<PAGE>
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws of principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
SOUTHWEST BANCORP, INC.
as Depositor
By: /s/ Robert L. McCormick, Jr.
-------------------------------------------
Name: Robert L. McCormick, Jr.
Title: President
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ Norma P. Closs
-------------------------------------------
Name: NORMA P. CLOSS
-----------------------------------------
Title: Vice President
----------------------------------------
/s/ Robert L. McCormick
----------------------------------------------
Robert L. McCormick, Jr., as Trustee
/s/ Kerby E. Crowell
----------------------------------------------
Kerby E. Crowell, as Trustee
/s/ Deborah T. Bradley
----------------------------------------------
Deborah T. Bradley, as Trustee
<PAGE>
Exhibit 4.5
=====================================================================
_____________________________
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
SOUTHWEST BANCORP, INC., AS DEPOSITOR
STATE STREET BANK AND TRUST COMPANY, AS PROPERTY TRUSTEE
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF _________________________, 1997
==================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINED TERMS................................................................... 1
SECTION 101. DEFINITIONS..................................................................... 1
ARTICLE II ESTABLISHMENT OF THE TRUST...................................................... 7
SECTION 201. NAME............................................................................ 7
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE
OF BUSINESS..................................................................... 8
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES......................................................... 8
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES............................................ 8
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION
AND PURCHASE OF DEBENTURES...................................................... 8
SECTION 206. DECLARATION OF TRUST............................................................ 9
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN
TRANSACTIONS.................................................................... 9
SECTION 208. ASSETS OF TRUST................................................................. 11
SECTION 209. TITLE TO TRUST PROPERTY......................................................... 11
ARTICLE III. PAYMENT ACCOUNT................................................................. 12
SECTION 301. PAYMENT ACCOUNT................................................................. 12
ARTICLE IV. DISTRIBUTIONS; REDEMPTION....................................................... 12
SECTION 401. DISTRIBUTIONS................................................................... 12
SECTION 402. REDEMPTION...................................................................... 12
SECTION 403. SUBORDINATION OF COMMON SECURITIES.............................................. 14
SECTION 404. PAYMENT PROCEDURES.............................................................. 14
SECTION 405. TAX RETURNS AND REPORTS......................................................... 14
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST..................................... 15
SECTION 407. PAYMENTS UNDER INDENTURE........................................................ 15
ARTICLE V. TRUST SECURITIES CERTIFICATES................................................... 15
SECTION 501. INITIAL OWNERSHIP............................................................... 15
SECTION 502. THE TRUST SECURITIES CERTIFICATES............................................... 15
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST
SECURITIES CERTIFICATES......................................................... 15
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF
PREFERRED SECURITIES CERTIFICATES............................................... 16
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
SECURITIES CERTIFICATES......................................................... 16
SECTION 506. PERSONS DEEMED SECURITYHOLDERS.................................................. 17
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND
ADDRESSES....................................................................... 17
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY................................................. 17
SECTION 509. APPOINTMENT OF PAYING AGENT..................................................... 17
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR..................................... 18
SECTION 511. PREFERRED SECURITIES CERTIFICATES............................................... 18
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 512. [Intentionally Omitted]............................................. 18
SECTION 513. [Intentionally Omitted]............................................. 18
SECTION 514. RIGHTS OF SECURITYHOLDERS........................................... 18
ARTICLE VI. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING........................... 19
SECTION 601. LIMITATIONS ON VOTING RIGHTS........................................ 19
SECTION 602. NOTICE OF MEETINGS.................................................. 20
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS............................... 20
SECTION 604. VOTING RIGHTS....................................................... 20
SECTION 605. PROXIES, ETC........................................................ 20
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT............................ 20
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES........................... 21
SECTION 608. ACTS OF SECURITYHOLDERS............................................. 21
SECTION 609. INSPECTION OF RECORDS............................................... 21
ARTICLE VII. REPRESENTATIONS AND WARRANTIES...................................... 22
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND
THE PROPERTY TRUSTEE................................................ 22
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE
BANK AND THE DELAWARE TRUSTEE....................................... 23
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR......................... 23
ARTICLE VIII. TRUSTEES............................................................ 24
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES................................. 24
SECTION 802. CERTAIN NOTICES..................................................... 25
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.................................. 25
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.......................................................... 27
SECTION 805. MAY HOLD SECURITIES................................................. 27
SECTION 806. COMPENSATION; INDEMNITY; FEES....................................... 27
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY
OF TRUSTEES......................................................... 27
SECTION 808. CONFLICTING INTERESTS............................................... 28
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.................................... 29
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR........................................................... 29
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.............................. 30
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS......................................................... 30
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
DEPOSITOR OR TRUST.................................................. 30
SECTION 814. REPORTS BY PROPERTY TRUSTEE......................................... 31
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE..................................... 31
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT........................................................... 31
SECTION 817. NUMBER OF TRUSTEES.................................................. 31
SECTION 818. DELEGATION OF POWER................................................. 32
SECTION 819. VOTING.............................................................. 32
ARTICLE IX. TERMINATION, LIQUIDATION AND MERGER................................. 32
SECTION 901 TERMINATION UPON EXPIRATION DATE.................................... 32
SECTION 902. EARLY TERMINATION................................................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 903. TERMINATION................................................ 32
SECTION 904. LIQUIDATION................................................ 33
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR
REPLACEMENTS OF THE TRUST.................................. 34
ARTICLE X. MISCELLANEOUS PROVISIONS................................... 34
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.................... 34
SECTION 1002. AMENDMENT.................................................. 35
SECTION 1003. SEPARABILITY............................................... 35
SECTION 1004. GOVERNING LAW.............................................. 36
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY........................... 36
SECTION 1006. SUCCESSORS................................................. 36
SECTION 1007. HEADINGS................................................... 36
SECTION 1008. REPORTS, NOTICES AND DEMANDS............................... 36
SECTION 1009. AGREEMENT NOT TO PETITION.................................. 37
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST
INDENTURE ACT.............................................. 37
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE.................................... 38
</TABLE>
iii
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Section of Amended
Trust Indenture Act and Restated
of 1939, as amended Trust Agreement
- ------------------- ---------------
<S> <C>
310(a)(1)............................................................................ 807
310(a)(2)............................................................................ 807
310(a)(3)............................................................................ 807
310(a)(4)...................................................................... 207(a)(ii)
310(b)............................................................................... 808
311(a)............................................................................... 813
311(b)............................................................................... 813
312(a)............................................................................... 507
312(b)............................................................................... 507
312(c)............................................................................... 507
313(a)............................................................................ 814(a)
313(a)(4)......................................................................... 814(b)
313(b)............................................................................ 814(b)
313(c).............................................................................. 1008
313(d)............................................................................ 814(c)
314(a).............................................................................. 815
314(b).................................................................... Not Applicable
314(c)(1)............................................................................ 816
314(c)(2)............................................................................ 816
314(c)(3)................................................................. Not Applicable
314(d).................................................................... Not Applicable
314(e).......................................................................... 101, 816
315(a).................................................................... 801(a), 803(a)
315(b)......................................................................... 802, 1008
315(c)............................................................................ 801(a)
315(d).......................................................................... 801, 803
316(a)(2)................................................................. Not Applicable
316(b).................................................................... Not Applicable
316(c)............................................................................... 607
317(a)(1)................................................................. Not Applicable
317(a)(2)................................................................. Not Applicable
317(b)............................................................................... 509
318(a).............................................................................. 1010
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect any interpretation of any of its terms or provisions.
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________, 1997, among (i)
SOUTHWEST BANCORP, INC., an Oklahoma corporation (including any successors or
assigns, the "Depositor"), (ii) STATE STREET BANK AND TRUST COMPANY, a trust
company duly organized and existing under the laws of the Commonwealth of
Massachusetts, as property trustee (the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the "Bank"),
(iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation duly organized
and existing under the laws of the State of Delaware, as Delaware trustee (the
"Delaware Trustee," and, in its separate corporate capacity and not in its
capacity as Delaware Trustee, the "Delaware Bank") (iv) ___________________, an
individual, __________________________, an individual, and
______________________, an individual, each of whose address is c/o
_________________________________________, _______________ (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).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, and ______________, ____________
and ________________, each as an Administrative Trustee, have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act (as hereinafter defined) by the entering into of that certain Trust
Agreement, dated as of _________, 1997 (the "Original Trust Agreement"), and by
the execution and filing by the Delaware Trustee, the Depositor and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on ______________, 1997, the form of which is
attached as Exhibit A; and
WHEREAS, the Depositor, the Delaware Trustee, the Property 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 herein) by the Trust (as defined
herein) to the Depositor; (ii) the issuance and sale of the Preferred Securities
(as defined herein) by the Trust pursuant to the Underwriting Agreement (as
defined herein); (iii) the acquisition by the Trust from the Depositor of all of
the right, title and interest in the Debentures (as defined herein); and (iv)
the appointment of the Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Securityholders (as defined herein),
hereby amends and restates the Original Trust Agreement in its entirety and
agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 101. DEFINITIONS.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to them in
this Article I and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to them
therein;
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(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.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of the
Indenture.
"Administrative Trustee" means each of _______________, _____________ and
______________, solely in his capacity as Administrative Trustee of the Trust
formed and continued hereunder and not in his individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"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, 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
Preferred Securities appointed by the Property Trustee pursuant to Section 503.
"Bank" has the meaning specified in the Preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises adjudging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation or reorganization of or in respect of such
Person under the United States Bankruptcy Code of 1978, as amended, 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 of 1978, as amended,
in respect of such Person, which shall continue undismissed for a period of 90
days or entry of an order for relief in such case; or the entry of a decree or
order of a court having jurisdiction in the premises for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee
or assignee in bankruptcy or insolvency of such Person or of its property, or
for the winding up or liquidation of its affairs, and such decree or order shall
have remained in force unvacated and unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy
proceeding against it, or the filing by such Person of a petition or answer or
consent seeking liquidation or reorganization under the United States Bankruptcy
Code of 1978, as amended, 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 shall make a general assignment for the benefit of
creditors.
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"Bankruptcy Laws" has the meaning specified in Section 1009.
"Board Resolution" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a day on which
banking institutions in the City of New York are authorized or required by law,
executive order or regulation to remain closed, or 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 of Trust" means the certificate of trust filed with the Secretary
of State of the State of Delaware with respect to the Trust, as amended or
restated from time to time.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets of the
Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Corporate Trust Office" means the office at which, at any particular time,
the corporate trust business of the Property Trustee or the Debenture Trustee,
as the case may be, shall be principally administered, which office at the date
hereof, in each such case, is located at Two International Place, 4th Floor,
Boston, Massachusetts 02110, Attention: Corporate Trust Department.
"Debenture Event of Default" means an "Event of Default" as defined in Section
7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Trustee" means State Street Bank and Trust Company, a banking
corporation company organized under the laws of the Commonwealth of
Massachusetts and any successor thereto, as trustee under the Indenture.
"Debentures" means the $____________ aggregate principal amount of the
Depositor's ____% Subordinated Debentures due 2027, issued pursuant to the
Indenture.
"Delaware Bank" has the meaning specified in the Preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Delaware Code Sections 3801 et seq. as it may be amended from time to
time.
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"Delaware Trustee" means the commercial bank or trust company identified as
the "Delaware Trustee" in the Preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the Preamble to this Trust Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 401.
"Early Termination Event" has the meaning specified in Section 902.
"Event of Default" means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust or the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such default
for a period of 30 days; or
(c) default by the Trust or the Property Trustee 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 Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c), above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the defaulting Trustee or Trustees by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property Trustee
and the failure by the Depositor to appoint a successor Property Trustee within
60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities between
the Depositor and the Trust, substantially in the form attached as Exhibit D, as
amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extended Interest Payment Period" has the meaning specified in Section 4.1 of
the Indenture.
"Guarantee" means the Preferred Securities Guarantee Agreement executed and
delivered by the Depositor and State Street Bank and Trust Company, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Preferred Securities, as amended from time to
time.
"Indenture" means the Indenture, dated as of _______________, 1997, between
the Depositor and the Debenture Trustee, as trustee, as amended or supplemented
from time to time pertaining to the Debentures of the Depositor.
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"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"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
Debentures to be contemporaneously redeemed in accordance with the Indenture and
the proceeds of which shall be used to pay the Redemption Price of such Trust
Securities; and (b) with respect to a distribution of Debentures to Holders of
Trust Securities in connection with a termination or liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed. Each
Debenture distributed pursuant to clause (b) above shall carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Debenture.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be distributed to
Holders of Trust Securities in connection with a termination and liquidation of
the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section 904(d).
"Officers' Certificate" means a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers signing
an Officers' Certificate given pursuant to Section 816 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has read
the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of legal counsel, who may be
counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the Recitals to this
Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of
the date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:
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(a) Preferred Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in lieu of
which other Preferred Securities have been executed and delivered pursuant to
Sections 504, 505 and 511; 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 (a) 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 (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the 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 so to act with
respect to such Preferred Securities and the Pledgee is not the Depositor or any
other Obligor upon the Preferred Securities or a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant to
Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures shall be held and from which the Property Trustee shall make
payments to the Securityholders in accordance with Sections 401 and 402.
"Person" means any individual, corporation, partnership, joint venture, trust,
limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"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 stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the Liquidation
Amount of such Trust Security, plus accumulated and unpaid Distributions to the
Redemption Date, paid by the Depositor upon the concurrent
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redemption of a Like Amount of Debentures, allocated on a pro rata basis (based
on Liquidation Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
"Securities Register" and "Securities Registrar" have the respective meanings
specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust Security or
Securities is registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the same
may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939, as amended, 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 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.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee and
the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
____________, 1997, among the Trust, the Depositor and the Underwriters named
therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SECTION 201. NAME.
The Trust created and continued hereby shall be known as "SBI Capital Trust,"
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.
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SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Delaware Trustee in the State of Delaware is c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, 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 608 South Main Street, Stillwater, Oklahoma, 74074.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES.
The Trustees acknowledge receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Trustee, promptly reimburse
such Trustee for any such expenses paid by such Trustee. The Depositor shall
make no claim upon the Trust Property for the payment of such expenses.
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.
On __________, 1997, the Depositor and an Administrative Trustee, on behalf of
the Trust and pursuant to the Original Trust Agreement, executed and delivered
the Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver in accordance with the
Underwriting Agreement, Preferred Securities Certificates, registered in the
name of the Persons entitled thereto, in an aggregate amount of __________
Preferred Securities having an aggregate Liquidation Amount of $__________
against receipt of the aggregate purchase price of such Preferred Securities of
$__________, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee. If the underwriters exercise their Option and there is an
Option Closing Date (as such terms are defined in the Underwriting Agreement),
then an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 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 __________ Preferred
Securities having an aggregate Liquidation Amount of up to $__________ against
receipt of the aggregate purchase price of such Preferred Securities of
$__________, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF
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 502 and deliver to the Depositor, Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of Common
Securities having an aggregate Liquidation Amount of $__________ against 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 Debentures, registered in the name of the Property Trustee on behalf
of the Trust and having an aggregate principal amount equal to $__________, and,
in satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Trust, shall deliver to the Depositor the sum of $__________.
(b) If the underwriters exercise the Option and there is an Option Closing
Date, then an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount of
Common Securities having an aggregate Liquidation Amount of up to $__________
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, Debentures, registered in the name of the Trust and having
an aggregate principal amount of up to $__________, and, in satisfaction of the
purchase price of such Debentures, the Property Trustee, on behalf of the
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Trust, shall deliver to the Depositor the amount received from one of the
Administrative Trustees pursuant to the last sentence of Section 204.
SECTION 206. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the 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 shall 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.
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in accordance with the
terms of this Trust Agreement. Subject to the limitations set forth in paragraph
(b) of this Section 207 and Article VIII, and in accordance with the following
provisions (i) and (ii), the Administrative Trustees shall have the authority to
enter into all transactions and agreements determined by the Administrative
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Administrative Trustees under this Trust Agreement, and
to perform all acts in furtherance thereof, including without limitation, the
following:
(i) As among the Trustees, each Administrative Trustee, acting singly or
jointly, shall have the power and authority to act on behalf of the Trust with
respect to the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and perform
on behalf of the Trust, the Expense Agreement and such other agreements or
documents as may be necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred Securities under the
Securities Act of 1933, as amended, and under state securities or blue sky laws,
and the qualification of this Trust Agreement as a trust indenture under the
Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities upon The Nasdaq
Stock Market's National Market or such securities exchange or exchanges as shall
be determined by the Depositor and 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 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;
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(G) to the extent provided in this Trust Agreement, the winding up of the
affairs of and liquidation of the Trust and the preparation, execution and
filing of the certificate of cancellation with the Secretary of State of the
State of Delaware;
(H) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created; and
(I) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement for the benefit of
the 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 Debentures;
(C) the collection of interest, principal and any other payments made in
respect of the 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 Debentures;
(F) the sending of notices of default and other information regarding the
Trust Securities and the 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, 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) registering transfers of the Trust Securities in accordance with this
Trust Agreement; and
(K) except as otherwise provided in this Section 207(a)(ii), the Property
Trustee shall have none of the duties, liabilities, powers or the authority of
the Administrative Trustees set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement; (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to 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
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purposes; (iv) incur any indebtedness for borrowed money or issue any other
debt; or (v) take or consent to any action that would result in the placement of
a Lien on any of the Trust Property. The Administrative Trustees shall defend
all claims and demands of all Persons at any time claiming any Lien on any of
the Trust Property adverse to the interest of the Trust or the 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 Debentures,
including any amendments thereto;
(ii) the determination of the States in which to take appropriate
action to qualify or, register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by or on
behalf of the Trust, and advise the Trustees of actions they must take on behalf
of the Trust, and prepare for execution and filing any documents to be executed
and filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to The Nasdaq Stock Market's National Market 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) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on Form 8-A
relating to the registration of the Preferred Securities under Section 12(b) or
12(g) of the Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Preferred
Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust shall not be deemed to be an "investment
company" required to be registered under the Investment Company Act, shall 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
Debentures shall be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, subject to Section 1002, the
Depositor and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law or this Trust Agreement, that each of the
Depositor and the Administrative Trustees determines in their discretion to be
necessary or desirable for such purposes.
SECTION 208. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times in the Property
Trustee (in its capacity as such) and shall be held and administered by the
Property Trustee for the benefit of the Securityholders in accordance with this
Trust Agreement.
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ARTICLE III
PAYMENT ACCOUNT
SECTION 301. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall establish the
Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the 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 Debentures. Amounts held in the Payment Account
shall not be invested by the Property Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 401. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be cumulative, and shall
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from __________, 1997, and,
except during any Extended Interest Payment Period with respect to the
Debentures, shall be payable quarterly in arrears on January 31, April 30, July
31 and October 31 of each year, commencing on July 31, 1997. 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) with the same force and effect as if made on such
date (each date on which distributions are payable in accordance with this
Section 401(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the Trust
Property. 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 Extended Interest Payment
Period with respect to the Debentures, Distributions on the Preferred Securities
shall be deferred for a period equal to the Extended Interest Payment 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 by 12:30 p.m. on each Distribution Date 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
the 15th day of the month in which the Distribution is payable.
SECTION 402. REDEMPTION.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust shall be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
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(b) Notice of redemption shall be given by the Property Trustee by first-class
mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to
the Redemption Date to each Holder of Trust Securities to be redeemed, at such
Holder's address appearing in the Securities Register. The Property Trustee
shall have no responsibility for the accuracy of any CUSIP number contained in
such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed; and
(v) that, on the Redemption Date, the Redemption Price shall become due
and payable upon each such Trust Security to be redeemed and that Distributions
thereon shall cease to accumulate on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption of
Debentures. Redemptions of the Trust Securities shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that the Trust
has immediately available funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 402(c), the Property Trustee shall deposit with the
Paying Agent funds sufficient to pay the applicable Redemption Price and shall
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 Securities so called for redemption shall
cease, except the right of such Securityholders to receive the Redemption Price
and any Distribution payable on or prior to the Redemption Date, but without
interest, and such Trust Securities shall 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 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) 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 shall 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 shall 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 the date 15 days
prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by such
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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 $25 or an integral multiple of $25 in excess thereof) of
the Liquidation Amount of Preferred Securities of a denomination larger than
$25. The Property Trustee shall promptly notify the Securities Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities which has been or is to be redeemed.
SECTION 403. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if applicable) on,
and the Redemption Price of, the Trust Securities, as applicable, shall be made,
subject to Section 402(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the Holder of Common Securities shall 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 shall have the right to direct
the Property Trustee to act on their behalf.
SECTION 404. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register. Payments in respect of the Common Securities shall be made in such
manner as shall be mutually agreed between the Property Trustee and the Common
Securityholder.
SECTION 405. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
form required to be filed in respect of the Trust in each taxable year of the
Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form required to be
furnished to such Securityholder or the information required to be provided on
such form. The Administrative Trustees shall provide the Depositor with a copy
of all such returns and reports promptly after such filing or furnishing. The
Property Trustee shall comply with United States federal
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withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Interest, the Property
Trustee, at the direction of an Administrative Trustee or the Depositor, shall
promptly pay any taxes, duties or governmental charges of whatsoever nature
(other than withholding taxes) imposed on the Trust by the United States or any
other taxing authority.
SECTION 407. PAYMENTS UNDER INDENTURE.
Any amount payable hereunder to any Holder of Preferred Securities shall be
reduced by the amount of any corresponding payment such Holder has directly
received under the Indenture pursuant to Section 514(b) or (c) hereof.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 501. INITIAL OWNERSHIP.
Upon the creation of the Trust and the contribution by the Depositor pursuant
to Section 203 and until the issuance of the Trust Securities, and at any time
during which no Trust Securities are outstanding, the Depositor shall be the
sole beneficial owner of the Trust.
SECTION 502. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in minimum denominations
of $25 Liquidation Amount and integral multiples of $25 in excess thereof, and
the Common Securities Certificates shall be issued in denominations of $25
Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504 and
511.
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES.
(a) On the Closing Date and on the date on which the Underwriter exercises the
Option, as applicable (the "Option Closing Date"), the Administrative Trustees
shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as
provided in Sections 204 and 205, to be executed on behalf of the Trust by at
least one of the Administrative Trustees and delivered to or upon the written
order of the Depositor, signed by its Chief Executive Officer, President, any
Vice President, the Treasurer or any Assistant Treasurer without further
corporate action by the Depositor, in authorized denominations.
(b) A Preferred Securities Certificate shall not be valid until authenticated
by the manual signature of an authorized signatory of the Property Trustee. The
signature of the Property Trustee shall be conclusive evidence that the
Preferred Securities Certificate has been authenticated under this Trust
Agreement. Each Preferred Security Certificate shall be dated the date of its
authentication.
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(c) Upon the written order of the Trust signed by the Administrative Trustee,
the Property Trustee shall authenticate and make available for delivery the
Preferred Securities Certificates.
(d) The Property Trustee may appoint an Authenticating Agent acceptable to the
Trust to authenticate the Preferred Securities. An Authenticating Agent may
authenticate the Preferred Securities whenever the Property Trustee may do so.
Each reference in this Trust Agreement to authentication by the Property Trustee
includes authentication by such agent. An Authenticating Agent has the same
rights as the Property Trustee to deal with the Depositor or the Trust.
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.
(a) The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 508, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (herein referred to as the "Securities
Register") in which the registrar designated by the Depositor (the "Securities
Registrar"), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Preferred Securities Certificates and Common
Securities Certificates (subject to Section 510 in the case of the Common
Securities Certificates) and registration of transfers and exchanges of
Preferred Securities Certificates as herein provided. The Property Trustee shall
be the initial Securities Registrar.
(b) Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 508, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee or
Trustees. The Securities Registrar shall not be required to register the
transfer of any Preferred Securities that have been called for redemption. At
the option of a Holder, Preferred Securities Certificates may be exchanged for
other Preferred Securities Certificates in authorized denominations of the same
class and of a like aggregate Liquidation Amount upon surrender of the Preferred
Securities Certificates to be exchanged at the office or agency maintained
pursuant to Section 508.
(c) 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 his 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.
(d) 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.
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.
If (a) any mutilated Trust Securities Certificate shall be surrendered to the
Securities Registrar, or if the Securities Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate; and (b) there shall be delivered to the Securities Registrar, the
Property Trustee 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
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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 505, the Administrative Trustees or
the Securities Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Securities Certificate issued pursuant to this
Section 505 shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at any
time.
SECTION 506. PERSONS DEEMED 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.
SECTION 507. 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 record date; and (b) promptly after receipt by any Administrative
Trustee or the Depositor of a request therefor from the Property Trustee 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.
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.
The Administrative Trustees shall maintain in a location or locations
designated by the Administrative Trustees, 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 Corporate Trust Office of the
Property Trustee, Two International Place, 4th Floor, Boston, Massachusetts
02110, 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.
SECTION 509. APPOINTMENT OF PAYING AGENT.
The Paying Agent shall initially be the Property Trustee, and any co-paying
agent chosen by the Property Trustee must be acceptable to the Administrative
Trustees and the Depositor. 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
material respect. Any Person acting as Paying Agent shall be permitted to resign
as Paying Agent upon 30 days' written notice to the
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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 shall 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 801, 803 and 806 shall apply to the Property Trustee also in its
role as Paying Agent, for so long as the Property Trustee shall act as Paying
Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Trust Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common Securities (other than a transfer in
connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 511. PREFERRED SECURITIES CERTIFICATES.
(a) Each owner shall receive a Preferred Securities Certificate representing
such owner's interest in such Preferred Securities. Upon the issuance of
Preferred Securities Certificates, the Trustees shall recognize the record
holders of the Preferred Securities Certificates as Securityholders. The
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.
(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.
SECTION 512. [Intentionally Omitted]
SECTION 513. [Intentionally Omitted]
SECTION 514. 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 209, 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 shall 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.
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(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 Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Preferred Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable, provided that the payment of principal and interest on such
Debentures shall remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain outstanding, if, upon a
Debenture Event of Default arising from the failure to pay interest or principal
on the Debentures, the Holders of any Preferred Securities then Outstanding
shall, to the fullest extent permitted by law, have the right to directly
institute proceedings for enforcement of payment to such Holders of principal of
or interest on the Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section 601, in Sections 514, 810 and 1002 and
in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(b) So long as any 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 Debentures; (ii) waive
any past default which is waivable under Article VII of the Indenture; (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; or (iv) consent to any amendment,
modification or termination of the Indenture or the 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 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 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 shall 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, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class shall 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.
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SECTION 602. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS.
(a) 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 in respect of which Preferred Securityholders are entitled to
vote upon the written request of the Preferred Securityholders 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 Preferred Securityholders to vote on any
matters as to which the Preferred Securityholders are entitled to vote.
(b) Preferred Securityholders 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 Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders 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 Preferred Securityholders of record present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities in respect of any matter as to
which such Securityholders are entitled to vote.
SECTION 605. 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.
SECTION 606. 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).
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SECTION 607. 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 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.
SECTION 608. ACTS OF SECURITYHOLDERS.
(a) 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 may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders 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
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section 608.
(b) The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.
(c) The ownership of Preferred Securities shall be proved by the Securities
Register.
(d) 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.
(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
(f) A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
SECTION 609. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection and copying by
Securityholders and their authorized representatives during normal business
hours for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE.
The Bank and the Property Trustee, each severally on behalf of and as to
itself, as of the date hereof, and each successor Property Trustee at the time
of the successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (the term "Bank" being used to refer to such successor
Property Trustee in its separate corporate capacity) hereby represents and
warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Bank is a trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) the Bank has full corporate power, authority and legal right to execute,
deliver and perform its obligations under this Trust Agreement and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered by
the Property Trustee and constitutes the valid and legally binding agreement of
the Property Trustee 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 Property Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Property Trustee and does not require any approval of
stockholders of the Bank and such execution, delivery and performance shall not
(i) violate the Bank's charter or by-laws; (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of, any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Bank is a party or by which it is bound; or (iii) violate any
law, governmental rule or regulation of the United States or the Commonwealth of
Massachusetts, as the case may be, governing the banking or trust powers of the
Bank or the Property Trustee (as appropriate in context) or any order, judgment
or decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by the Property Trustee
of this Trust Agreement nor the consummation of any of the transactions by the
Property Trustee 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
federal law governing the banking or trust powers of the Bank or the Property
Trustee, as the case may be, under the laws of the United States or the
Commonwealth of Massachusetts; and
(f) there are no proceedings pending or, to the best of the Property Trustee's
knowledge, threatened against or affecting the Bank or the Property Trustee 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
Property Trustee to enter into or perform its obligations as one of the Trustees
under this Trust Agreement.
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SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE.
The Delaware Bank and the Delaware Trustee, each severally on behalf of and as
to itself, as of the date hereof, and each successor Delaware Trustee at the
time of the successor Delaware Trustee's acceptance of appointment as Delaware
Trustee hereunder (the term "Delaware Bank" being used to refer to such
successor Delaware Trustee in its separate corporate capacity), hereby
represents and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) the Delaware Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered by
the Delaware Trustee and constitutes the valid and legally binding agreement of
the Delaware Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Delaware Trustee and does not require any approval of
stockholders of the Delaware Bank and such execution, delivery and performance
shall not (i) violate the Delaware Bank's charter or by-laws; (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any indenture,
mortgage, credit agreement, license or other agreement or instrument to which
the Delaware Bank or the Delaware Trustee is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust powers
of the Delaware Bank or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Delaware Bank or the Delaware
Trustee;
(e) neither the authorization, execution or delivery by the Delaware Trustee
of this Trust Agreement nor the consummation of any of the transactions by the
Delaware Trustee 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
federal law governing the banking or trust powers of the Delaware Bank or the
Delaware Trustee, as the case may be, under the laws of the United States or the
State of Delaware; and
(f) there are no proceedings pending or, to the best of the Delaware Trustee's
knowledge, threatened against or affecting the Delaware Bank or the Delaware
Trustee in any court or before any governmental authority, agency or arbitration
board or tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Delaware Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit of the
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, shall be, as of such date or dates, if applicable, duly and validly
executed, issued and delivered by the Administrative Trustees pursuant to the
terms and provisions of,
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and in accordance with the requirements of, this Trust Agreement and the
Securityholders shall be, as of such date or dates, if applicable, entitled to
the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for its
act or omissions hereunder except as a result of its 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 801. To the extent that, at law or in equity, the
Delaware Trustee or an Administrative Trustee has duties (including fiduciary
duties) and liabilities relating thereto to the Trust or to the 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, as the case
may be.
(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. With respect to the
relationship of each Securityholder and the Trustee, each Securityholder, by its
acceptance of a Trust Security, agrees that it shall look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 801(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of judgment
made in good faith by an authorized officer of the Property Trustee, unless it
shall be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in Liquidation Amount of
the Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available
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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 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
money held by the Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account maintained by the Property
Trustee pursuant to Section 301 and except to the extent otherwise required by
law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.
SECTION 802. CERTAIN NOTICES.
(a) Within 5 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. For purposes of
this Section 802 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 1008, notice of the Depositor's
election to begin or further extend an Extended Interest Payment Period on the
Debentures (unless such election shall have been revoked) within the time
specified for transmitting such notice to the holders of the Debentures pursuant
to the Indenture as originally executed.
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action; or (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with other provisions contained herein;
or (iii) the Property Trustee is unsure of the application of any provision of
this Trust Agreement, then, except as to any matter as to which the Preferred
Securityholders 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 2
Business Days), it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent
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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, any filing under tax or securities laws or any filing under tax or
securities laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice (which counsel
may be counsel to the Depositor or any of its Affiliates) and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice; the Property Trustee shall
have the right at any time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
(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 reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other evidence of indebtedness or other paper or document, unless
requested in writing to do so by one or more 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.
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SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The Recitals contained herein and in the Trust Securities Certificates shall
be taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
SECTION 805. MAY HOLD SECURITIES.
Any Trustee or any other agent of any Trustee or the Trust, in its individual
or any other capacity, may become the owner or pledgee of Trust Securities and,
subject to Sections 808 and 813 and except as provided in the definition of the
term "Outstanding" in Article I, may otherwise deal with the Trust with the same
rights it would have if it were not a Trustee or such other agent.
SECTION 806. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation for all
services rendered by them hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustees
upon request for all reasonable expenses, disbursements and advances incurred or
made by the Trustees in accordance with any provision of this Trust Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to such Trustee's negligence, bad faith or willful misconduct (or,
in the case of the Administrative Trustees or the Delaware Trustee, any such
expense, disbursement or advance as may be attributable to its, his or her gross
negligence, bad faith or willful misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee for, and to
hold the Trustees harmless against, any loss, damage, claims, liability, penalty
or expense incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except any such 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).
No Trustee may claim any Lien or charge on any Trust Property as a result of
any amount due pursuant to this Section 806.
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with respect to
the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section 807,
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 807, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
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(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.
SECTION 808. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Property Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Trust Agreement.
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.
(a) 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 shall have power to appoint, and upon the
written request of the Property Trustee, the Depositor 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 809. If the Depositor does not join in such appointment within 15
days after the receipt by it 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 809 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.
(b) 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.
(c) 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:
(i) 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.
(ii) 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.
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(iii) 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 809, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have the power to accept the resignation
of, or remove, any such co-trustee or separate trustee without the concurrence
of the Depositor. Upon the written request of the Property Trustee, the
Depositor shall join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section
809.
(iv) 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.
(v) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article VIII shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time with respect to the Trust Securities by giving written notice
thereof to the Securityholders. If the instrument of acceptance by the successor
Trustee required by Section 811 shall not have been delivered to the Relevant
Trustee within 30 days after the giving of such notice of resignation, the
Relevant Trustee may petition, at the expense of the Depositor, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee with
respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by Act of the Common Securityholder. 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 the Relevant Trustee (in its individual capacity and on
behalf of the Trust). An Administrative Trustee may be removed by the Common
Securityholder at any time.
(d) If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any cause,
at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and the successor
Trustee shall comply with the applicable requirements of Section 811. If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then Outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 811. If no successor
Relevant Trustee with respect to the
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Trust Securities shall have been so appointed by the Common Securityholder or
the Preferred Securityholders and accepted appointment in the manner required by
Section 811, any Securityholder who has been a Securityholder of Trust
Securities on behalf of himself and all others similarly situated may petition a
court of competent jurisdiction for the appointment of a successor Relevant
Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them; or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 807).
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Relevant Trustee with
respect to the Trust Securities and the Trust, the retiring Relevant Trustee and
each successor Relevant Trustee with respect to the Trust Securities shall
execute and deliver an instrument hereto wherein each successor Relevant 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 Relevant 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 Relevant 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 Relevant Trustee such
retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant 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.
(b) Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the immediately preceding paragraph, as the case may be.
(c) No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article VIII.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
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 VIII, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.
If and when the Property Trustee or the Delaware Trustee shall be or become a
creditor of the Depositor or the Trust (or any other obligor upon the Debentures
or the Trust Securities), the Property Trustee or the Delaware
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Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. REPORTS BY PROPERTY TRUSTEE.
(a) The Property Trustee shall transmit to Securityholders such reports
concerning the Property Trustee, its actions under this Trust Agreement, and the
property and funds in its possession as Property Trustee as may be required
pursuant to the Trust Indenture Act, at the times and in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with The Nasdaq Stock Market's
National Market, and each national securities exchange or other organization
upon which the Trust Securities are listed, and also with the Commission and the
Depositor.
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 817. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that the Holder of all of
the Common Securities by written instrument may increase or decrease the number
of Administrative Trustees. The Property Trustee and the Delaware Trustee may be
the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 817(a), or if the
number of Trustees is increased pursuant to Section 817(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 810.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence or
incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 810, the Administrative Trustees in office, regardless
of their number (and notwithstanding any other provision of this Agreement),
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this Trust
Agreement.
SECTION 818. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
207(a); and
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(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.
SECTION 819. VOTING.
Except as otherwise provided in this Trust Agreement, the consent or approval
of the Administrative Trustees shall require consent or approval by not less
than a majority of the Administrative Trustees, unless there are only two, in
which case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
SECTION 901. TERMINATION UPON EXPIRATION DATE.
Unless earlier dissolved, the Trust shall automatically dissolve on March 31,
2051 (the "Expiration Date") subject to distribution of the Trust Property in
accordance with Section 904.
SECTION 902. EARLY TERMINATION.
The first to occur of any of the following events is an "Early Termination
Event:"
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or
liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the Depositor at
any time (which direction is wholly optional and within the discretion of the
Depositor) to dissolve the Trust and distribute the Debentures to
Securityholders in exchange for the Preferred Securities in accordance with
Section 904;
(c) the redemption of all of the Preferred Securities in connection with the
redemption of all of the Debentures; and
(d) the entrance of an order for dissolution of the Trust by a court of
competent jurisdiction.
SECTION 903. TERMINATION.
The respective obligations and responsibilities of the Trustees and the Trust
created and continued hereby shall terminate upon the latest to occur of the
following: (a) the distribution by the Property Trustee to Securityholders upon
the liquidation of the Trust pursuant to Section 904, or upon the redemption of
all of the Trust Securities pursuant to Section 402, of all amounts required to
be distributed hereunder upon the final payment of the Trust Securities; (b) the
payment of any expenses owed by the Trust; (c) the discharge of all
administrative duties of the Administrative Trustees, including the performance
of any tax reporting obligations with respect to the Trust or the
Securityholders; and (d) the filing of a Certificate of Cancellation by the
Administrative Trustee under the Delaware Business Trust Act.
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SECTION 904. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Debentures,
subject to Section 904(d). Notice of liquidation shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not later than 30 nor more
than 60 days prior to the Liquidation Date to each Holder of Trust Securities at
such Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust Securities
shall no longer be deemed to be Outstanding and any Trust Securities
Certificates not surrendered for exchange shall be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debentures, or, if
Section 904(d) applies, receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the 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 Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the Liquidation Date,
(i) the Trust Securities shall no longer be deemed to be outstanding; (ii)
certificates representing a Like Amount of Debentures shall 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 Debentures listed on The Nasdaq Stock
Market's National Market or on such other securities exchange or other
organization as the Preferred Securities are then listed or traded; (iv) any
Trust Securities Certificates not so surrendered for exchange shall be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the 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 shall be made to holders of Trust Securities Certificates
with respect to such Debentures); and (v) all rights of Securityholders holding
Trust Securities shall cease, except the right of such Securityholders to
receive Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this Section
904, whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical, the Trust
Property shall be liquidated, and the Trust shall be dissolved, wound-up or
terminated, by the Property Trustee in such manner as the Property Trustee
determines. In such event, on the date of the dissolution, winding-up or other
termination of the Trust, Securityholders shall 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 applicable
law, an amount equal to the Liquidation Amount per Trust Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If, upon any such dissolution, winding-up
or termination, the Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro rata
basis (based upon Liquidation Amounts). The holder of the Common Securities
shall be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or
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termination pro rata (determined as aforesaid) with Holders of Preferred
Securities, except that, if a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities.
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST.
The Trust may not merge with or into, consolidate, amalgamate, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other Person, except pursuant to this Section
905. At the request of the Depositor, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities, the
Property Trustee or the Delaware Trustee, the Trust may merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with respect to the
Preferred Securities; or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"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 Debentures; (iii)
the Successor Securities are listed or traded, or any Successor Securities shall
be listed or traded upon notification of issuance, on any national securities
exchange or other organization on which the Preferred Securities are then
listed, if any; (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect; (v) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Depositor has received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect; and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity shall be required to register as an "investment company" under the
Investment Company Act; and (vi) 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,
the Debentures, the Indenture, this Trust Agreement and the Expense Agreement.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other Person or
permit any other Person to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF 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 or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding-up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
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SECTION 1002. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the Trustees and
the Depositor, without the consent of any Securityholders, (i) as provided in
Section 811 with respect to acceptance of appointment by a successor Trustee;
(ii) to cure any ambiguity, correct or supplement any provision herein or
therein which may be inconsistent with any other provision herein or therein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, that shall not be inconsistent with the other provisions
of this Trust Agreement; or (iii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust shall 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 shall 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 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust 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 shall 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 603 or 606 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date; or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date. Notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 603 or 606 hereof), this
paragraph (c) of this Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no Trustee
shall enter into or consent to any amendment to this Trust Agreement which would
cause the Trust to fail or cease to qualify for the exemption from status of an
"investment company" under the Investment Company Act or to fail or cease to be
classified as a grantor trust for United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary, without
the consent of the Depositor, this Trust Agreement may not be amended in a
manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be required to
enter into any amendment to this Trust Agreement which affects its own rights,
duties or immunities under this Trust Agreement. The Property Trustee shall be
entitled to receive an Opinion of Counsel and an Officers' Certificate stating
that any amendment to this Trust Agreement is in compliance with this Trust
Agreement.
SECTION 1003. SEPARABILITY.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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SECTION 1004. 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).
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY.
If the date fixed for any payment on any Trust Security shall be a day that is
not a Business Day, then such payment need not be made on such date but may be
made on the next succeeding day which is a Business Day, with the same force and
effect as though made on the date fixed for such payment, and no distribution
shall accumulate thereon for the period after such date.
SECTION 1006. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to the benefit of
any successor to the Depositor, the Trust or the Relevant Trustee(s), including
any successor by operation of law. Except in connection with a consolidation,
merger or sale involving the Depositor that is permitted under Article XII of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
SECTION 1007. HEADINGS.
The Article and Section headings are for convenience only and shall not affect
the construction of this Trust Agreement.
SECTION 1008. REPORTS, NOTICES AND DEMANDS.
Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to Southwest Bancorp,
Inc., 608 South Main Street, Stillwater, Oklahoma, Attention: Mr. Kerby Crowell,
facsimile no.: (405) 377-3808. Any notice to Preferred Securityholders 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 State Street Bank and Trust Company, Two
International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration; and
(c) with respect to the Administrative Trustees, to them at the address above
for notices to the Depositor, marked "Attention: Administrative Trustees of
First Preferred Capital Trust." Such notice, demand or other communication to or
upon the Trust or the Property Trustee shall be deemed to have been sufficiently
given or made only upon actual receipt of the writing by the Trust or the
Property Trustee.
36
<PAGE>
SECTION 1009. 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 1 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 of 1978, as amended) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 1009, the Property Trustee agrees, for the benefit of 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 1009 shall survive the termination of
this Trust Agreement.
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture
Act that are required to be part of this Trust Agreement and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for the
purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement shall
not affect the nature of the Trust Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
37
<PAGE>
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR
ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT
TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER
AND SUCH OTHERS.
38
<PAGE>
SOUTHWEST BANCORP, INC.
By:_________________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Property Trustee
By:_________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:_________________________________________
Name:
Title:
____________________________________________
_______________, as Administrative Trustee
____________________________________________
_______________, as Administrative Trustee
____________________________________________
_______________, as Administrative Trustee
39
<PAGE>
Exhibit 4.7
PREFERRED SECURITIES GUARANTEE AGREEMENT
BY AND BETWEEN
SOUTHWEST BANCORP, INC.
AND
STATE STREET BANK AND TRUST COMPANY
_______________, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
ARTICLE I. DEFINITIONS AND INTERPRETATION............................................................................. 1
SECTION 1.1. DEFINITIONS AND INTERPRETATION........................................................................... 1
ARTICLE II. TRUST INDENTURE ACT............................................................................................... 4
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION......................................................................... 4
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES........................................................................... 5
SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE............................................................... 5
SECTION 2.4. PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.......................................................... 5
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT......................................................... 5
SECTION 2.6. EVENTS OF DEFAULT; WAIVER................................................................................ 5
SECTION 2.7. EVENT OF DEFAULT; NOTICE................................................................................. 6
SECTION 2.8. CONFLICTING INTERESTS.................................................................................... 6
ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE.......................................................... 6
SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE
TRUSTEE....................................................................................................... 6
SECTION 3.2. CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE............................................................ 8
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.................................................... 9
ARTICLE IV PREFERRED GUARANTEE TRUSTEE........................................................................................ 10
SECTION 4.1. PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY................................................................. 10
SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED
GUARANTEE TRUSTEE............................................................................................. 10
ARTICLE V GUARANTEE........................................................................................................... 11
SECTION 5.1. GUARANTEE................................................................................................ 11
SECTION 5.2. WAIVER OF NOTICE AND DEMAND.............................................................................. 11
SECTION 5.3. OBLIGATIONS NOT AFFECTED................................................................................. 11
SECTION 5.4. RIGHTS OF HOLDERS........................................................................................ 12
SECTION 5.5. GUARANTEE OF PAYMENT..................................................................................... 13
SECTION 5.6. SUBROGATION.............................................................................................. 13
SECTION 5.7. INDEPENDENT OBLIGATIONS.................................................................................. 13
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION.......................................................................... 13
SECTION 6.1. LIMITATION ON TRANSACTIONS............................................................................... 13
SECTION 6.2 RANKING.................................................................................................. 14
ARTICLE VII TERMINATION....................................................................................................... 14
SECTION 7.1. TERMINATION.............................................................................................. 14
ARTICLE VIII INDEMNIFICATION.................................................................................................. 14
SECTION 8.1. EXCULPATION.............................................................................................. 14
SECTION 8.2. INDEMNIFICATION.......................................................................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX MISCELLANEOUS.............................................................................................. 15
SECTION 9.1. SUCCESSORS AND ASSIGNS................................................................................... 15
SECTION 9.2. AMENDMENTS............................................................................................... 15
SECTION 9.3. NOTICES.................................................................................................. 15
SECTION 9.4. BENEFIT.................................................................................................. 16
SECTION 9.5. GOVERNING LAW............................................................................................ 16
</TABLE>
ii
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- --------------------- ---------
<S> <C>
310(a)................................................................... 4.1(a)
310(b).............................................................. 4.1(c), 2.8
310(c)........................................................... Not Applicable
311(a)................................................................... 2.2(b)
311(b)................................................................... 2.2(b)
311(c)........................................................... Not Applicable
312(a)................................................................... 2.2(a)
312(b)................................................................... 2.2(b)
313......................................................................... 2.3
314(a)...................................................................... 2.4
314(b)........................................................... Not Applicable
314(c)...................................................................... 2.5
314(d)........................................................... Not Applicable
314(e)........................................................... 1.1, 2.5,3.2
314(f)................................................................. 2.1, 3.2
315(a)................................................................... 3.1(d)
315(b)...................................................................... 2.7
315(c)...................................................................... 3.1
315(d)................................................................... 3.1(d)
316(a)............................................................ 1.1, 2.6, 5.4
316(b)...................................................................... 5.3
317(a)...................................................................... 3.1
317(b)........................................................... Not Applicable
318(a)...................................................................... 2.1
318(b)...................................................................... 2.1
318(c)................................................................... 2.1(b)
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.
iii
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
THIS PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred Securities
Guarantee"), dated as of ___________, 1997, is executed and delivered by
Southwest Bancorp, Inc., an Oklahoma corporation (the "Guarantor"), and STATE
STREET BANK AND TRUST COMPANY, a trust company organized and existing under the
laws of the Commonwealth of Massachusetts, 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 SBI Capital Trust, a Delaware
statutory business trust (the "Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ___________, 1997, among the trustees of the Trust
named therein, the Guarantor, as depositor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof __________ preferred securities, having an aggregate
liquidation amount of $_______________________, designated the ________%
Cumulative Trust Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guarantee, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS AND INTERPRETATION
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee has the
same meaning throughout;
(d) 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;
(e) 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>
(f) 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
(g) 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 day on which federal or state
banking institutions in New York, New York are authorized or required by law,
executive order or regulation to close or a day on which the Corporate Trust
Office of the Preferred Guarantee Trustee 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 Preferred Securities Guarantee is located at Two
International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the ____% Subordinated Debentures due June 30, 2027, of
the Debenture Issuer held by the Property Trustee of the Trust.
"Debenture Issuer" means the Guarantor.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.
"Guarantor" means Southwest Bancorp, Inc., an Oklahoma corporation.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accrued and unpaid Distributions that are required to
be paid on such Preferred Securities, to the extent the Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), to the extent
the Trust has funds available therefor, with respect to any Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Debentures to the Holders in exchange for Preferred
Securities as provided in the Trust Agreement), the lesser of (a) the aggregate
of the Liquidation Amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, to the extent the Trust shall have
funds available therefor (the "Liquidation Distribution"), and (b) the amount of
assets of the Trust remaining available for distribution to Holders in
liquidation of the Trust.
"Holder" shall mean any holder, as registered on the books and records of
the 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.
2
<PAGE>
"Indenture" means the Indenture dated as of _____________, 1997, among the
Debenture Issuer and State Street Bank and Trust Company, as trustee, and any
indenture supplemental thereto pursuant to which Subordinated Debentures of the
Debenture Issuer are to be issued to the Property Trustee of the Trust.
"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.
"Majority in Liquidation Amount of the Preferred Securities" means the
holders 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 of the Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means State Street Bank and 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.
"Redemption Price" has the meaning provided therefor in the definition of
Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as
in force at the date of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939, as amended, is
3
<PAGE>
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.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION
(a) This Preferred Securities Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Preferred Securities
Guarantee and shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES
(a) In the event the Preferred Guarantee Trustee is not also the Securities
Registrar, 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 (the "List of
Holders") as of such date, (i) within 1 Business Day after January 1 and June 30
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
15 days before such List of Holders is given to the Preferred Guarantee Trustee;
provided, that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The
Preferred Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE
On or before July 15 of each year, the Preferred Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (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.
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
4
<PAGE>
SECTION 2.6. EVENTS OF DEFAULT; WAIVER
The Holders of a Majority in Liquidation Amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Preferred
Securities Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7. EVENT OF DEFAULT; NOTICE
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, that the Preferred Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Preferred Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.
SECTION 2.8. CONFLICTING INTERESTS
The Trust Agreement shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guarantee
Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities
5
<PAGE>
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
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Preferred
Guarantee Trustee, unless it shall be proved that the Preferred Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall require
the Preferred Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Preferred Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably assured to
it.
SECTION 3.2. CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
6
<PAGE>
(ii) any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The Preferred Guarantee
Trustee shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights and powers
vested in it by this Preferred Securities Guarantee;
(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Preferred Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action;
(x) whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Preferred Guarantee Trustee (i) may request instructions
from the Holders of a Majority in Liquidation Amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action
7
<PAGE>
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE
The Recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY
(a) There shall at all times be a Preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEE
(a) Subject to Section 4.2(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 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor.
8
<PAGE>
(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the 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 the Trust to pay such
amounts to the Holders.
SECTION 5.2. WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Trust or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3. OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor under
this 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 the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the 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
9
<PAGE>
or other sum payable that results from the extension of any interest payment
period on the Debentures or any extension of the maturity date of the 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 the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or consent
required in connection with the Preferred Securities (or the common equity
securities issued by the Trust), including the failure to receive any approval
of the Board of Governors of the Federal Reserve System required for the
redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4. RIGHTS OF HOLDERS
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.
SECTION 5.5. GUARANTEE OF PAYMENT
This Preferred Securities Guarantee creates a guarantee of payment and not
of collection.
SECTION 5.6. SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the 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
10
<PAGE>
the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 5.7. INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the 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 (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. LIMITATION ON TRANSACTIONS
So long as any Preferred Securities remain outstanding, if there shall have
occurred an Event of Default under this Preferred Securities Guarantee, an Event
of Default under the Trust Agreement or during an Extended Interest Payment
Period (as defined in the Indenture), then (a) the Guarantor shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock and (b) the Guarantor shall not make any payment of interest or
principal on or repay, repurchase or redeem any debt securities issued by the
Guarantor which rank pari passu with or junior to the Debentures other than
payments under this Preferred Securities Guarantee and (c) the Guarantor shall
not redeem, purchase or acquire less than all of the Outstanding Debentures or
any of the Preferred Securities.
SECTION 6.2 RANKING
This Preferred Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred securities or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of any preferred securities or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1. TERMINATION
This Preferred Securities Guarantee shall terminate upon (i) full payment
of the Redemption Price of all Preferred Securities, (ii) upon full payment of
the amounts payable in accordance with the Trust Agreement upon liquidation of
the Trust, or (iii) upon distribution of the Debentures to the Holders of the
Preferred Securities. Notwithstanding the foregoing, this Preferred Securities
Guarantee shall continue to be effective or shall be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. EXCULPATION
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted
11
<PAGE>
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2. INDEMNIFICATION
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2. AMENDMENTS
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of at least a Majority in Liquidation Amount of the Preferred
Securities. The provisions of Article VI of the Trust Agreement with respect to
meetings of Holders of the Preferred Securities apply to the giving of such
approval.
SECTION 9.3. NOTICES
All notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee
Trustee's mailing address set forth below (or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the Preferred
Securities):
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
12
<PAGE>
(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):
Southwest Bancorp, Inc.
608 South Main Street
Stillwater, Oklahoma 74074
Attention: ____________________
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the 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.
SECTION 9.4. BENEFIT
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5. GOVERNING LAW
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OKLAHOMA.
This Preferred Securities Guarantee is executed as of the day and year
first above written.
SOUTHWEST BANCORP, INC.
as Guarantor
By
..............................................
Name:
............................................
Title:
...........................................
STATE STREET BANK AND TRUST COMPANY,
as Preferred Guarantee Trustee
By
..............................................
Name:
............................................
Title:
...........................................
13
<PAGE>
EXHIBIT 5.1
[Letterhead of Kennedy & Baris, L.L.P.]
Southwest Bancorp, Inc. SBI Capital Trust
608 South Main Street 608 South Main Street
Stillwater, Oklahoma 74074 Stillwater, Oklahoma 74074
Re: Registration Statement on Form S-2 of SBI Capital Trust and Southwest
Bancorp, Inc. (File Nos. 333-_______ and 333-_______)
Gentlemen:
We have acted as counsel to Southwest Bancorp, Inc. an Oklahoma corporation
(the "Company"), and SBI Capital Trust, a Delaware statutory business trust (the
"Trust"), in connection with the preparation of a Registration Statement on Form
S-2 (the "Registration Statement") to be filed by the Company and the Trust with
the Securities and Exchange Commission (the "SEC") for the purpose of
registering under the Securities Act of 1933, as amended, preferred securities
(the "Preferred Securities") of the Trust, subordinated debentures (the
"Subordinated Debentures") of the Company and the guarantee of the Company with
respect to the Preferred Securities (the "Guarantee").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate of
trust (the "Certificate of Trust") filed by the Trust with the Secretary of
State of the State of Delaware on ___________, 1997; (ii) the Trust Agreement,
dated as of ____________, 1997, with respect to the Trust; (iii) the form of the
Amended and Restated Trust Agreement with respect to the Trust; (iv) the form of
the Preferred Securities of the Trust; (v) the form of Guarantee between the
Company and State Street Bank and Trust Company, as trustee; (vi) the form of
Subordinated Debentures; and (vii) the form of the indenture (the "Indenture")
between the Company and State Street Bank and Trust Company, as trustee, in each
case in the form filed as an exhibit to the Registration Statement. We have
also examined originals or copies, certified, or otherwise identified to our
satisfaction, of such other documents, certificates, and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as copies and the authenticity of the originals of
such copies. In examining documents executed by parties other than the Company
or the Trust, we have assumed that such parties had the power, corporate or
otherwise, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or otherwise,
and execution and delivery by such parties of such documents and that, except as
set forth in paragraphs (1) and (2) below, such documents constitute valid and
binding obligations of such parties. In addition, we have assumed that the
Amended and Restated Trust Agreement, the Preferred Securities, the Guarantee,
the Subordinated Debentures and the Indenture, when executed, will be executed
in substantially the form reviewed by us. As to any facts material to the
opinions expressed herein which were not independently established or verified,
we have relied upon oral or written statements and representations of officers,
trustees, and other representatives of the Company, the Trust, and others.
Based upon and subject to the foregoing and to other qualifications and
limitations set forth herein, we are of the opinion that:
1. After the Indenture has been duly executed and delivered, the
Subordinated Debentures, when duly executed, delivered, authenticated and issued
in accordance with the Indenture and delivered and paid for as
<PAGE>
Southwest Bancorp, Inc.
SBI Capital Trust
May ___, 1997
Page 2
contemplated by the Registration Statement, will be valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity,
regardless of whether enforceability is considered in a proceeding at law or in
equity.
2. The Guarantee, when duly executed and delivered by the parties hereto,
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity, regardless
of whether enforceability is considered in a proceeding at law or in equity.
We hereby consent to the use of our name under the caption "Validity of
Securities" in the Prospectus forming a part of the Registration Statement and
to the inclusion of this opinion as an exhibit to the Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF RICHARDS, LAYTON & FINGER]
May ___, 1997
SBI Capital Trust
c/o Southwest Bancorp, Inc.
608 South Main Street
Stillwater, Oklahoma 74074
Re: SBI Capital Trust
-----------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for SBI Capital Trust, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated May ___, 1997 (the
"Certificate"), as filed in the office of the Secretary of the State of Delaware
(the "Secretary of State") on May ___, 1997;
(b) The Trust Agreement of the Trust, dated as of May ___, 1997, among
Southwest Bancorp, Inc., an Oklahoma corporation (the "Company"), and the
trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-2, including a prospectus (the "Prospectus") relating to the ___% Preferred
Securities of the Trust representing preferred undivided beneficial interests in
the Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities") as filed by the Company and the Trust as set forth therein with the
Securities and Exchange Commission on May ___, 1997;
(d) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among the Company, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial interests in the Trust (the
"Trust Agreement"), attached as an exhibit to
<PAGE>
the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May ___, 1997,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated therein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
<PAGE>
SBI Capital Trust
May ____, 1997
Page 3
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C
------
(S)3801, et seq.
-------
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly Yours,
EAM
<PAGE>
EXHIBIT 8
[Letterhead of Kennedy & Baris, L.L.P.]
Southwest Bancorp, Inc. SBI Capital Trust
608 South Main Street 608 South Main Street
Stillwater, Oklahoma 74074 Stillwater, Oklahoma 74074
Re: Registration Statement on Form S-2 of Southwest Bancorp, Inc., and SBI
Capital Trust (File Nos. 333-_______ and 333-_______)
Gentlemen:
We have acted as special counsel for Southwest Bancorp, Inc., an Oklahoma
corporation (the "Company"), and SBI Capital Trust (the"Trust"), a statutory
business trust created under the laws of Delaware, in connection with the above-
captioned registration statement on Form S-2, initially filed with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Act"), on _______________, 1997, (such
registration statement, as amended, being hereinafter referred to as the
"Registration Statement"), for the purpose of registering the Preferred
Securities issued by the Trust and the Subordinated Debentures issued by the
Company to the Trust in connection with such issuance of the Preferred
Securities. All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Registration Statement.
In rendering this opinion, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of (i) the certificate of trust
(the "Certificate of Trust") filed by the Trust with the Secretary of State of
the State of Delaware on ___________, 1997; (ii) the Trust Agreement, dated as
of ____________, 1997, with respect to the Trust; (iii) the form of the Amended
and Restated Trust Agreement with respect to the Trust; (iv) the form of the
Preferred Securities of the Trust; (v) the form of Guarantee between the Company
and State Street Bank and Trust Company, as trustee; (vi) the form of
Subordinated Debentures; and (vii) the form of the indenture (the "Indenture")
between the Company and State Street Bank and Trust Company, as trustee, in each
case in the form filed as an exhibit to the Registration Statement. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates, and records as we have
deemed necessary or appropriate for purposes of rendering the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
<PAGE>
documents executed by parties other than the Company or the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Amended and
Restated Trust Agreement, the Preferred Securities, the Guarantee, the
Subordinated Debentures and the Indenture when executed, will be executed in
substantially the form reviewed by us and that the terms of the Subordinated
Debentures when established in conformity with the Indenture will not violate
any applicable law. As to any facts material to the opinions expressed herein
which were not independently established or verified, we have relied upon oral
or written statements and representations of officers, trustees, and other
representatives of the Company, the Trust and others.
We hereby confirm that, although the discussion set forth under the heading
"Certain Federal Income Tax Consequences" in the form of Prospectus for the
offering of Preferred Securities constituting a part of the Registration
Statement ("Prospectus") does not purport to discuss all possible United States
federal income tax consequences of the purchase, ownership and disposition of
Preferred Securities, in our opinion, such discussion constitutes, in all
material respects, a fair and accurate summary of the United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities, based upon current laws as they relate to holders
described therein. It is possible that contrary positions with regard to the
purchase, ownership and disposition of the Preferred Securities may be taken by
the Internal Revenue Service and that a court may agree with such contrary
positions.
Additionally, based upon the facts, assumptions and representations set
forth or referred to herein, and the accuracy of such facts, assumptions and
representations as of the date hereof, it is our opinion that the Trust will be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation. Accordingly, each holder of
Preferred Securities will be treated as owning an undivided beneficial interest
in the Subordinated Debentures.
The opinions expressed in this letter are based on the Internal Revenue
Code of 1986, as amended, the Income Tax Regulations promulgated by the Treasury
Department thereunder and judicial authority reported as of the date hereof. We
have also considered the position of the Internal Revenue Service (the
"Service") reflected in published and private rulings. There can be no
assurances that future legislation or administrative changes, court decisions or
Service interpretations would not significantly modify the statements or
opinions expressed herein.
Our opinion is limited to those federal income tax issues specifically
considered herein and is addressed to and is only for the benefit of the Company
and the Trust in connection with the filing of the Registration Statement and,
except as set forth below, is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person for any
purpose without our written consent. We do not express any opinion as to any
other United States federal income issues, or any state, local or foreign tax
issues. Although the opinions herein are based upon our best interpretation of
existing sources of law and express what we believe a court would properly
conclude if presented with these issues, no assurance can be
<PAGE>
given that such interpretations would be followed if they were to become the
subject of judicial or administrative proceedings.
We hereby consent to the use of our name under the captions "Certain
Federal Income Tax Consequences" and "Validity of Securities" in the Prospectus
and the filing of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission promulgated thereunder. This opinion is expressed
as of the date hereof and applies only to the disclosures set forth in the
Prospectus and Registration Statement. We disclaim any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
<PAGE>
EXHIBIT 12.1
SOUTHWEST BANCORP, INC.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Years ended March 31, Years ended December 31,
1997 1996 1996 1995 1994 1993 1992
--------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income before taxes $ 646 $3,011 $11,858 $ 9,428 $ 7,898 $ 6,304 $ 5,182
Fixed charges:
Interest on deposits 9,189 7,528 32,728 28,266 16,516 12,366 12,937
Other interest 70 58 105 278 121 51 106
Interest factor portion of rentals (1) 95 74 343 269 205 118 105
Preferred dividend requirement (2) 601 601 2,405 1,009 0 0 0
-------------------------------------------------------------------
Total fixed charges 9,955 8,261 35,581 29,822 16,842 12,535 13,148
Ratio of earnings to fixed charges:
Including interest on deposits 1.06 1.36 1.33 1.32 1.47 1.50 1.39
Excluding interest on deposits 1.84 5.11 5.16 7.06 25.23 38.30 25.56
</TABLE>
(1) The use of the one-third factor results in a reasonable approximation of the
Interest portion of rentals.
(2) Gross of taxes.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Southwest Bancorp, Inc.
on Form S-2 of our report dated January 27, 1997, included and incorporated by
reference in the Annual Report on Form 10-K of Southwest Bancorp, Inc. for the
year ended December 31, 1996, and to the use of our report dated January 27,
1997, appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Oklahoma City, Oklahoma
May 9, 1997
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned directors of the Southwest Bancorp, Inc.(the
"Registrant"), hereby severally constitute and appoint Robert L. McCormick, Jr,
our true and lawful attorney and agent, to do any and all things in our names in
the capacities indicated below which said person may deem necessary or advisable
to enable the Registrant to comply with the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Trust Indenture Act, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the preparation and filing of a
registration statement on Form S-2 and the registration and sale of the
securities described therein under the federal securities laws and the laws of
the various states, and the creation of documents of trust described in such
registration statement, including specifically, but not limited to, power and
authority to sign for us in our names in the capacities indicated below such
registration statement and any amendments thereto and any document or filing
necessary or appropriate in connection with qualification of the Indenture or
the Guarantee, described in such registration statement, under the Trust
Indenture Act; and we hereby approve, ratify and confirm all that said person
shall do or cause to be done by virtue thereof.
Signature Date
/s/ George M. Berry April 24, 1997
- --------------------------------------------
George M. Berry
Director
/s/ Joyce P. Berry April 24, 1997
- --------------------------------------------
Joyce P. Berry
Director
/s/ Thomas D. Berry April 24, 1997
- --------------------------------------------
Thomas D. Berry
Director
/s/ Joe Berry Cannon April 24, 1997
- --------------------------------------------
Joe Berry Cannon
Director
/s/ W. Haskell Cudd April 24, 1997
- --------------------------------------------
W. Haskell Cudd
Director
/s/ J. Berry Harrison April 24, 1997
- --------------------------------------------
J. Berry Harrison
Director
/s/ Erd M. Johnson April 24, 1997
- --------------------------------------------
Erd M. Johnson
Director
<PAGE>
/s/ David P. Lambert April 24, 1997
- --------------------------------------------
David P. Lambert
Director
/s/ Linford R. Pitts April 24, 1997
- --------------------------------------------
Linford R. Pitts
Director
/s/ Robert B. Rodgers April 24, 1997
- --------------------------------------------
Robert B. Rodgers
Director
/s/ James B. Wise, M.D. April 24, 1997
- --------------------------------------------
James B. Wise, M.D.
Director
/s/ Lee A. Wise April 24, 1997
- --------------------------------------------
Lee A. Wise
Director
/s/ Paul C. Wise April 24, 1997
- --------------------------------------------
Paul C. Wise
Director
<PAGE>
Exhibit 25.1
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) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President, General Counsel and
Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
Southwest Bancorp, Inc.
(Exact name of obligor as specified in its charter)
Oklahoma 73-1136584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
608 South Main Street, Stillwater, Oklahoma 74074
(Address of principal executive offices) (Zip Code)
--------------------
% Subordinated Debentures
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement Eligibility of and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as
Exhibit 4 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement
of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor
is in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates
to matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 14th day of April, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
---------------------
E. Decker Adams
Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by Southwest
Bancorp, Inc. of its Guarantee, we hereby consent that reports of examination
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
-------------------------
E. Decker Adams
Vice President
Dated: April 14, 1997
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business
December 31, 1996, published in accordance with a call made by the Federal
- -----------------
Reserve Bank of this District pursuant to the provisions of the Federal Reserve
Act and in accordance with a call made by the Commissioner of Banks under
General Laws, Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............. 1,561,409
Interest-bearing balances...................................... 7,562,240
Securities.......................................................... 9,388,513
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary............................ 5,622,962
Loans and lease financing receivables:
Loans and leases, net of unearned income....................... 4,858,187
Allowance for loan and lease losses............................ 72,614
Loans and leases, net of unearned income and allowances........ 4,785,573
Assets held in trading accounts..................................... 874,700
Premises and fixed assets........................................... 383,955
Other real estate owned............................................. 870
Investments in unconsolidated subsidiaries.......................... 93,621
Customers' liability to this bank on acceptances outstanding........ 35,022
Intangible assets................................................... 148,190
Other assets........................................................ 932,673
----------
Total assets........................................................ 31,389,728
==========
LIABILITIES
Deposits:
In domestic offices............................................ 8,508,096
Noninterest-bearing........................................ 6,435,131
Interest-bearing........................................... 2,072,965
In foreign offices and Edge subsidiary......................... 11,395,724
Noninterest-bearing........................................ 27,508
Interest-bearing........................................... 11,368,216
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary............................ 7,518,222
Demand notes issued to the U.S. Treasury and Trading Liabilities.... 733,935
Other borrowed money................................................ 650,578
Bank's liability on acceptances executed and outstanding............ 35,022
Other liabilities................................................... 770,029
----------
Total liabilities................................................... 29,611,606
----------
EQUITY CAPITAL
Common stock........................................................ 29,931
Surplus............................................................. 358,146
Undivided profits................................................... 1,389,720
Cumulative foreign currency translation adjustments................. 325
----------
Total equity capital................................................ 1,778,122
----------
Total liabilities and equity capital................................ 31,389,728
==========
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
<PAGE>
Exhibit 25.2
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)
--
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President, General Counsel and
Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
SBI Capital Trust
(Exact name of obligor as specified in its charter)
Delaware xx-xxxxxxx
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
608 South Main Street, Stillwater, Oklahoma 74074
(Address of principal executive offices) (Zip Code)
---------------------
Preferred Securities
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Boston Corporation.
(See note on page 2.)
Item 3.through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with
the Securities and Exchange Commission as Exhibit 2 to
Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse
Shoe, Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (file No. 33-37823) and is incorporated herein
by reference thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 14th day of April, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
-----------------------------
E. Decker Adams
Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by SBI Capital
Trust of its Preferred Securities, we hereby consent that reports of examination
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
----------------------------
E. Decker Adams
Vice President
Dated: April 14, 1997
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business December
--------
31, 1996, published in accordance with a call made by the Federal Reserve Bank
- --------
of this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin....................... 1,561,409
Interest-bearing balances................................................ 7,562,240
Securities........................................................................ 9,388,513
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary...................................... 5,622,962
Loans and lease financing receivables:
Loans and leases, net of unearned income ................................ 4,858,187
Allowance for loan and lease losses...................................... 72,614
Loans and leases, net of unearned income and allowances.................. 4,785,573
Assets held in trading accounts................................................... 874,700
Premises and fixed assets......................................................... 383,955
Other real estate owned........................................................... 870
Investments in unconsolidated subsidiaries........................................ 93,621
Customers' liability to this bank on acceptances outstanding...................... 35,022
Intangible assets................................................................. 148,190
Other assets...................................................................... 932,673
------------
Total assets...................................................................... 31,389,728
============
LIABILITIES
Deposits:
In domestic offices...................................................... 8,508,096
Noninterest-bearing............................................ 6,435,131
Interest-bearing............................................... 2,072,965
In foreign offices and Edge subsidiary................................... 11,395,724
Noninterest-bearing............................................ 27,508
Interest-bearing............................................... 11,368,216
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary...................................... 7,518,222
Demand notes issued to the U.S. Treasury and Trading Liabilities.................. 733,935
Other borrowed money.............................................................. 650,578
Bank's liability on acceptances executed and outstanding.......................... 35,022
Other liabilities................................................................. 770,029
------------
Total liabilities................................................................. 29,611,606
------------
EQUITY CAPITAL
Common stock...................................................................... 29,931
Surplus........................................................................... 358,146
Undivided profits................................................................. 1,389,720
Cumulative foreign currency translation adjustments............................... 325
------------
Total equity capital.............................................................. 1,778,122
------------
Total liabilities and equity capital.............................................. 31,389,728
============
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
<PAGE>
Exhibit 25.3
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)
--
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President, General Counsel and
Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
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Southwest Bancorp, Inc.
(Exact name of obligor as specified in its charter)
Oklahoma 73-1136584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
608 South Main Street, Stillwater, Oklahoma 74074
(Address of principal executive offices) (Zip Code)
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Guarantee
(Title of Indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
Item 3.through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit 2
to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse
Shoe, Inc. (File No. 22-17940) and is incorporated herein
by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
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<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 14th day of April, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /S/ E. Decker Adams
--------------------
E. Decker Adams
Vice President
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<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Southwest
Bancorp, Inc. of its % Subordinated Debentures, we hereby consent that reports
of examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /S/ E. Decker Adams
-------------------
E. Decker Adams
Vice President
Dated: April 14, 1997
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<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business December
--------
31, 1996, published in accordance with a call made by the Federal Reserve Bank
- --------
of this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin......................... 1,561,409
Interest-bearing balances.................................................. 7,562,240
Securities...................................................................... 9,388,513
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary........................................ 5,622,962
Loans and lease financing receivables:
Loans and leases, net of unearned income .................................. 4,858,187
Allowance for loan and lease losses........................................ 72,614
Loans and leases, net of unearned income and allowances.................... 4,785,573
Assets held in trading accounts................................................. 874,700
Premises and fixed assets....................................................... 383,955
Other real estate owned......................................................... 870
Investments in unconsolidated subsidiaries...................................... 93,621
Customers' liability to this bank on acceptances outstanding.................... 35,022
Intangible assets............................................................... 148,190
Other assets.................................................................... 932,673
--------------
Total assets.................................................................... 31,389,728
==============
LIABILITIES
Deposits:
In domestic offices........................................................ 8,508,096
Noninterest-bearing............................................ 6,435,131
Interest-bearing............................................... 2,072,965
In foreign offices and Edge subsidiary..................................... 11,395,724
Noninterest-bearing............................................ 27,508
Interest-bearing............................................... 11,368,216
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary........................................ 7,518,222
Demand notes issued to the U.S. Treasury and Trading Liabilities................ 733,935
Other borrowed money............................................................ 650,578
Bank's liability on acceptances executed and outstanding........................ 35,022
Other liabilities............................................................... 770,029
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Total liabilities............................................................... 29,611,606
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EQUITY CAPITAL
Common stock.................................................................... 29,931
Surplus......................................................................... 358,146
Undivided profits............................................................... 1,389,720
Cumulative foreign currency translation adjustments............................. 325
--------------
Total equity capital............................................................ 1,778,122
--------------
Total liabilities and equity capital............................................ 31,389,728
==============
</TABLE>
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<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
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